Does Real Option Value Influence Oncologists' Treatment Recommendations? A Survey of US Oncologists.

OBJECTIVES: Survival benefit from anticancer treatments, even if modest, improves a patient's chances of accessing future innovations, thereby creating real option value. There is no empirical evidence on the impact of potential future innovations on oncologists' treatment recommendations. METHODS: We conducted a national online survey of practicing medical and hematological oncologists. We presented a hypothetical metastatic cancer patient with median survival of 6 months under 4 decision-making scenarios with varying expected efficacy and time to arrival of future innovations. We assessed the likelihood of discussing future innovations with their patients and the likelihood that future innovations would influence their current treatment recommendation, as well as factors associated with these 2 outcomes using multivariate logistic regressions. RESULTS: A total of 201 oncologists completed the survey. When future innovations were expected to improve survival by 6 months and be available in 6 months, 76% of oncologists were likely or very likely to discuss the innovations with their patients, and 68% reported they would influence their current treatment recommendations. A 1-month increase in the expected survival improvement of future innovation was associated with a 1.17 greater odds (95% CI 1.1-1.25) of reporting likely or very likely to discuss future innovations with their patients, whereas a 1-month increase in the expected time to arrival was associated with a 0.91 lower odds (95% CI 0.88-0.94). CONCLUSIONS: Given that potential future innovations seem to influence oncologists' treatments recommendations, evidence to inform clinical guidelines and value assessments should consider data on real option value impacts to support informed treatment decision making.

The value of the accelerated approval pathway: real-world outcomes associated with reducing the time between innovations.

Aim: We investigated the effect of shortening time between innovations with the accelerated approval (AA) pathway on patient outcomes for three solid tumors. Methods: This real-world analysis evaluated patients receiving sequential AA pathway-approved innovations after initial treatment with existing therapies in three solid tumor case studies. Outcomes attributable to AA were estimated and assumed approval occurred at the time of conversion to approval and extrapolated to the US population. Results: Survival gains from accessing innovative therapies were 2.3-3.8-times higher when using the AA pathway. At the US population level, AA was associated with ∼8000 life-years gained across all three tumor case studies. Conclusion: In areas of rapid clinical development, the value of existing therapies can be enhanced by earlier access to AA pathway innovations and should be considered when evaluating the AA program.

What is this study about? The US Food and Drug Administration's accelerated approval pathway provides patients with access to innovative drugs sooner than standard regulatory pathways. Using three case studies in solid tumors, this study measured how many patients on current cancer drugs received future cancer drugs because of the accelerated approval pathway and asked whether quicker access to new drugs resulted in them living longer.What were the results? In three cancer case studies, the accelerated approval pathway led to more patients receiving future cancer drugs. Patients who received future drugs through the AA pathway lived longer than patients who did not have access to them.What do the results of the study mean? The accelerated approval pathway is important because it can improve outcomes of current cancer drugs by giving patients additional treatments to choose from in the future and therefore a chance to live longer. Policymakers should consider this when thinking about making changes to the accelerated approval pathway.

A Pragmatic Guide to Assessing Real Option Value for Medical Technologies.

OBJECTIVES: This study aimed to provide recommendations for identifying and implementing real option value (ROV) calculations in value assessment. METHODS: We identified the primary mechanisms through which ROV can be created based on a theoretical framework for ROV, assessed approaches for predicting future innovations and improvements in health, and described the steps for estimating ROV in a cost-effectiveness analysis framework. RESULTS: The 3 primary mechanisms by which ROV can be created are when a current treatment (1) prolongs survival to increase the proportion of patients who can receive future innovations, (2) slows disease progression to increase patients' eligibility for future innovations, and (3) directly affects the efficacy of future innovations. We provide 5 recommendations for implementing ROV in value assessment. First, the decision to quantify ROV should be based on a qualitative evaluation of whether the treatment can enable greater benefits from future innovations. Second, ROV should be quantified in the same value assessment framework (eg, cost-effectiveness analysis using quality-adjusted life-year) as the conventional value. Third, method for quantifying ROV should consider data availability, rate of innovation, and sources of future health improvements. Fourth, ROV estimate should be presented alongside the conventional value as a separate element due to its inherently large uncertainty. Finally, generalizability of ROV estimate should be evaluated, and local data should be used when available. CONCLUSIONS: ROV can arise from a variety of mechanisms that should be considered before investing in an ROV analysis. Calculating ROV includes exploring different approaches for forecasting future innovations and future improvements in health.

Modeling the Ex Post Real Option Value in Metastatic Melanoma Using Real-World Data.

OBJECTIVES: Real option value (ROV) is created when a drug enables a patient to live long enough to benefit from a future innovation. Few studies have quantified ROV in the real world. We aimed to estimate the ex post ROV for ipilimumab in metastatic melanoma using real-world data (RWD). METHODS: We developed a framework for calculating ROV using RWD, accounting for the health gain in the standard therapy arm and the uptake of future innovations. A Markov model was developed to estimate the quality-adjusted life-years (QALYs) gained with ipilimumab compared with chemotherapy for patients with or without subsequent cancer immunotherapy (CIT). A nationwide electronic health record-derived, deidentified database was used to estimate survival and uptake of CIT. RESULTS: The incremental QALYs gained for ipilimumab compared with chemotherapy without subsequent CIT were 1.74. With subsequent CIT, the incremental QALYs compared with chemotherapy increased by 0.92, 0.60, 0.33, 0.18, 0.10, and 0.02 when CIT became available 0, 3, 6, 9, 12, and 24 months after the initiation of first-line treatment, respectively. The results were most sensitive to the survival benefit of ipilimumab, the survival benefit of subsequent CIT, and the uptake of CIT. CONCLUSIONS: This is the first study to estimate ex post ROV using RWD. The ex post ROV was between 1% and 54% of conventional value for patients who received a diagnosis within 2 years before CIT availability. Further studies are needed to understand ROV in other disease areas, particularly those with longer survival times.

Broadening the Concept of Value: A Scoping Review on the Option Value of Medical Technologies.

OBJECTIVES: A recent debate in health economics and outcomes research community identified option value as one of the elements warranting consideration in the assessment of medical technologies. To conduct a scoping review of contributions on option value in the healthcare sector and identify relevant conceptual aspects and methods used to incorporate it in standard economic evaluations. METHODS: A systematic search was conducted up to July 2020 to identify contributions from electronic bibliographic database and gray literature. Data on the proposed definitions of option value, theoretical implications of its use in economic evaluations, and methods used to estimate it were extracted and analyzed. RESULTS: We found 57 eligible studies. Three different definitions emerged: insurance value, real option value, and option value of survival. Focusing on the latter (24 studies), we analyzed in depth 8 empirical applications across 7 therapeutic areas. The most relevant methodological challenges were on the perspective used in economic evaluations and how to robustly manage forecasting uncertainty, update cost-effectiveness thresholds, and avoid double-counting issues. For empirical studies assessing the total value of the technology, including option value, estimates ranged from +7% to +469% of its conventional value. CONCLUSIONS: This review synthesizes theoretical and empirical aspects on option value of healthcare technologies and proposes a terminology to distinguish 3 different concepts identified. Future work should focus primarily on agreeing on whether option value should be included in economic evaluations and, if so, on developing and validating reliable methods for its ex-ante estimation.

Lessons from the pandemic on the value of research infrastructure.

The COVID-19 pandemic has shed a spotlight on the resilience of healthcare systems, and their ability to cope efficiently and effectively with unexpected crises. If we are to learn one economic lesson from the pandemic, arguably it is the perils of an overfocus on short-term allocative efficiency at the price of lack of capacity to deal with uncertain future challenges. In normal times, building spare capacity with 'option value' into health systems may seem inefficient, the costs potentially exceeding the benefits. Yet the fatal weakness of not doing so is that this can leave health systems highly constrained when dealing with unexpected, but ultimately inevitable, shocks-such as the COVID-19 pandemic. In this article, we argue that the pandemic has highlighted the potentially enormous option value of biomedical research infrastructure. We illustrate this with reference to COVID-19 response work supported by the United Kingdom National Institute for Health Research Oxford Biomedical Research Centre. As the world deals with the fallout from the most serious economic crisis since the Great Depression, pressure will soon come to review government expenditure, including research funding. Developing a framework to fully account for option value, and understanding the public appetite to pay for it, should allow us to be better prepared for the next emerging problem.

Volatile hiring: uncertainty in search and matching models.

In search-and-matching models, the nonlinear nature of search frictions increases average unemployment rates during periods with higher volatility. These frictions are not, however, by themselves sufficient to raise unemployment following an increase in perceived uncertainty; though they may do so in conjunction with the common assumption of wages being determined by Nash bargaining. Importantly, option-value considerations play no role in the standard model with free entry. In contrast, when the mass of entrepreneurs is finite and there is heterogeneity in firm-specific productivity, a rise in perceived uncertainty robustly increases the option value of waiting and reduces job creation.

How Does Option Value Affect the Potential Cost-Effectiveness of a Treatment? The Case of Ipilimumab for Metastatic Melanoma.

BACKGROUND: Innovations that extend life can generate option value and cost of experiencing future technologies. OBJECTIVES: To understand how consideration of option value may affect the potential cost-effectiveness of a treatment through a case study of ipilimumab for previously untreated metastatic melanoma. METHODS: We estimated the cost-effectiveness of ipilimumab in 2 scenarios: a conventional scenario, for which we constructed the model using the standard methods that rely on efficacy data directly from the phase III trial of ipilimumab, and an option value scenario, where we incorporated future hypothetical improvements in mortality for metastatic melanoma owing to innovations. We developed 2 approaches to incorporate option value. In the first approach, we forecasted mortality trends based on historical trends from the Surveillance, Epidemiology, and End Results (SEER) Program registry. Alternatively, we identified drugs being studied in clinical trials at the time of ipilimumab's approval on clinicaltrials.gov and estimated their likelihood and timing of approval, potential efficacy, and cost. We accounted for increases in overall cancer treatment cost and unrelated medical cost in the option value scenario. RESULTS: In the option value scenario, using the SEER approach, the incremental quality-adjusted life-years (QALYs) gained and the incremental cost increased by 6.2% and 3.8%, respectively, whereas the incremental cost-effectiveness ratio (ICER) decreased by 2.3% compared with the conventional scenario. Using the clinicaltrials.gov approach, the incremental QALY gained and the incremental cost increased by 7.5% and 7.1%, respectively, whereas the ICER decreased by 0.40%. CONCLUSIONS: We developed generalizable approaches to estimating option value in cost-effectiveness analysis.

Do cancer treatments have option value? Real-world evidence from metastatic melanoma.

A change in the expectations about future treatments may change the option value of a current treatment, thereby affecting its utilization. We conducted an interrupted time series analysis using a large administrative claims database to test whether the utilization of existing cancer treatments changed after the disclosures of the then-investigational drug ipilimumab's Phase II and Phase III results among metastatic melanoma patients from 2008 to 2011. We used a multinomial logistic regression to analyze the temporal probability of receiving antineoplastic systemic therapy, surgical resection of metastasis, or both, relative to no treatment, in the first 3 months following the first metastasis diagnosis. One thousand eight hundred forty-six metastatic melanoma patients were included. After adjusting for clinical and sociodemographic variables and the underlying time trend, the disclosure of ipilimumab's Phase II result was associated with a nearly twofold immediate increase in the probability of receiving surgical resection of metastasis relative to no treatment, which was significant at 5% level. No significant effect was observed for the time trend. No significant effects were found for the announcement of the Phase III result. Our findings in metastatic melanoma provide the first empirical evidence of the impact of option value in cancer treatment decision making.

Estimating option values of solar radiation management assuming that climate sensitivity is uncertain.

Although solar radiation management (SRM) might play a role as an emergency geoengineering measure, its potential risks remain uncertain, and hence there are ethical and governance issues in the face of SRM's actual deployment. By using an integrated assessment model, we first present one possible methodology for evaluating the value arising from retaining an SRM option given the uncertainty of climate sensitivity, and also examine sensitivities of the option value to SRM's side effects (damages). Reflecting the governance challenges on immediate SRM deployment, we assume scenarios in which SRM could only be deployed with a limited degree of cooling (0.5 °C) only after 2050, when climate sensitivity uncertainty is assumed to be resolved and only when the sensitivity is found to be high (T2x = 4 °C). We conduct a cost-effectiveness analysis with constraining temperature rise as the objective. The SRM option value is originated from its rapid cooling capability that would alleviate the mitigation requirement under climate sensitivity uncertainty and thereby reduce mitigation costs. According to our estimates, the option value during 1990-2049 for a +2.4 °C target (the lowest temperature target level for which there were feasible solutions in this model study) relative to preindustrial levels were in the range between $2.5 and $5.9 trillion, taking into account the maximum level of side effects shown in the existing literature. The result indicates that lower limits of the option values for temperature targets below +2.4 °C would be greater than $2.5 trillion.

The value of flexibility in conservation financing.

Land-acquisition strategies employed by conservation organizations vary in their flexibility. Conservation-planning theory largely fails to reflect this by presenting models that are either extremely inflexible-parcel acquisitions are irreversible and budgets are fixed-or extremely flexible-previously acquired parcels can readily be sold. This latter approach, the selling of protected areas, is infeasible or problematic in many situations. We considered the value to conservation organizations of increasing the flexibility of their land-acquisition strategies through their approach to financing deals. Specifically, we modeled 2 acquisition-financing methods commonly used by conservation organizations: borrowing and budget carry-over. Using simulated data, we compared results from these models with those from an inflexible fixed-budget model and an extremely flexible selling model in which previous acquisitions could be sold to fund new acquisitions. We then examined 3 case studies of how conservation organizations use borrowing and budget carry-over in practice. Model comparisons showed that borrowing and budget carry-over always returned considerably higher rewards than the fixed-budget model. How they performed relative to the selling model depended on the relative conservation value of past acquisitions. Both the models and case studies showed that incorporating flexibility through borrowing or budget carry-over gives conservation organizations the ability to purchase parcels of higher conservation value than when budgets are fixed without the problems associated with the selling of protected areas.

Bioremediation: how to deal with removal efficiency uncertainty? An economic application.

Bioremediation is a remediation strategy, which has considerable strength but also certain limitations. Complex and uncertain relationships among biomass, contaminants, and nutrients lead to an uncertain level of removal efficiency. The uncertainty inherent to a bioremediation strategy should be addressed in the remediation selection process. In order to evaluate the bioremediation strategy economically, this study takes into account the reversibility of a decision. A decision tree structures the different remediation strategies, thus giving the possible courses of action open to the decision maker. The option value indicates the importance of having the possibility to reverse a previously made decision. Compared with conventional economic evaluation tools, more information to ground the selection made is revealed.

Should biodiversity and nature have to earn their keep? What it really means to bring environmental goods into the marketplace.

Pursuit of economic gain has sponsored much of our planet's despoliation. Yet conservation increasingly operates as an economic sector that markets biodiversity, ecosystems, and nature as natural capital, service provider, or option value. This essay first elucidates what basic moral theory says about the principle that the goodness of biodiversity and nature is largely economic. It explains why economic valuations may be morally unimportant, inapt for environmental goods, and subversive of more important ideals. It also shows why neither econometric notions of option value nor Daniel Faith's qualitative one credibly applies. The essay then turns to what an economic conception of goodness implies for conservation practice. It refers to two prominent conservation organizations, whose conservation principles match the market-based ones of the World Business Council on Sustainable Development's. The environmental record of the latter organization's practices according to these principles predicts what their adoption for conservation entails.

The Option Value of Innovative Treatments for Metastatic Melanoma.

Background Treatment options in oncology have increased in recent years due to the quick pace of innovation. In the cancer care landscape, therapies that enable patients to live to the next innovation have additional value, "option value," from the benefit of surviving to the next innovation. In such disease areas, providers and payers should consider this value when gauging the value of new therapies. The purpose of this study is to develop a model to estimate the additional survival patients attain from a therapy that allows them to live to benefit from further advances in care, and to apply the model to immunotherapy for metastatic melanoma. Methods The benefit of a therapy extends beyond immediate tumor control; it can also allow patients to live to benefit from further advances in care. This is a therapy's option value. Using data from the SEER cancer registry and clinical trial publications, we developed a model to estimate option value and applied it to ipilimumab, the first immune checkpoint modulator used to treat metastatic melanoma. Because ipilimumab extends survival, select patients benefited from survival extension to live to benefit from the introduction of PD-1 inhibitors (i.e. pembrolizumab and nivolumab). We calculated the option value of ipilimumab in terms of additional life-months patients gained by living to become potential candidates for PD-1 inhibitors, discounting at 3% per year. Results Patients taking ipilimumab as a second-line therapy for metastatic melanoma gained 10.5 months compared to patients taking the prior standard of care. Patients diagnosed in 2011, 2012, and 2013 gained an additional 1.6, 2.8, and 5.1 months of life expectancy, respectively, by living to see the introduction of PD-1 inhibitors. This equates to an option value of 15%, 27%, and 49%, respectively, of the conventionally calculated survival gain from ipilimumab. Ipilimumab had greater option value for patients diagnosed in later years who were more likely to live to the introduction of PD-1 inhibitors. Conclusions Therapies that enable patients to see further advances in care have option value. Option value is particularly important to patients with disease areas undergoing rapid innovation.

Ensuring the success of IPBES: between interface, market place and parliament.

After years of protracted negotiations, the Intergovernmental science-policy Platform on Biodiversity and Ecosystem Services (IPBES) was finally established in 2012. One year on and we have already witnessed two plenary sessions which have, so far, defined procedures for nominating members for observatory and decision-making panels as well as experts and knowledge holders for the compilation of reports. The sessions also determined the work programme for the next 4 years (2014-2018). According to its internally formulated criteria, the success of IPBES will be determined by how credible, relevant and legitimate its institution and operations are. More specifically, these criteria suggest that success is contingent on the transparency of the processes within IPBES, the autonomy and quality of scientific knowledge, and the early integration of different stakeholders and diverse knowledge and value systems. Currently, we see IPBES encompassing open and integrative approaches as well as providing a convenient trading floor for particulate and opaque agendas formulated elsewhere. In any case, without the backing of large and effective publics the policy-support function of IPBES will be limited. Local capacity building and supporting communities to actively participate in research projects dealing with biodiversity are essential for furthering a practical and emancipatory understanding of the relationship between political and economic decisions, the state and functioning of biodiversity and ecosystems, and current and future human well-being.

Optimal Mortgage Refinancing: A Closed Form Solution.

We derive the first closed-form optimal refinancing rule: Refinance when the current mortgage interest rate falls below the original rate by at least [Formula: see text] In this formula W(.) is the Lambert W-function, [Formula: see text]ρ is the real discount rate, λ is the expected real rate of exogenous mortgage repayment, σ is the standard deviation of the mortgage rate, κ/M is the ratio of the tax-adjusted refinancing cost and the remaining mortgage value, and τ is the marginal tax rate. This expression is derived by solving a tractable class of refinancing problems. Our quantitative results closely match those reported by researchers using numerical methods.

The Option Value of Innovation.

Standard techniques of cost effectiveness analysis measure a technology's benefits in terms of expected life years (or quality-adjusted life years) gained at today's life expectancies. However, this approach ignores the gains which derive from the possibility that a health technology allows an individual to survive long enough to benefit from other technological innovations which raise life expectancy (and quality of life) in the future. Borrowing a term from the finance literature, we refer to this source of value as the "option value" of innovation. We explain where this value comes from and how to calculate it in a variety of standard cost effectiveness analysis contexts. We provide a proof-of-concept using the example of the drug tamoxifen, which delayed the onset of breast cancer for some patients until more effective adjuvant treatment was available. We find that incorporating option value can increase the conventionally estimated value of tamoxifen with better adjuvant treatment by nearly a quarter (from $200,000 to $248,000 for those who initiated tamoxifen in 1999). We expect similar results for other drugs in therapeutic areas of rapid technological advancement.