Projects

Here we offer insights into selected scientific projects at the Institute.

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Some of the weaknesses and limitations of the currently prevailing paradigm in applied health economics, i.e., the calculation of incremental cost effectiveness ratios (ICERs) with quality-adjusted life years (QALYs) – as a purportedly universal and comprehensive measure of benefits for valuation, can be illuminated by exploring the issues that arise when this paradigm is applied in practice.  One of the pertinent examples is the evaluation of treatments for rare and ultra-rare disorders (“URDs”) using this paradigm.

A key underlying reason for the failure of many drugs for URDs to meet proposed – and, in some jurisdictions, actually applied – standards for cost effectiveness (i.e., maximum cost per QALY benchmarks) is that manufacturers need to generate revenues that allow them to recoup the cost of research and development (R&D), which also include the costs of gaining regulatory approval, from a small number of patients during limited periods of market exclusivity.  This challenge inevitably results in high acquisition costs for these products on a per patient basis – and often high costs per QALY gained. 

At the same time, the success of regulatory policies that have been adopted to encourage research and development (R&D) of treatments for “orphan” disorders has prompted concerns among payers about the costs that might arise with an increasing number of expensive treatments for rare and ultra-rare disorders (URDs).  Therefore, an international group of experts with relevant experience and backgrounds in clinical medicine, pharmacology, HTA (Health Technology Assessment), health economics, and medical ethics has been addressing key underlying issues and is working on promising alternatives.

Project Phase I: Analysis of Key Issues

Thus far, a consensus has been reached to recommend a more rigorous assessment of the clinical effectiveness of URDs, applying established standards of evidence-based medicine.  This may include conditional approval and reimbursement policies, which however should be combined with a firm expectation of proof of a minimum significant clinical benefit within a reasonable time.  In contrast, there was agreement that current health economic evaluation paradigms fail to adequately reflect normative and empirical concerns (i.e., morally defensible “social preferences”) regarding health care resource allocation.  Hence a strong need was identified for alternative health economic evaluation models (not only) for URDs.

The rationale underlying the consensus was explained in detail in an open access publication:

Predicting Future Budget Impact

In an attempt to address concerns by health care policy makers about potentially escalating costs due to drugs for URDs, a budget impact model was developed to predict the future health care expenses caused by treatments for URDs. The preliminary analyses did not indicate an uncontrollable future growth in expenditures for drugs for URDs. Nevertheless, continuous monitoring of the budget impact as an input to rational policy making was recommended.

Project Phase II: Alternative Evaluation Methods

The conventional logic of cost effectiveness does not adequately capture prevailing social norms and preferences regarding health care resource allocation. Such preferences include, but are not limited to, a priority for care for the worst off (related to initial health state), for those with more urgent conditions (sometimes referred to as the “rule of rescue”), and a relatively lower priority based upon capacity to benefit, as well as a dislike against systematic discrimination against certain patient groups as well as “all or nothing” resource allocation decisions (which might deprive some groups from any chance to access effective care). Therefore, a second phase of the project is devoted to a critical review of promising alternative evaluation paradigms. Candidates include direct social value measurement using the relative social willingness-to-pay and person trade-off instruments, and a greater role for budget impact analysis. As a pragmatic alternative, multi-criteria decision analysis will be reviewed as a potentially useful tool for assessment.

The need for alternative evaluation methods was highlighted in a contribution to the special interest periodical ISPOR Connections:

The “URD Project” has received support from three biopharmaceutical companies under an unrestricted educational grant policy (specifically, for phase I from Alexion and BioMarin, and for phase II from BioMarin and Genzyme).  Any conclusions reached are the sole responsibility of the expert group and have not been influenced by third parties, including the project supporters.

Project Phase III: Social Preferences Measurement Study

There is now a large number of empirical studies on "social (i.e., non-selfish) preferences" for an efficient and fair allocation of scarce health care resources. However, most of these studies have been small, heterogeneous in design, and prone to framing effects. Further to this, the limited level of public awareness and knowledge about health care resource allocation implications contributed to the phenomenon of unstable preferences in some of the studies. Another limitation of many studies has been that they were restricted in scope by the assumption of a pre-defined fixed health care budget, whereas it seems possible that many people might actually prefer increasing health care resources over rationing policies that would exclude certain groups of patients from any access to effective care. Hence there is a strong need for a robust empirical study of non-selfish preferences.

Thus far, the "URD Project" has received support from three biopharmaceutical companies under an unrestricted educational grant policy (specifically, for phase I from Alexion and BioMarin, and for phase II from BioMarin and Genzyme). Any conclusions reached are the sole responsibility of the expert group and have not been influenced by third parties, including the project supporters.