Making Value-Based Pricing A Reality: Issue Panel

Moderator: Meindert BoysenPanelists: John Brazier, Roberta Ara

and Werner Brower

ISPOR 16th Annual European Congress 2-6 November 2013, The Convention Centre in Dublin, Eire

Value-based pricing: wider considerations

• There is a ‘basic’ NHS cost per QALY threshold• Costs and QALYs (through weighting) to take into account:

– diseases with greater ‘burden of illness’ as reflected in QALY loss from a condition

– greater therapeutic innovation and improvement (size of QALY gain)

– wider societal benefits (e.g. productivity and carer time)• Basic threshold adjusted to reflect the opportunity cost of

displaced activities weighted using same methods • Price negotiated on the basis of the cost per weighted QALY

compared to the new threshold (from 2014)

XOR

New drug Other use (?)

Cost:…………………………………………………………………………..

Cost / QALY:……………………………………………………………………..

->QALYs gained:…………………………………………………………………..

BoI weight:……………………………………………………………………

WSBs, £:…………………………………………………………………….

->WSBs, QALYs:…………………………………………………………………

-> Total Benefits:…………………………………………………………………

->Weighted QALYs:…………………………………………………………………

(£50k displaced)£50k

2 lost

£25k (centre of threshold range)

2 gained

£25k (measured ICER)

+30%

£12,000

2.8 QALYs’ worth gained

0.2 QALYs worth

2.6

+20%

£30,000

2.9 QALYs’ worth lost

0.5 QALYs worth

2.4

=

< X

£25,000 *1+ 0.1

£24,138

Comparing new and displaced treatments in VBP:Expression as an adjusted cost per QALY threshold

Adjustment to c/Q threshold:

30%+

1+ 0.2520%+=

Elicitation of societal preferences for Burden of Illness, Therapeutic

Improvement and End of Life from a UK online panel

John BrazierDH PRU in Economic Evaluation of Health and Care Interventions

(EEPRU), University of Sheffield

Donna Rowen, Clara Mukuria, Sophie Whyte, Anju Keetharuth, Aki Tsuchiya, Phil ShackleyHealth Economics and Decision Science, ScHARR, University of Sheffield

Arne Risa Hole Economics Department, University of Sheffield

Acknowledgements: Angela Robinson (University of East Anglia) and Gavin Roberts (DH)

Outline of presentation

• Value-based pricing: BOI, TI and EOL• Methods• Main results • Weights for use in DH framework • Discussion

Elicitation of societal preferences

Discrete choice experiment (DCE) survey using online UK panel to elicit societal preferences for:• Burden of illness (QALY loss from condition) • Therapeutic improvement (size of QALY gain from

treatment)• End of life (e.g. NICE weights QALY gain more where

expected survival is 24 months and survival gain 3 months or more)

Conceptual framework

Normal life expectancy

Normal population

Life expectancy from today

TodayDead

100%

Health

Without treatment

Conceptual framework

Normal life expectancy

Life expectancy without treatment

Health without treatment

Normal population

Life expectancy from today

TodayDead

100%

Health

Without treatment

Conceptual framework

Normal life expectancy

Life expectancy without treatment

Survival gain

Health without treatment

Health gain Treatment gain

Normal population

Life expectancy from today

TodayDead

100%

Health

Main survey design• Internet panel sample – allows for large numbers, collection fast

Survey content• Introduction video played • 2 practice and 10 real DCE questions• 9 questions asking general attitudes assessed in survey• 17 questions on ‘you and your health’ and understanding

Design• 4 normal life expectancies (5, 20, 40, 80 years)• Both small and large starting point and gains in health and

survival• 580 pairs selected using D-efficient design. Impossible scenarios

not included • 58 ‘card blocs’ in total across 4 normal life expectancies

1

FEEDBACK

Modelling • U=f(QALY gain, QALY gain squared, EOL or BOI)• Estimation by conditional logit regression model• Dependent variable = Choice patient group A or

patient group B• Estimated for pooled data and each of the 4 separate

normal life expectancies

Basic additive model:V = β1 QALY + β2 QALY2 + β3 BOI (or EOL)

Where a positive β2 would suggest TI

Marginal rate of substitution

The marginal rate of substitution between BOI and QALY (or EOL and QALY) provides a measure of the weight of BOI in terms of QALY gain equivalents

e.g. MRS1 = -β3 /β1

MRS2 = -β3 /(β1+ 2*β2QALY)

So MRS2 varies by size of QALY

Main results (1)Sample• 3669 respondents (55% response rate)• Similar age, but more females and unemployed

respondents and less healthy than UK norm

Practice questions• PQ1 – Majority chose larger QALY gain (90.7-92.5%)• PQ2 - No evidence of preference for higher BOI

(46.8% - 54.3%)

Regression resultsVARIABLES All 5 yrs 20 yrs 40 yrs 80 yrs

QALY 0.276*** 3.641*** 0.751*** 0.404*** 0.171***

QALY_sq -0.004*** -0.709*** -0.037*** -0.014*** -0.002***

BOI 0.017*** 0.12*** -0.000 0.039*** 0.005**

VARIABLES All 5 yrs 20 yrs 40 yrs 80 yrs

QALY 0.281*** 3.229*** 0.761*** 0.400*** 0.175***

QALY_sq -0.004*** -0.602*** -0.037*** -0.014*** -0.002***

EOL 0.609*** 0.607*** 0.375*** 0.576*** 0.314***

Overview of results

Regression results:• QALYs matter but at a decreasing rate – no

support for TI• BOI matters – but is weak and inconsistent• EOL is significant• Coefficients change for different variants of

normal life expectancy

Weights for BOI

Model (1): Assuming the value of a QALY is constant• MRS(1) of 1 more unit of

BOI is -0.040 QALYs

Model (2) Allowing value of a QALY to vary

Warning: This is additive and not proportionate to the size of QALY gain

QALY gain

MRS(2)

0.05 - 0.063

0.1 - 0.063

0.5 - 0.063

1 - 0.064

2 - 0.066

5 - 0.073

10 - 0.087

20 - 0.141

Limitations• Limited range of characteristics (e.g. no age)• Online data collection• Additive design• Robustness - many respondents may have continued to

make the mistake of assuming the profiles were for them even after feedback– Identified respondents who chose a profile with smaller

QALY gain and lower BOI but larger number of lifetime QALYs – Once these were excluded (n=2247) then BOI coefficients

were all positive, significant and larger than for the whole sample

• Weights – choice of variant and specification

To download the report go to:

http://www.eepru.org.uk/VBP%20survey%20research%20report.pdf