The Value of Medical Innovation Versus Industry Rewards.

OBJECTIVES: This article provides systematic evidence on the share of the value of health generated by drugs and other healthcare goods and services that accrue to patients on the demand side versus the manufacturers on the supply side. METHODS: We exploit a large data set with > 9000 cost-effectiveness measures for various interventions, which we convert into measures of the shares of the value of improved health appropriated by the supply side using literature estimates of how patients value gains in health. RESULTS: We find that if patients value a quality-adjusted life-year at $450 000 the median share appropriated for drugs on the supply side is approximately 6% and has declined at 0.1% per year between 1997 and 2019. This compares with other healthcare interventions, such as screenings or medical procedures, which have a median value of 9% but decline at 0.3% per year over the same period. If patients value a quality-adjusted life-year at $150 000, the median share appropriated for drugs and other healthcare interventions on the supply side is approximately 18% and 27%, respectively. Our estimates of appropriations are upper bounds, partly due to QALYs not capturing full producer value. CONCLUSIONS: Many policy debates center on the idea that the supply side is capturing too much of the value of the medical innovation that they generate. We find that, for these interventions, a large share of the value of medical innovation accrues to patients on the demand side given that the revenue to innovators is often far less than the patient's value of these medical innovations.

The aggregate value of cancer screenings in the United States: full potential value and value considering adherence.

BACKGROUND: Although cancer mortality has been decreasing since 1991, many cancers are still not detected until later stages with poorer outcomes. Screening for early-stage cancer can save lives because treatments are generally more effective at earlier than later stages of disease. Evidence of the aggregate benefits of guideline-recommended single-site cancer screenings has been limited. This article assesses the benefits in terms of life-years gained and associated value from major cancer screening technologies in the United States. METHODS: A mathematical model was built to estimate the aggregate benefits of screenings for breast, colorectal, cervical, and lung cancer over time since the start of US Preventive Services Task Force (USPSTF) recommendations. For each type, the full potential benefits under perfect adherence and the benefits considering reported adherence rates were estimated. The effectiveness of each screening technology was abstracted from published literature on the life-years gained per screened individual. The number of individuals eligible for screening per year was estimated using US Census data matched to the USPSTF recommendations, which changed over time. Adherence rates to screening protocols were based on the National Health Interview Survey results with extrapolation. RESULTS: Since initial USPSTF recommendations, up to 417 million people were eligible for cancer screening. Assuming perfect adherence to screening recommendations, the life-years gained from screenings are estimated to be 15.5-21.3 million (2.2-4.9, 1.4-3.6, 11.4-12.3, and 0.5 million for breast, colorectal, cervical, and lung cancer, respectively). At reported adherence rates, combined screening has saved 12.2-16.2 million life-years since the introduction of USPSTF recommendations, ~ 75% of potential with perfect adherence. These benefits translate into a value of $8.2-$11.3 trillion at full potential and $6.5-$8.6 trillion considering current adherence. Therefore, single-site screening could have saved an additional 3.2-5.1 million life-years, equating to $1.7-$2.7 trillion, with perfect adherence. CONCLUSIONS: Although gaps persist between the full potential benefit and benefits considering adherence, existing cancer screening technologies have offered significant value to the US population. Technologies and policy interventions that can improve adherence and/or expand the number of cancer types tested will provide significantly more value and save significantly more patient lives.

Real-World Data: Policy Issues Regarding their Access and Use.

As real-world data (RWD) in health care begin to cross over to the Big Data realms, a panel of health economists was gathered to establish how well the current US policy environment further the goals of RWD and, if not, what can be done to improve matters. This report summarizes these discussions spanning the current US landscape of RWD availability and usefulness, private versus public development of RWD assets, the current inherent bias in terms of access to RWD, and guiding principles in providing quality assessments of new RWD studies. Three main conclusions emerge: (1) a business case is often required to incentivize investments in RWD assets. However, access restrictions for public data assets have failed to generate a proper market for these data and hence may have led to an underinvestment of public RWDs; (2) Very weak empirical evidence exist on for-profit entities misusing public RWD data entities to further their own agendas, which is the basis for supporting access restrictions of public RWD data; and (3) perhaps developing standardized metrics that could flag misuse of RWDs in an efficient way could help quell some of the fear of sharing public RWD assets with for-profit entities. It is hoped that these discussions and conclusions would pave the way for more rigorous and timely debates on the greater availability and accessibility of RWD assets.

Heterogeneity in action: the role of passive personalization in comparative effectiveness research.

Despite the goal of comparative effectiveness research (CER) to inform patient-centered care, most studies fail to account for the patient-centeredness of care that already exist in practice, which we denote as passive personalization (PP). Because CER studies describe the average effectiveness of treatments rather than heterogeneity in how individual patients respond to therapies, clinical or coverage policies that respond to CER results may undermine PP in clinical practice and generate worse outcomes. We study this phenomenon empirically in the context of use of antipsychotic drugs in Medicaid patients with schizophrenia using novel instrumental variable methods. We find strong support for PP in clinical practice and demonstrate that the average effects from a CER study cannot be replicated in practice because of the presence of PP. In contrast, providing physicians with evidence to further personalize treatment can produce significant benefits.

Cost-effectiveness analysis and innovation.

While cost-effectiveness (CE) analysis has provided a guide to allocating often scarce resources spent on medical technologies, less emphasis has been placed on the effect of such criteria on the behavior of innovators who make health care technologies available in the first place. A better understanding of the link between innovation and cost-effectiveness analysis is particularly important given the large role of technological change in the growth in health care spending and the growing interest of explicit use of CE thresholds in leading technology adoption in several Westernized countries. We analyze CE analysis in a standard market context, and stress that a technology's cost-effectiveness is closely related to the consumer surplus it generates. Improved CE therefore often clashes with interventions to stimulate producer surplus, such as patents. We derive the inconsistency between technology adoption based on CE analysis and economic efficiency. Indeed, static efficiency, dynamic efficiency, and improved patient health may all be induced by the cost-effectiveness of the technology being at its worst level. As producer appropriation of the social surplus of an innovation is central to the dynamic efficiency that should guide CE adoption criteria, we exemplify how appropriation can be inferred from existing CE estimates. For an illustrative sample of technologies considered, we find that the median technology has an appropriation of about 15%. To the extent that such incentives are deemed either too low or too high compared to dynamically efficient levels, CE thresholds may be appropriately raised or lowered to improve dynamic efficiency.

Industry funding of the FDA: effects of PDUFA on approval times and withdrawal rates.

The development of new therapies is a crucial component of efforts to improve healthcare. Because drug development and FDA regulatory review have historically been lengthy and costly processes, the US Congress passed a series of legislative acts, beginning in 1992, known collectively as the Prescription Drug User Fee Acts (PDUFA), which sought to expedite the FDA drug-review process. Here, we review data on drug approvals and drug-approval times, both as a whole and by therapeutic class, which demonstrate that implementation of the PDUFAs led to substantial incremental reductions in approval times beyond what would have been observed in the absence of these legislative acts. In addition, our preliminary examination of the trends in the number of new molecular entity withdrawals, frequently used as a proxy to assess the FDA's safety record, suggests that the proportion of approvals ultimately leading to safety withdrawals prior to PDUFA and during PDUFA I and II were not statistically different.

Association Between Breast Cancer Disease Progression and Workplace Productivity in the United States.

OBJECTIVE: Determine workplace productivity losses attributable to breast cancer progression. METHODS: Longitudinal analysis linking 2005 to 2012 medical and pharmacy claims and workplace absence data in the US patients were commercially insured women aged 18 to 64 diagnosed with breast cancer. Productivity was measured as employment status and total quarterly workplace hours missed, and valued using average US wages. RESULTS: Six thousand four hundred and nine women were included. Breast cancer progression was associated with a lower probability of employment (hazard ratio [HR] = 0.65, P < 0.01) and increased workplace hours missed. The annual value of missed work was $24,166 for non-metastatic and $30,666 for metastatic patients. Thus, progression to metastatic disease is associated with an additional $6500 in lost work time (P < 0.05), or 14% of average US wages. CONCLUSIONS: Breast cancer progression leads to diminished likelihood of employment, increased workplace hours missed, and increased cost burden.

The wider public health value of HCV treatment accrued by liver transplant recipients.

OBJECTIVES: Organs for transplantation are scarce, but new medical therapies can prevent organ failure and the need for transplants. We sought to describe the unique value created by treatments that spare organs from failure and thus conserve donated organs for transplant into others, using hepatitis C virus (HCV) as a case study. STUDY DESIGN: Epidemiologic-economic model. METHODS: Using data on trends in chronic liver disease, liver disease progression, and liver transplant allocation models, as well as the effectiveness of new HCV treatments, we estimate the potential effects of systematic HCV screening and treatment on the demand for liver transplants in the United States. We estimate the spillover benefits to patients with all-cause liver disease in terms of increased availability of transplants and life-years gained. RESULTS: We estimated that systematic HCV screening and treatment could spare 10,490 liver transplants to HCV-infected patients from 2015 to 2035. An estimated 7321 transplants would accrue to patients with end-stage liver disease without HCV and 3169 transplants to those with uncured HCV, providing approximately 52,700 and 22,800 additional life-years, respectively. CONCLUSIONS: Treatment advances for HCV have the potential to generate considerable spillover benefits to patients awaiting transplants for non-HCV-mediated liver failure. For other diseases in which organ transplants are in short supply, our study provides a novel pathway by which positive spillovers may accrue from treatments that prevent end-stage organ disease.

Quantifying Gains in the War on Cancer Due to Improved Treatment and Earlier Detection.

INTRODUCTION: There have been significant improvements in both treatment and screening efforts for many types of cancer over the past decade. However, the effect of these advancements on the survival of cancer patients is unknown, and many question the value of both new treatments and screening efforts. METHODS: This study uses a retrospective analysis of SEER Registry data to quantify reductions in mortality rates for cancer patients diagnosed between 1997 and 2007. Using variation in trends in mortality rates by stage of diagnosis across cancer types, we use logistic regression to decompose separate survival gains into those attributable to advances in treatment versus advances in detection. We estimate the gains in survival due to gains in both treatment and detection overall and separately for 15 of the most common cancer types. RESULTS: We estimate that 3-year cancer-related mortality of cancer patients fell 16.7% from 1997 to 2007. Overall, advances in treatment reduced mortality rates by approximately 12.2% while advances in early detection reduced mortality rates by 4.5%. The relative importance of treatment and detection varied across cancer types. Improvements in detection were most important for thyroid, prostate and kidney cancer. Improvements in treatment were most important for non-Hodgkins lymphoma, lung cancer and myeloma. CONCLUSION: Both improved treatment options and better early detection have led to significant survival gains for cancer patients diagnosed from 1997 to 2007, generating considerable social value over this time period.

The Quantity and Quality of Life and the Evolution of World Inequality.

GDP per capita is usually used to proxy for the quality of life of individuals living in different countries. Welfare is also affected by quantity of life, however, as represented by longevity. This paper incorporates longevity into an overall assessment of the evolution of cross-country inequality and shows that it is quantitatively important. The absence of reduction in cross-country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity. Throughout the post­World War II period, health contributed to reduce significantly welfare inequality across countries. This paper derives valuation formulas for infra-marginal changes in longevity and computes a "full" growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000. Incorporating longevity gains changes traditional results; countries starting with lower income tended to grow faster than countries starting with higher income. We estimate an average yearly growth in "full income" of 4.1 percent for the poorest 50 percent of countries in 1960, of which 1.7 percentage points are due to health, as opposed to a growth of 2.6 percent for the richest 50 percent of countries, of which only 0.4 percentage points are due to health. Additionally, we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups. We show that mortality from infectious, respiratory, and digestive diseases, congenital, perinatal, and "ill-defined" conditions, mostly concentrated before age 20 and between ages 20 and 50, is responsible for most of the reduction in life expectancy inequality. At the same time, the recent effect of AIDS, together with reductions in mortality after age 50--due to nervous system, senses organs, heart and circulatory diseases--contributed to increase health inequality across countries.

Quality-adjusted cost of care: a meaningful way to measure growth in innovation cost versus the value of health gains.

Technology drives both health care spending and health improvement. Yet policy makers rarely see measures of cost growth that account for both effects. To fill this gap, we present the quality-adjusted cost of care, which illustrates cost growth net of growth in the value of health improvements, measured as survival gains multiplied by the value of survival. We applied the quality-adjusted cost of care to two cases. For colorectal cancer, drug cost per patient increased by $34,493 between 1998 and 2005 as a result of new drug launches, but value from offsetting health improvements netted a modest $1,377 increase in quality-adjusted cost of care. For multiple myeloma, new therapies increased treatment cost by $72,937 between 2004 and 2009, but offsetting health benefits lowered overall quality-adjusted cost of care by $67,863. However, patients with multiple myeloma on established first-line therapies saw costs rise without corresponding benefits. All three examples document rapid cost growth, but they provide starkly different answers to the question of whether society got what it paid for.

Clinical evidence inputs to comparative effectiveness research could impact the development of novel treatments.

AIM: This study aims to analyze the impacts of a range of clinical evidence generation scenarios associated with comparative effectiveness research (CER) on pharmaceutical innovation. MATERIALS & METHODS: We used the Global Pharmaceutical Policy Model to project the effect of changes in pharmaceutical producer costs, revenues and timings on drug innovation and health for the age 55+ populations in the USA and Europe through year 2060 using three clinical scenarios. RESULTS: Changes in producer incentives from widespread CER evidence generation and use had varied but often large predicted impacts on simulated outcomes in 2060. Effect on the number of new drug introductions ranged from a 81.1% reduction to a 45.5% increase, and the effect on population-level life expectancy ranged from a 15.6% reduction to a 11.4% increase compared to baseline estimates. CONCLUSION: The uncertainty surrounding the consequences of increased clinical evidence generation and use on innovation calls for a carefully measured approach to CER implementation, balancing near-term benefits to spending and health with long-term implications for innovation.

Cancer mortality reductions were greatest among countries where cancer care spending rose the most, 1995-2007.

Health care spending and health outcomes vary markedly across countries, but the association between spending and outcomes remains unclear. This inevitably raises questions as to whether continuing growth in spending is justified, especially relative to the rising cost of cancer care. We compared cancer care across sixteen countries over time, examining changes in cancer spending and two measures of cancer mortality (amenable and excess mortality). We found that compared to low-spending health systems, high-spending systems had consistently lower cancer mortality in the period 1995-2007. Similarly, we found that the countries that increased spending the most had a 17 percent decrease in amenable mortality, compared to 8 percent in the countries with the lowest growth in cancer spending. For excess mortality, the corresponding decreases were 13 percent and 9 percent. Additionally, the rate of decrease for the countries with the highest spending growth was faster than the all-country trend. These findings are consistent with the existence of a link between higher cancer spending and lower cancer mortality. However, further work is needed to investigate the mechanisms that underlie this correlation.

Economic burden of disease-associated malnutrition in China.

Disease-associated malnutrition (DAM) is a well-recognized problem in many countries, but the extent of its burden on the Chinese population is unclear. This article reports the results of a burden-of-illness study on DAM in 15 diseases in China. Using data from the World Health Organization (WHO), the China Health and Nutrition Survey, and the published literature, mortality and disability-adjusted life years (DALYs) lost because of DAM were calculated; a financial value of this burden was calculated following WHO guidelines. DALYs lost annually to DAM in China varied across diseases, from a low of 2248 in malaria to a high of 1 315 276 in chronic obstructive pulmonary disease. The total burden was 6.1 million DALYs, for an economic burden of US$66 billion (Chinese ¥ 447 billion) annually. This burden is sufficiently large to warrant immediate attention from public health officials and medical providers, especially given that low-cost and effective interventions are available.

Understanding and overcoming barriers to medication adherence: a review of research priorities.

Improving medication adherence has been identified as a crucial step towards improving health outcomes for patients with chronic disease and has provided the motivation for many changes in our health care system. Despite the volume of research done on this topic, however, we still lack important basic information about how to improve adherence in a cost-effective way. There is a need for a better understanding of what areas of research are most likely to produce advances that could be used by policymakers, providers, payers, or other stakeholders to generate real improvements in medication adherence. To address this, we developed a set of research priorities designed to improve understanding about whom to target for adherence interventions and which particular interventions to employ for specific subpopulations. To produce this research agenda, we synthesized information from the existing literature with a series of stakeholder interviews and expert panel meetings. We identified 6 key areas for research: (1) predicting nonadherence, (2) behavioral factors affecting nonadherence, (3) measuring the impact of nonadherence on health and cost outcomes, (4) effectiveness of existing interventions, (5) misaligned incentives between payers and providers, and (6) provider training and coordination of care. We provide detailed descriptions and example topics within each area.  As the health care system continues to embrace reforms designed to improve the value of care, more and better information is needed to guide efforts designed to improve medication adherence. Addressing the topic areas identified here will be an important step towards accomplishing this goal. 

Can Oral Nutritional Supplements Improve Medicare Patient Outcomes in the Hospital?

We analyzed the effect of oral nutritional supplement (ONS) use on 30-day readmission rates, length of stay (LOS), and episode costs in hospitalized Medicare patients (≥65), and subsets of patients diagnosed with acute myocardial infarction (AMI), congestive heart failure (CHF) or pneumonia (PNA). Propensity-score matching and instrumental variables were used to analyze ONS and non-ONS episodes from the Premier Research Database (2000-2010). ONS use was associated with reductions in probability of 30-day readmission by 12.0% in AMI and 10.1% in CHF. LOS decreases of 10.9% in AMI, 14.2% in CHF, and 8.5% in PNA were associated with ONS, as were decreases in episode costs in AMI, CHF and PNA of 5.1%, 7.8% and 10.6%, respectively. The effect on LOS and episode cost was greatest for the Any Diagnosis population, with decreases of 16.0% and 15.8%, respectively. ONS use in hospitalized Medicare patients ≥65 is associated with improved outcomes and decreased healthcare costs, and is therefore relevant to providers seeking an inexpensive, evidence-based approach for meeting Affordable Care Act quality targets.

Quantifying the Value of Personalized Medicines: Evidence from COX-2 Inhibitors.

We develop a conceptual framework for estimating the value of personalized medicines. We show that personalizing medicines generates value from two sources. The first is a market-expansion effect by persons who initiate treatment due to reduced pre-treatment uncertainty about the effectiveness or side effects of treatment. The second is a market-contraction effect due to discontinuation of treatment by persons unresponsive to treatment. We apply the conceptual framework to evaluate the value of a predictive test to assess whether patients are at elevated risk for cardiac complications from COX-2 inhibitors. We find that this predictive test would yield an overall value to patients of about $16 billion per year or $1284 per likely patient.