A principled approach to non-discrimination in cost-effectiveness.

The US Inflation Reduction Act (IRA) prohibits the Centers for Medicare and Medicaid Services (CMS) from using standard quality-adjusted life-years or other value assessment methods that discriminate against the aged, terminally ill, or disabled when setting maximum fair prices for prescription drugs. This policy has reignited interest in methods for assessing value without discrimination. Equal value of life-years gained (EVL), healthy years in total (HYT), and Generalized Risk-Adjusted Cost-Effectiveness (GRACE) have emerged as proposals. Neither EVL nor HYT rests on well-articulated microeconomic foundations. We show that they produce decisions that are inconsistent over time in a variety of ways, including: (1) failure to support additivity and indirect comparison in cases where the standard-of-care therapy changes over time; (2) strictly negative value of survival gains that accrue from a new, better standard-of-care, particularly for the disabled themselves; (3) unbounded average value of survival gains; and (4) non-convex survival preferences. We propose an alternative method that relies on GRACE and its microeconomic foundations.

Risk preferences over health: Empirical estimates and implications for medical decision-making.

Mainstream health economic theory implies that an expected gain in health-related quality of life (HRQoL) produces the same value for consumers, regardless of baseline health. Several strands of recent research call this implication into question. Generalized Risk-Adjusted Cost-Effectiveness (GRACE) demonstrates theoretically that baseline health status influences value, so long as consumers are not risk-neutral over health. Prior empirical literature casts doubt on risk-neutral expected utility-maximization in the health domain. We estimate utility over HRQoL in a nationally representative U.S. population and use our estimates to measure risk preferences over health. We find that individuals are risk-seeking at low levels of health, become risk-averse at health equal to 0.485 (measured on a 0-1 scale), and are most risk-averse at perfect health (coefficient of relative risk aversion = 4.51). We develop the resulting implications for medical decision making, cost-effectiveness analyses, and the proper theory of health-related decision making under uncertainty.

Assessment of Medical and Public Assistance Expenditures and Employment Among US Adults With Cancer Diagnoses.

Importance: Prior research suggests significant social value associated with increased longevity due to preventing and treating cancer. Other social costs associated with cancer, such as unemployment, public medical spending, and public assistance, may also be sizable. Objective: To examine whether a cancer history is associated with receipt of disability insurance, income, employment, and medical spending. Design, Setting, and Participants: This cross-sectional study used data from the Medical Expenditure Panel Study (MEPS) (2010-2016) for a nationally representative sample of US adults aged 50 to 79 years. Data were analyzed from December 2021 to March 2023. Exposure: Cancer history. Main Outcomes and Measures: The main outcomes were employment, public assistance receipt, disability, and medical expenditures. Variables for race, ethnicity, and age were used as controls. A series of multivariate regression models were used to assess the immediate and 2-year association of a cancer history with disability, income, employment, and medical spending. Results: Of 39 439 unique MEPS respondents included in the study, 52% were female, and the mean (SD) age was 61.44 (8.32) years; 12% of respondents had a history of cancer. Individuals with a cancer history who were aged 50 to 64 years were 9.80 (95% CI, 7.35-12.25) percentage points more likely to have a work-limiting disability and were 9.08 (95% CI, 6.22-11.94) percentage points less likely to be employed compared with individuals in the same age group without a history of cancer. Nationally, cancer accounted for 505 768 fewer employed individuals in the population aged 50 to 64 years. A cancer history was also associated with an increase of $2722 (95% CI, $2131-$3313) in medical spending, $6460 (95% CI, $5254-$7667) in public medical spending, and $515 (95% CI, $337-$692) in other public assistance spending. Conclusions and Relevance: In this cross-sectional study, a history of cancer was associated with increased likelihood of disability, higher medical spending, and decreased likelihood of employment. These findings suggest there may be gains beyond increased longevity if cancer can be detected and treated earlier.

Methods to Adjust Willingness-to-Pay Measures for Severity of Illness.

OBJECTIVES: Both private sector organizations and governmental health agencies increasingly use illness severity measures to adjust willingness-to-pay thresholds. Three widely discussed methods-absolute shortfall (AS), proportional shortfall (PS), and fair innings (FI)-all use ad hoc adjustments to cost-effectiveness analysis methods and "stair-step" brackets to link illness severity with willingness-to-pay adjustments. We assess how these methods compare with microeconomic expected utility theory-based methods to value health gains. METHODS: We describe standard cost-effectiveness analysis methods, the basis from which AS, PS, and FI make severity adjustments. We then develop how the Generalized Risk Adjusted Cost Effectiveness (GRACE) model assesses value for differing illness and disability severity. We compare AS, PS, and FI against value as defined by GRACE. RESULTS: AS, PS, and FI have major and unresolved differences between them in how they value various medical interventions. Compared with GRACE, they fail to properly incorporate illness severity or disability. They conflate gains in health-related quality of life and life expectancy incorrectly and confuse the magnitude of treatment gains with value per quality-adjusted life-year. Stair-step methods also introduce important ethical concerns. CONCLUSIONS: AS, PS, and FI disagree with each other in major ways, demonstrating that at most, one correctly describes patients' preferences. GRACE offers a coherent alternative, based on neoclassical expected utility microeconomic theory, and can be readily implemented in future analyses. Other approaches that depend on ad hoc ethical statements have yet to be justified using sound axiomatic approaches.

Access to Disease-Modifying Alzheimer's Therapies: Addressing Possible Challenges Using Innovative Payment Models.

OBJECTIVES: Aduhelm is the first approved disease-modifying therapies (DMT) for Alzheimer disease (AD). Nevertheless, under current payment models, AD DMTs-especially because they treat broader populations-will pose challenges to patient access since costs may accrue sooner than benefits do. New payment approaches may be needed to address this difference in timing. METHODS: We use the Future Elderly Model that draws on nationally representative data sets such as the Health and Retirement Study to estimate the potential benefits because of hypothetical AD DMTs in 4 stylized treatment scenarios for patients with mild cognitive impairment or mild AD, and develop a payment model to estimate the accrual of net costs and benefits to private and public payers. RESULTS: The modeled AD DMTs result in clinical benefit of 0.30 to 0.55 quality-adjusted life-years gained per patient in the baseline treatment scenario and 0.13 to 0.24 quality-adjusted life-years gained per patient in the least optimistic scenario. Private payers may observe a net loss in patients at the age of 61 to 65 years under the status quo (payment upon treatment). Constant and deferred installment payment models resolve this issue. CONCLUSIONS: Innovative payment solutions, such as installment payments, may be required to address misaligned incentives that AD DMTs may create among patients younger than the age of 65 years and may help address concerns about the timing and magnitude of costs and benefits accrued to private payers.

Increased Lifetime Risk of Intestinal Complications and Extraintestinal Manifestations in Crohn's Disease and Ulcerative Colitis.

Patients with Crohn's disease (CD) or ulcerative colitis (UC) have high morbidity rates owing to debilitating intestinal complications and extraintestinal manifestations (EIMs). We retrospectively identified patients in the Truven MarketScan databases with an incident CD or UC diagnosis from January 2008 to September 2015 to quantify the incremental lifetime risk of experiencing an intestinal complication or EIM after CD or UC diagnosis. Seven intestinal complications and 13 categories of EIMs by site were identified, and lifetime risk of experiencing an intestinal complication or EIM from age at CD or UC diagnosis to end of life was estimated using parametric models. Results were compared with controls' propensity score matched by age, sex, health plan, and pre-index Charlson Comorbidity Index. The CD or UC incremental risk was calculated using the difference in rates between CD or UC patients and matched controls. A total of 34,692 CD patients and 48,196 UC patients with 1:1 matched controls were included. CD and UC patients had an increased lifetime risk of intestinal complications, which varied across ages, inflammatory bowel disease (IBD) types, and categories of intestinal complications and EIMs. CD and UC patients aged 0 to 11 years had the highest incremental lifetime risk for all 7 intestinal complications and the majority of EIMs, with blood EIMs associated with the highest incremental risk (CD: 32%; UC: 21%). CD and UC patients of all ages have a higher lifetime risk of experiencing intestinal complications and EIMs than patients without CD or UC. When evaluating the burden of disease on patients with IBD, it is important to include the burden of these intestinal complications and EIMs in the assessment.

Value of Reducing Wait Times for Chimeric Antigen Receptor T-Cell Treatment: Evidence From Randomized Controlled Trial Data on Tisagenlecleucel for Diffuse Large B-Cell Lymphoma.

OBJECTIVES: This study aimed to quantify the value of reducing chimeric antigen receptor T-cell (CAR-T) treatment wait times on patients with refractory and relapsed aggressive blood cancer who can newly gain access to treatment or access treatment earlier in their disease course. METHODS: Using data from the JULIET clinical trial, we first identified the number of additional patients with diffuse large B-cell lymphoma that would have been treated with tisagenlecleucel CAR-T therapy if wait times were shortened. For these patients, we estimated mortality benefits using literature estimates of CAR-T effectiveness. Next, among patients who already received CAR-T, we estimated tumor burden progression over time using a linear probability regression model. The primary outcome variable was an indicator for having above-normal lactate dehydrogenase, and we controlled for time, use of bridging therapy, and time-invariant patient characteristics. The regression results, along with literature estimates relating lactate dehydrogenase to CAR-T effectiveness, were used to compute the survival benefits of earlier CAR-T treatment. RESULTS: Reducing wait times by 2 months increased the number of eligible patients receiving CAR-T by at least 10.7%. For patients already receiving tisagenlecleucel CAR-T, a 2-month reduction in wait times generated a 3.3% increase in survival gains per treated patient. Thus, among patients seeking treatment, the combined treatment efficacy increased by 14%, with approximately one-quarter of survival benefits accruing to existing patients receiving faster treatment. CONCLUSIONS: Delays affected not only access to CAR-T treatments but also treatment effectiveness. Our results highlight the survival benefits of expediting treatment access and may help explain some observed differences in CAR-T effectiveness across countries.

Impact of non-binding FDA guidances on primary endpoint selection in Alzheimer's disease trials.

Introduction: The U.S. Food and Drug Administration (FDA)'s guidances help describe the agency's current thinking on regulatory issues and serve as a means of informal policymaking that is non-binding. This study examines the impact of two guidance documents for Alzheimer's disease (AD) trials. The first guidance in 2013 encouraged the use of cognitive/functional endpoints, while the second in 2018 modified such recommendation. Methods: Using pivotal trial data, we applied a regression discontinuity in time (RDiT) framework to examine trialist response to these guidance documents. Results were stratified by disease-modifying therapy (DMT) status, and controlled for disease staging, FDA registration status, and trial phase. Results: Among AD DMT trials, annual use of cognitive/functional composite endpoints significantly increased after the 2013 guidance (+12.9%, P < .001), and significantly decreased after the 2018 guidance (-19.9%, P = .022). Discussion: Although guidance documents do not set new legal standards or impose binding requirements, our findings indicate they are broadly followed by AD trialists.

Crosswalk between the Mini-Mental State Examination and the Telephone Interview for Cognitive Status (TICS-27/30/40).

BACKGROUND: We develop a crosswalk between the Mini-Mental State Examination (MMSE) and Telephone Interview for Cognitive Status (TICS)-27, TICS-30, and TICS-40 for adults 65 years and older. METHODS: We examined the scores of 1809 participants, with and without cognitive impairment, who completed the MMSE and the TICS assessment in the 2016 Health and Retirement Study and the 2016 Harmonized Cognitive Assessment Protocol study. Crosswalks between MMSE and TICS-27/30/40 were developed via equipercentile equating. RESULTS: We present crosswalks for MMSE and TICS-27/30/40 for the 65+ population representative of the US elderly. While monotonic, the pattern of the TICS-30 to MMSE crosswalk differs from the other two crosswalks (MMSE to TICS-27/40). CONCLUSION: Our analysis offers an empirical crosswalk between two commonly used cognitive measures-the MMSE and TICS. Our findings suggest the need for validated and robust measures that allow for the comparison of scores on different cognitive scales.

A guide to extending and implementing generalized risk-adjusted cost-effectiveness (GRACE).

The generalized risk-adjusted cost-effectiveness (GRACE) model generalizes conventional cost-effectiveness analysis (CEA) by introducing diminishing returns to Health-Related Quality of Life (QoL). This changes CEA practice in three ways: (1) Willingness to pay (WTP) increases exponentially with untreated illness severity or pre-existing permanent disability, and WTP ends up lower for mild diseases but higher for severe diseases compared with conventional CEA; (2) Average treatment effectiveness should be adjusted for uncertainty in outcomes; and (3) The marginal rate of substitution between life expectancy and QoL varies with health state. Implementing GRACE requires new parameters describing risk preferences over QoL, the marginal rate of substitution between life expectancy (LE) and QoL, and the variance and skewness of treatment outcomes distributions. In this paper, we provide: (1) a generalized WTP threshold incorporating the possibility of permanent disability; (2) a simpler method to estimate the tradeoff rate between QoL and LE, eliminating the need to carry out treatment-by-treatment estimates; (3) a more-general method to adjust WTP for illness severity that permits non-constant relative risk-aversion in QoL; (4) a new approach to estimating risk-preferences over QoL, leveraging established empirical methods from "happiness" economics; and (5) a step-by-step guide for practitioners wishing to implement multi-period GRACE analyses.

Two steps forward, one step back: 50 years of societal value from LDL-C-lowering therapies.

OBJECTIVES: To assess the evolving landscape of low-density lipoprotein cholesterol-lowering therapies (LLTs) and quantify their effect on cardiovascular disease (CVD)-related mortality and morbidity. STUDY DESIGN: Secondary data came from LLT clinical trials and 1999-2014 National Health and Nutrition Examination Survey (NHANES) data. 1996-2016 Medical Expenditure Panel Survey (MEPS) data were used to estimate LLT spending. Nonfatal CVD events prevented by LLTs were calculated from clinical trials and NHANES. The value of nonfatal events prevented was calculated as the product of event treatment costs and the number of events prevented. The value of mortality reduction was calculated as the product of a value of a life-year and the life expectancy gain from LLTs. This was compared with LLT spending estimated using MEPS. METHODS: Total LLT expenditures were calculated based on MEPS LLT utilization and expenditure data. Values of prevented hospitalizations, prevented CVD events, and other LLT utilization-related outcomes were pulled from the published literature. RESULTS: Combined, statins and ezetimibe prevented 2.8 million nonfatal heart attacks and 1.7 million nonfatal strokes from 1999 to 2014. Statin use generated $2.6 trillion in societal value through CVD deaths avoided from 1987 to 2014, and 85% accrued to patients. CONCLUSIONS: LLTs have yielded significant societal value, and the majority of this value has accrued to patients.

The economics of alternative payment models for pharmaceuticals.

Pharmaceuticals are priced uniformly by convention, but vary in their degree of effectiveness for different disease indications. As more high-cost therapies have launched, the demand for alternative payment models (APMs) has been increasing in many advanced markets, despite their well-documented limitations and challenges to implementation. Among policy justifications for such contracts is the maximization of value given scarce resources. We show that while uniform pricing rules can handle variable effectiveness in efficient markets, market inefficiencies of other kinds create a role for different value-based pricing structures. We first present a stylized theoretical model of efficient interaction among drug manufacturers, payers, and beneficiaries. In this stylized setting, uniform pricing works well, even when treatment effects are variable. We then use this framework to define market failures that result in obstacles to uniform pricing. The market failures we identify include: (1) uncertainty of patient distribution, (2) asymmetric beliefs, (3) agency imperfection by payer, (4) agency imperfection by provider, and (5) patient behavior and treatment adherence. We then apply our insights to real-world examples of alternative payment models, and highlight challenges related to contract implementation.

Health Technology Assessment With Diminishing Returns to Health: The Generalized Risk-Adjusted Cost-Effectiveness (GRACE) Approach.

OBJECTIVES: Cost-effectiveness analysis (CEA) embeds an assumption at odds with most economic analysis-that of constant returns to health in the creation of happiness (utility). We aim to reconcile it with the bulk of economic theory. METHODS: We generalize the traditional CEA approach, allow diminishing returns to health, and align CEA with the rest of the health economics literature. RESULTS: This simple change has far-reaching implications for the practice of CEA. First, optimal cost-effectiveness thresholds should systematically rise for more severe diseases and fall for milder ones. We provide formulae for estimating how these thresholds vary with health-related quality of life (QoL) in the sick state. Practitioners can also use our approach to account for treatment outcome uncertainty. Holding average benefits fixed, risk-averse consumers value interventions more when they reduce outcome uncertainty ('insurance value') and/or when they provide a chance at positively skewed outcomes ('value of hope'). Finally, we provide a coherent way to combine improvements in QoL and life expectancy (LE) when people have diminishing returns to QoL. CONCLUSION: This new approach obviates the need for increasingly prevalent and ad hoc exceptions to CEA for end-of-life care, rare disease, and very severe disease (eg, cancer). Our methods also show that the value of improving QoL for disabled people is greater than for comparable non-disabled people, thus resolving an ongoing and mathematically legitimate objection to CEA raised by advocates for disabled people. Our Generalized Risk-Adjusted Cost-Effectiveness (GRACE) approach helps align HTA practice with realistic preferences for health and risk.

Predicting quantity and quality of life with the Future Elderly Model.

The Future Elderly Model (FEM) is a microsimulation model designed to forecast health status, longevity, and a variety of economic outcomes. Compared to traditional actuarial models, microsimulation models provide greater opportunities for policy forecasting and richer detail, but they typically build upon smaller samples of data that may mitigate forecasting accuracy. We perform validation analyses of the FEM's mortality and quality of life forecasts using a version of the FEM estimated exclusively on early waves of data from the Health and Retirement Study. First, we compare FEM mortality and longevity projections to the actual mortality and longevity experience observed over the same period of time. We also compare the FEM results to actuarial forecasts of mortality and longevity during the same time. We find that FEM projections are generally in line with observed mortality rates and closely match longevity. Then, we assess the FEM's performance at predicting quality of life and longitudinal outcomes, two features missing from traditional actuarial models. Our analysis suggests the FEM performs at least as well as actuarial forecasts of mortality, while providing policy simulation features that are not available in actuarial models.

Does Medicare Coverage Improve Cancer Detection and Mortality Outcomes?

Medicare is a large government health insurance program in the United States that covers about 60 million people. This paper analyzes the effects of Medicare insurance on health for a group of people in urgent need of medical care: people with cancer. We used a regression discontinuity design to assess impacts of near-universal Medicare insurance at age 65 on cancer detection and outcomes, using population-based cancer registries and vital statistics data. Our analysis focused on the three tumor sites for which screening is recommended both before and after age 65: breast, colorectal, and lung cancer. At age 65, cancer detection increased by 72 per 100,000 population among women and 33 per 100,000 population among men; cancer mortality also decreased by nine per 100,000 population for women but did not significantly change for men. In a placebo check, we found no comparable changes at age 65 in Canada. This study provides the first evidence to our knowledge that near-universal access to Medicare at age 65 is associated with improvements in population-level cancer mortality.

Health technology assessment with risk aversion in health.

Standard cost-effectiveness models compare incremental cost increases to incremental average gains in health, commonly expressed in Quality-Adjusted Life Years (QALYs). Our research generalizes earlier models in several ways. We introduce risk aversion in Quality of Life (QoL), which leads to "willingness-to-pay" thresholds that rise with illness severity, potentially by an order of magnitude. Unlike traditional CEA analyses, which discriminate against persons with disabilities, our analysis implies that the marginal value of improving QoL rises for disabled individuals. Our model can also value the uncertain benefits of medical interventions by employing well-established analytic methods from finance. Finally, we show that traditional QALYs no longer serve as a single index of health, when consumers are risk-averse. To address this problem, we derive a generalized single-index of health outcomes-the Generalized Risk-Adjusted QALY (GRA-QALY). Earlier models of CEA that abstract from risk-aversion nest as special cases of our more general model.

CAR-T therapy and historical trends in effectiveness and cost-effectiveness of oncology treatments.

Aim: This study examines how chimeric antigen receptor T-cell (CAR-T) therapy's incremental effectiveness and cost-effectiveness profile fits into the recent history of anticancer treatments. Materials & methods: We conducted graphical and multivariable analyses using data from the Cost-Effectiveness Analysis Registry of the Tufts Medical Center and the Institute for Clinical and Economic Review's analysis of CAR-T therapies. We collected additional information including the US FDA approval years for pharmacologic innovations. Results: CAR-T provided 5.03 (95% CI: 3.88-6.18) more incremental quality-adjusted life-years than the average pharmaceutical intervention and 4.61 (95% CI: 1.67-7.56) more than the average nonpharmaceutical intervention, while retaining similar cost-effectiveness. There was evidence of worsening cost-effectiveness by approval year for pharmaceutical interventions. Limitations: Analysis is limited to anticancer treatments studied in cost-utility analyses, estimated to cover approximately 60% of FDA-approved antineoplastic agents. Conclusion: CAR-T therapy breaks a pattern of stagnant efficacy growth in pharmaceutical innovation and demonstrates significantly greater incremental effectiveness and similar cost-effectiveness to prior innovations.

The Social Value of Improvement in Activities of Daily Living among the Advanced Parkinson's Disease Population.

OBJECTIVES: Quantify the value of functional status (FS) improvements consistent in magnitude with improvements due to levodopa-carbidopa intestinal gel (LCIG) treatment, among the advanced Parkinson's disease (APD) population. METHODS: The Health Economic Medical Innovation Simulation (THEMIS), a microsimulation that estimates future health conditions and medical spending, was used to quantify the health and cost burden of disability among the APD population, and the value of quality-adjusted life-years gained from FS improvement due to LCIG treatment compared to standard of care (SoC). A US-representative Parkinson's disease (PD)-comparable cohort was constructed in THEMIS based on observed PD patient characteristics in a nationally representative dataset. APD was defined from the literature and clinical expert input. The PD and APD cohorts were followed from 2010 over their remaining lifetimes. All individuals were ages 65 and over at the start of the simulation. To estimate the value of FS improvement due to LCIG treatment, decreases in activities of daily living (ADL) limitations caused by LCIG treatment were calculated using data from a randomized, controlled, double-blind, double-dummy clinical trial and applied to the APD population in THEMIS. RESULTS: Total burden of disability associated with APD was $17.7 billion (B). From clinical trial data, LCIG treatment versus SoC lowers the odds of difficulties in walking, dressing, and bathing by 76%, 42% and 39%, respectively. Among the APD population, these reductions generated $2.6B in value to patients and cost savings to payers. The added value was 15% of the burden of disability associated with APD and offsets 15% of the cost of LCIG treatment. CONCLUSIONS: FS improvements, consistent with improvements due to LCIG treatment, in the APD population created health benefits and reduced healthcare costs in the US.