By Jason Shafrin, PhD
If you had a life-threatening disease and were offered a choice of treatments, would you opt for a one-time cure or for weekly treatments for the rest of your life? The answer for most people is unsurprising: a cure. Cures eliminate the inconvenience of ongoing treatment, decrease caregiver burden, and reduce patient anxiety.
Although we want cures, how do payers, policy makers, and pharmaceutical manufacturers place a price on them? While there are standard economic approaches for measuring treatment value, one of the key challenges of pricing cures based on value is uncertainty. Some cures—particularly for rare diseases—have clinical trials with small patient populations. Smaller sample sizes mean more uncertainty about a treatment’s safety and efficacy. Additionally, most clinical trials are short-term in nature; thus, it may not be clear whether the “cure” observed in the trial will result in the permanent, complete elimination of disease in the real world. This uncertainty makes measuring treatment benefits—and a corresponding value-based price—challenging. In fact, the Institute for Clinical and Economic Review (ICER) is developing a separate value framework for single or short-term transformative therapies.1
Some argue that any attempt to measure the value of curative therapies is a fool’s errand. A previous commentary by Winston Wong argues that traditional cost-effectiveness measures for transformative or curative therapies are not “sensitive nor sophisticated enough” to measure the true value of these treatments.2 Nonetheless, while challenges remain in measuring the value of curative therapies, in recent years health economists have been able to better quantify how society values curative or transformative therapies across three key dimensions.
First, the health economic literature has shown that society places high value on health gains for severe diseases. In the language of health economists, individuals do not value quality-adjusted life-year (QALY) gains equally across diseases.3-6 One study showed that individuals value the development of treatments for severe diseases so much that they are willing to give up potential gains in overall “aggregate” health to prioritize treatments for the severely ill.4
Second, for patients with severe disease, uncertainty itself is valuable. In one of my studies7, my co-authors and I surveyed cancer patients and physicians to learn whether they would prefer any of two treatments with identical average survival. The first treatment offered patients a perfectly predictable survival profile; the second treatment offered the chance of long-term, durable survival gains couple with an increased risk of more rapid death. Whereas physicians were largely indifferent between the certain and uncertain options, cancer patients were willing to give up approximately 1 year of certain survival to be able to access the riskier therapy. This incremental value patients place on the potential for long-term survival gains is known as the “value of hope.” For patients with debilitating disease, therapies with the promise of being a cure are likely to be valued above standard QALY-based metrics.
Third, healthy individuals also place a high value on the development of new treatments for severe diseases. This concept—known as the “insurance value of medical innovation”—occurs when healthy individuals are at risk of a getting a disease in the future.8 Most people place a high value on avoiding very bad outcomes. We insure our homes to avoid financial ruin from fire, flood, or other natural disasters. In the case of severe disease, curative therapies provide insurance value as well: the worst-case scenario—getting a debilitating disease—is no longer so bad if there is a curative treatment available. Thus, innovation acts as an insurance policy. This insurance value is especially high when the disease has a significant impact on individual quality of life. In the case of new treatments for multiple sclerosis (MS), for instance, one-third of the value of new therapies is accrued by individuals without MS due to this insurance value.9
In short, Dr Wong is right to say that standard cost-effectiveness methods do not fully capture the value of transformative, curative treatments.2 However, health economists are beginning to create the tools needed to quantify these additional value components. To summarize, recent health economic research has shown that: (1) health gains for patients with severe disease are typically valued higher than identical health gains for less severely ill patients, (2) patients with severe disease value treatments with evidence of curative potential above and beyond the health benefits expected by the median patient, and (3) individuals without a given disease also value innovative treatments for severe disease if they would be at risk of getting the disease later in life. While I agree with Dr Wong that measuring the value of curative therapies is a challenge for ICER, the Innovation and Value Initiative, and other value assessment frameworks, health economists have provided some tools to help quantify the value of curative therapies. The question is, will ICER and other value frameworks begin to put these tools into practice?
1. Institute for Clinical and Economic Review. Value Assessment Methods for “Single or Short-Term Transformative Therapies” (SSTs): Proposed Adaptations to the ICER Value Assessment Framework. Published August 6, 2019.
2. Wong W. Should ICER look at transformative therapies? J Clin Pathways. https://www.journalofclinicalpathways.com/commentary/should-icer-look-transformative-therapies. Published September 12, 2019.
3. Dolan P et al. QALY maximisation and people's preferences: a methodological review of the literature. Health Econ. 2005;14(2):197-208
4. Shah KK. Severity of illness and priority setting in healthcare: a review of the literature. Health Policy.2009;93(2-3):77-84.
5. Round J. Is a QALY still a QALY at the end of life? J Health Econ. 2012;31(3):521-527.
6. Nord E. Severity of illness versus expected benefit in societal evaluation of healthcare interventions. Expert Rev Pharmacoecon Outcomes Res. 2001;1(1):85-92.
7. Shafrin J et al. Patient versus physician valuation of durable survival gains: implications for value framework assessments. Value Health. 2017;20(2):217-223.
8. Lakdawalla D et al. The insurance value of medical innovation. J Public Econ. 2017;145:94-102.
9. Shih T et al. Reconsidering the economic value of multiple sclerosis therapies. Am J Manag Care. 2016;22(11):e368-e374.