Editorial

How do we value a cure? Expert Review of Pharmacoeconomics & Outcomes Research Downloaded from informahealthcare.com by Nyu Medical Center on 06/16/15 For personal use only.

Expert Rev. Pharmacoecon. Outcomes Res. Early online, 1–5 (2015)

Don Husereau Institute of Health Economics, 879 Winnington Ave, Ottawa, ON, Canada Tel.: +1 613 299 4379 [email protected]

Future perceptions of the value of curative therapies will likely reflect debates happening today about preferences for funding of preventive versus treatment programs, as well as funding orphan drugs. Little is known about how society will value curative therapies versus standard treatments, and the significant role of a host of psychological factors compared to overarching concerns about opportunity costs will likely lead to significant tension between payers and the public. More research to clarify societal preferences and healthcare goals in regards to curative therapies and in light of the potential for significant opportunity costs will be required. Given what we know about preferences for the funding of prevention and treatment measures, we should expect that cures will not be held to a different measure.

“ A thrush was feeding on a myrtle-tree and did not move from it because its berries were so delicious. A fowler observed her staying so long in one spot, and having well bird-limed his reeds, caught her. The thrush, being at the point of death, exclaimed, ’ O foolish creature that I am! For the sake of a little pleasant food I have deprived myself of my life” . -Aesop [1] Defining terms

The term ‘cure’, much frowned upon a century ago by a medical community besieged with quack medicines [2], seems to be making a comeback [3,4]. In fairness, even early 20th century quack medicines were effective for the consumer, insofar as they would have exerted a placebo effect and were used for self-limiting conditions such as headache, toothache, swelling, muscle pain, frost bite, sore throat and warts. Arguably, relieving a patient of disease symptoms could be called ‘curative’, although it may be more accurate to suggest the sufferer’s symptoms have been cured, rather than the disease itself. Some early 20th century elixirs would have cured symptoms of pain, cough and malaise without tackling the underlying cause of disease. But is it fair to call something a cure that only relieves symptoms without

addressing the underlying disease that caused them? This definition is consistent with saying that a cure, at minimum, is something that temporarily gets us out of a state of health where we do not feel or function as well as we could. Others could suggest this definition is too forgiving, and instead reserve the term ‘cure’ for an intervention that permanently removes us from a poorer state of health, never to return again. Contemporary medicine is even challenging this conventional range of definitions and extending the term ‘cure’ to interventions that address asymptomatic risk states where patients feel and function normally. For example, medicines effective at restoring CD4+ cell counts and making HIV-1 virus undetectable by standard tests have been labeled ‘cures’, as they may effectively provide future health benefits and allow individuals to live as long as similar uninfected individuals [5]. Surgical interventions for obesity have ‘cured’ individuals of their diabetes (a risk state based on laboratory test) [6]. Oncology medicines have used ‘cure rates’ synonymously with progressionfree and overall survival [7]. Also, medicines that more effectively remove detectable hepatitis C virus in those with chronic states of infection have been recently labeled ‘cures’ [8].

KEYWORDS: consumer behavior/economics . diffusion of innovation . financial/economics . health .

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patient preference/economics

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reimbursement . reimbursement mechanisms

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Editorial

Husereau

Using the word ‘cure’ in this way is a slippery slope – interventions can now be ‘cures’ in those without symptoms, without strong evidence of changing prognosis, or even when compelling evidence exists that suffering and dysfunction is not relieved. We might be tempted to blame regulators in large markets, like the EMA and US FDA, who have accepted some surrogates in an attempt to provide access to promising medicines. But claims of cure do not appear in product labels. They do, however, appear in communications from regulators [3], as well as in company communications to investors [9], with the hope that the value of averting a threat to public health might be understood. Yet, there is widespread recognition by those who study and model the course of diseases that individuals with tumors, chronic infection and diabetes who have left their risk states may have sustained cellular-level damage or have other characteristics that render them not like everyone else, that is, not a state of full health or normal function [6,8]. In the case of chronic hepatitis C infection, where medicine is only taken for a short course over a lifetime, there is also the very real possibility of re-infection or relapse, especially in high-risk populations, a far cry from cure [10]. Future interventions that aim to truly correct the underlying cause of disease may be worthy of being called a cure. These include regenerative therapies that are intended ‘to restore or establish normal function’ to organs, tissues, cells and genes [11]. Truly curative therapies would presumably be given once, without the need for ongoing monitoring or treatment (e.g., immunosuppressant therapy) with the recipients enjoying the same length and quality of life as everyone else. Despite their promise, we are likely to slip down the slope again as innovators tackling rare diseases with lengthy convalescence negotiate the use of not-yet validated surrogate measures to show promise. On top of this will be situations where restoration of function is not durable – an intervention will provide a chance of cure, as is seen with some organ transplantation today, and curative states may be transient and not always sustained, as is seen with some oncology treatments. A final challenge will be the ever-present concerns regarding ambiguous (i.e., unknown rates of unknown [12]) evidence of harms. Payers typically do not equate absence of evidence of harm with safety (i.e., evidence of absence of harm). The second term that must be defined is ‘value’, a term with an equally vague definition today. Attempts to characterize what might be of ‘value’ to societal decision-makers have taken several forms. One approach, consistent with the welfarist school of economics, has been to understand preferences for what individuals or society are willing to gain and lose (both in health and non-health terms), often through direct elicitation techniques, comparing preferences through bidding games, trade-off questions or discrete choice experiments [13]. While sound in principle, these proposals still raise the question of ease of implementation and obtaining ‘adequate clinical and survey evidence’ to support decision-making [14], as well as the questions of how individual preferences may translate into social preferences for healthcare goals [15]. doi: 10.1586/14737167.2015.1039519

An alternative and more common approach to characterize ‘value’ has been through an extra-welfarist framework, and assuming a social decision-maker would want to maximize healthcare goals, such as states of health, that are consistent with her mandate. This approach has led to much use of cost– effectiveness analyses and quality-adjusted life-years (QALYs) as a means of addressing efficiency, but at the risk of ignoring equity. Some attempts to address this shortcoming have focused on re-valuing health gains with important distributional consequences and empirical evidence to support them, namely, considering equity by putting higher priorities on gains to the very young or those with terminal conditions [16,17]. This, it is argued, is more in line with societal values (moral values, another term often confused with value) and does not ignore efficiency. Other attempts to characterize value for decision-making have ignored efficiency entirely. Attempts to go beyond the QALY have included the use of multi-criteria decision analysis as a means of incorporating wider societal values. Although some multi-criteria decision analysis-based proposals have addressed the payer’s problem of scarce resources [18], others have failed to consider what payers are able to give up to achieve these wider benefits. Like welfarist approaches, multicriteria decision analysis also represents a challenge of becoming administratively burdensome and is hard to use in practice [19]. For the purpose of the rest of this paper, it is assumed a ‘cure’ describes an intervention that permanently moves us into a fully restored state of health. It is not simply a relief from symptoms that does not address underlying disease or an exit from an asymptomatic or mildly symptomatic risk state. It is still recognized that any intervention will likely only provide a chance of cure. For simplicity, the ‘value’ of anything is defined by healthcare system objectives and what buyers and sellers are willing to give up to achieve them. How much value?

The question of valuing a cure leads us to the question of whether there is anything about curative therapies relative to other therapies that may be perceived as providing additional benefits to patients beyond QALYs or whether there are equity considerations that would require weighing QALYs differently. There appears to be little direct evidence to address this. The question of ‘cure’ versus treatment has not been widely explored, although there is a large literature exploring treatment (often labeled ‘cure’ in these studies) versus prevention that may offer some insight [20–23]. These studies have revealed the relationship between individual and societal preferences for prevention versus treatment. Ubel et al., for example, reported that 37% of the individuals sampled preferred prevention versus 21% preferring treatment [20]. However, preferences for prevention appeared to go away when a subsequent group of investigators asked one sample of respondents to provide willingness to pay for prevention and another sample to provide willingness to pay for a treatment with similar costs and health outcomes [24]. A higher proportion of individuals (78%) Expert Rev. Pharmacoecon. Outcomes Res.

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How do we value a cure?

suggested a treatment intervention should be covered by insurance than a prevention intervention (56%) [24]. What this implies is that when given a choice between prevention and treatment, individuals will most often say they prefer prevention. However, the (societal) willingness to pay for treatment programs is valued more highly. This difference has been attributed to a host of psychological factors including the influence of time and certainty on individual decisions and how people value identifiable versus statistical lives [24]. The latter explanation, also known as Broome’s paradox [25], could explain societal preferences for insuring medicines for orphan conditions [26,27]. It could also explain a frequent failure to acknowledge disbenefits to unidentifiable patients through displaced opportunities for health, while instead focusing solely on those who may benefit [28]. If a similar disconnect between individual and societal preferences for curative versus treatment interventions occurs, it implies there will be difficult decisions ahead and considerable public debate. It may mean, for example, that people will say they prefer curative therapies more than treatment, but will not value them differently when subject to independent verification. But it may also mean that payers will struggle against the psychological foibles of those who value cure more than treatment on its face. We do know that societies place more value on helping those who are sicker or with fewer years left to live. These empirical factors could most definitely play a factor in those vulnerable populations that require a cure. There is clearly more research to be done. A way forward

Assuming evaluative frameworks do not need to change, and that a QALY is sufficient to capture benefits (and displaced benefits) and that the same framework can be used for prevention, treatment and cure, we may still find ourselves facing new and disruptive innovations that can produce a fantastic amount of health compared to conventional therapies. If price reflects this increase in societal value, how will we decide and how will we pay for it? On the first question of how we will decide, the value for money questions that the new and potentially expensive therapies carry may have profound implications for current structures for decision-making. Many regulatory frameworks view regenerative therapies as biologics; yet, unlike most currently approved biologics, they will likely require administration in acute care settings, where transfusion medicine and specialized laboratories already exist – in these settings, they will be likely seen as a device (or procedure) rather than a drug. Yet, adoption processes in many countries are markedly different for devices than for medicines. Unlike their pharmaceutical counterparts, device manufacturers have seen a trend toward demonstrating value through cost avoidance in acute care settings. Many hospitals internationally are subject to diagnosis-related group funding schemes and jurisdictions often create special funds for new and expensive innovation. In Germany, France and the USA, for example, diagnosis-related group codes are informahealthcare.com

Editorial

required for funded services. In Canada, hospitals receive block funding which greatly prohibits the entry of new and expensive technology. In the UK, drugs and procedures are treated more evenly. The answer to ‘how will we pay’ first needs to consider the size of the populations we will pay for. Small populations will command small sums relative to large payer budgets, even at high prices. Despite structural barriers to adoption, financing can be found for these, even if they represent significant opportunity cost. However, curative therapies will be available for a multitude of small populations; current estimates suggest almost 500 therapies are in development [29]. The sheer number of them creates a condition of ‘salami slicing’ that we should anticipate for drugs for rare diseases in the even nearer future. The promise of large future market sizes with low R&D costs is attractive to investors today, but payers who have only been willing to reimburse due to relatively small budget impacts will likely resist when this accumulation of these small exceptions represents a large population and opportunity cost. We should imagine that curative therapies, eventually, would be viewed as large investments for large populations rather than one-off exceptions. If a large fiscal outlay is needed and interventions are not immediately affordable, financing will likely need to borrow from the expensive new medicines playbook, including new schemes for financing that have been proposed with the introduction of high-priced, high-volume Sovaldi. As raising social revenues through increased tax, cutting other programs or deficit spending has become increasingly unpopular with politicians, innovative approaches to funding and access have been devised. A straightforward approach may be access with evidence development [30]. Also known as ‘performance-based risk sharing’ or ‘managed entry’, this may prove easier for some diseases where populations are easily tracked or identifiable, and outcomes are not difficult to define [31]. The introduction of a new and relatively expensive medicine for cystic fibrosis (ivacaftor), for example, was aided by well-developed patient-founded registries across the planet. It was also relatively easy to determine the drug’s real-world performance, if payers were interested in access with evidence schemes. The Australian Pharmaceutical Benefits Scheme, for example, provided, this new medicine through a pay-for-performance arrangement [32]. Other innovative payment arrangements could be variants of what already occurs with large capital equipment purchases. Amortization or leasing arrangements could spread costs over years [33]. Although this could be societally beneficial, uncertainty about performance would likely need to be managed (either through price reductions based on value of information or through pay-for-performance) and accounting rules used for capital equipment would likely need modification [34]. Other innovative financing mechanisms could include innovative licensing and bond mechanisms that have been created for financing existing interventions for developing countries [35,36]. The International Finance Facility for Immunisation scheme has raised US$ 6.5 billion from 23 countries, which is doi: 10.1586/14737167.2015.1039519

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used to immediately provide vaccines to countries with a lesser ability to pay [35]. Market investors are issued a bond that has appeal as an ethical investment. A different scheme is the Health Impact Fund, where companies pledge to distribute innovations at cost in return for a performance-based reward [36]. The Health Impact Fund has received widespread support, but is yet to be fully implemented. Future perceptions of value of curative therapies will likely reflect debates about preferences for the funding of preventive versus treatment programs, as well as for funding orphan drugs that are happening today [37]. Little is known about how society will value curative therapies versus standard treatments, and the significant role of a host of psychological factors compared to overarching concerns about opportunity cost will likely lead to significant tension payers and the public. More research to clarify societal preferences and healthcare goals in regards to curative therapies and in light of the potential for significant opportunity costs will be required. Given what we know about preferences for the funding of prevention and treatment measures, we should expect that cures will not be held to a different measure. The development of new evaluative frameworks and pay arrangements is also in its infancy; the decades-old recognition that QALYs do not capture all societally relevant benefits has not led to the diffusion of new frameworks for evaluation. This is coupled with a new recognition that what society wants is not always affordable, and new mechanisms to finance while reducing risk to payers are needed. Slow change in the implementation of evaluation and funding is likely due to historical precedent coupled with the need for systems that are easy to understand and justify and are not administratively burdensome. References 1.

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doi: 10.1586/14737167.2015.1039519

As new, regenerative therapies emerge, we should not expect payers to be ready for their widespread uptake. Instead, existing mechanisms of evaluation and uptake will be challenged and likely lead to considerable political debate, rather than a surrender of funds. As with all biomedical innovations, we should also expect many promising developments to deliver less than anticipated coupled with new treatments being oversold and labeled as cures, in hopes of finding more favorable reimbursement. The impact of salami slicing and accumulation of small populations in rare disease treatments will bring concerns about forgone opportunity costs to the fore, possibly readying payers for these new therapies. For those truly curative therapies that demand high upfront investment, novel financing mechanisms will be required. Pay-for-performance will likely be the basis of funding and payers may start to consider novel leasing arrangements. Acknowledgements

The author would like to acknowledge Eric Faulkner, Josh Carlson and Adrian Towse, who participated in an ISPOR panel on the value of a cure at the 17th annual European Congress and provided substantial insight into the subject area. The author would also like to acknowledge Christopher McCabe, Michael Paulden and an anonymous peer reviewer who all provided advice on characterizing value and opportunity cost. Some references presented by ISPOR panel authors are cited here. Financial & competing interests disclosure

D Husereau has provided health economic and strategic advice to with government payers, the HTA bodies that support them, pharmaceutical companies, and medical device companies. No writing assistance was utilized in the production of this manuscript.

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How do we value a cure?

Future perceptions of the value of curative therapies will likely reflect debates happening today about preferences for funding of preventive versus t...
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