Presentation by Adrian Towse at HTAi, Toyko - May 2016

1. Adrian Towse
Director of the Office of Health Economics
Visiting Professor London School of Economics
HTAi Tokyo May 2016
Dimensions of value,
assessment, and decision
making

2. HTAi Tokyo May 2016
Agenda
• Identifying the elements of value
• Methods of assessing value
• Translation to price and affordability
1
2
3

3. HTAi Tokyo May 2016
An overview of the process (1)
A reordering of process?
Safety
Efficacy,
effectiveness
Value for
money (CE)
Other factors of
value to D-M
(ethical issues, social
values, feasibility of
implementation,
unmet needs,
innovation value,
legal issues, …)
Affordability
(BIA)
Criteria: broader definition of value
(risks, benefits)
Overall D-M Framework:
Opportunity costs
(value-for-money)
Source: Ron Goeree, Director PATH Research Institute, Professor, McMaster University

4. HTAi Tokyo May 2016
An overview of the process (2)
Getting to Health System Value1
Comparative
Clinical
Effectiveness
Additional
Benefits &
Context:
Health System
Intervention
Value
Affordability,
Incremental
cost per
outcomes
achieved
Decision
making
process
Health
System
Value
1Adapted with permission from Steve Pearson, ICER

5. HTAi Tokyo May 2016
What elements of value? Usually recognised
and Less frequently / consistently recognised
Usually recognised
• Health effects that are well
captured
• Cost offsets
• Uncertainty
Less frequently / consistently
recognised
• Health effects less well
captured
• Wider societal impacts
• Severity /unmet need
• National Priorities
• Process issues
• Innovation
• Patient preferences
• The value of knowing

6. HTAi Tokyo May 2016
What elements of value?
Precision medicine
“..an approach to disease treatment and prevention that seeks to
maximize effectiveness by taking into account individual variability
in genes, environment, and lifestyle”1
• Enabling a treatment effective only in a small fraction of the population to
be made available
• Reducing or avoiding the adverse effects associated with treatment
(including the medical and nonmedical costs of managing them)
• Reducing or avoiding time delays in selecting the most appropriate
intervention
• “Value of knowing”
1. President Obama’s Personalized Medicine Initiative

7. HTAi Tokyo May 2016
What elements of value?
Precision medicine – examples
A. Reduce or
avoid adverse
drug reactions
B. Reduce or
avoid delay in
selecting optimal
treatment
C. Increase
patient adherence
or willingness to
start preventive
interventions
D. Enable Tx with
a small
proportion of
responders to be
made available
E. Value of
Knowing
(i) Allows Tx to
obtain licence
based on Dx
availability
Example:
BCR-ABL in CML
Example: PreDx
Diabetes Risk
(i) Tx has higher
chance to obtain
licence or to be
‘rescued’ with Dx.
Example: EGFR
mutation in NSCLC
Example:
Oncotype DX in
breast cancer
(ii) Use of a
licensed Tx is
increased with Dx.
Example: HLA-B*
5701 in HIV
(ii) Increases Tx
cost effectiveness
Example: HER2 in
breast cancer
(iii) Dx supports
clinical trials and
hasten market
approval of Tx.
Example: ALK
Fish in NSCLC
Adapted from Garau et al. 2013

8. HTAi Tokyo May 2016
What elements of value?
The value of knowing
• Increasing the certainty of a patient’s response to a medicine
• “Knowing for the sake of knowing” (Asch et al., 1999)
• The value of hope (Lakdawalla et al., 2012)
• Real option value (Cook et al., 2011)
• Insurance value (Lakdawalla et al., 2015)
• Scientific spillovers

9. HTAi Tokyo May 2016
Agenda
• Identifying the elements of value
• Methods of assessing value
• Translation to price and affordability
1
2
3

10. HTAi Tokyo May 2016
Steps to “a decision on value”
What elements of
value?
How measured,
evidenced and valued
/rated?
How aggregated and
judged?
A “decision on value”
• Health effects
• Well captured
• Cost offsets
• Uncertainty
• Health effects that are
less well captured
• Wider societal impacts
• Severity /unmet need
• National Priorities
• Process issues
• Innovation
• Patient Preferences
• The Value of Knowing
• Measured: e.g. use
of QALYs, clinical
outcomes
• Evidenced: e.g.
preference for RCTs
• Valued /rated: e.g.
population or patient
values, use of
categories or discrete
scales
• Challenges
– Scientific
uncertainty
– Value judgements
• Weighting:
– Deliberative
processes
– Algorithms
• How structured
could /should this
become?
– Avoid a “black box”
1 2 3

11. HTAi Tokyo May 2016
Use of categories or discrete scales
ASMR
rating
Definition
I
Major therapeutic
progress
II
Significant progress
in terms of
therapeutic efficacy
and/or reduction in
side effects
III
Modest progress in
terms of
therapeutic efficacy
and/or reduction in
side effects
IV
Minor progress in
terms of
efficacy/usefulness
V
No therapeutic
progress
NICE
• Does a
technology get
assessed or
not?
• Exemption /
separate
treatment of
orphan drugs
• End of life
threshold
uprating and
use for small
patient
populations

12. HTAi Tokyo May 2016
A system not based on MCDA
MCDA converts all input
evaluations of decision
outcomes into a common
currency of value added—
not financial value,
preference value
Source: Professor Larry Phillips London School of Economic and Facilitations Limited

13. HTAi Tokyo May 2016
An MCDA example

14. HTAi Tokyo May 2016
Results of weighting in the MCDA
example
Per cent
‘Experts’
workshop
‘Patients’
workshop
Extent to which treatment is available in the absence of the new medicine 19.5 11
Disease’s mortality impact with current SoC 14 11.5
Morbidity and disability with the disease with current SoC 12 15
Impact of the disease on patients’ and carers’ daily lives with current SoC 8 15
Sub-total weight for impact of disease / extent of unmet need 53.5 52.5
Evidence of treatment clinical efficacy and patient clinical outcome 27.5 17.5
Drug safety 8 7.5
Social Impact of the treatment on patients’ and carers’ daily lives 11 17.5
Treatment innovation 0 5
Sub-total weight for impact of new medicine 46.5 47.5
Total 100 100

15. HTAi Tokyo May 2016
Agenda
• Identifying the elements of value
• Methods of assessing value
• Translation to price and affordability
1
2
3

16. HTAi Tokyo May 2016
Two main approaches to pricing
• cost-effectiveness requirements. Drugs are assessed
for use or for a reimbursement price by looking at
incremental health related effects (often measured and
valued using the Quality Adjusted Life Year (QALY) and
incremental costs relative to existing treatments using
cost effectiveness analysis (CEA).
• therapeutic added value requirements. These
typically involve comparison with other, established drugs
in the same class, or with other treatments used in the
standard of care (SoC) with higher prices allowed or
negotiated for improved health or health related effects in
the form of efficacy, better side effect profile or
convenience.

17. HTAi Tokyo May 2016
The England cost-effectiveness
threshold saga

18. HTAi Tokyo May 2016
Sweden: Equity /”need” adjusted reimbursement
decisions compared with a constant cost-
effectiveness threshold
Cost/QALY
Source: Ulf Persson, IHE
Threshold
Adjusted threshold
Degree of severity/”need”
0.5 1.00.90.1 0.2 0.3

19. HTAi Tokyo May 2016
Use of categories or discrete scales to
support different categories of pricing
ASMR
rating
Definition
I
Major therapeutic
progress
II
Significant progress
in terms of
therapeutic efficacy
and/or reduction in
side effects
III
Modest progress in
terms of
therapeutic efficacy
and/or reduction in
side effects
IV
Minor progress in
terms of
efficacy/usefulness
V
No therapeutic
progress
NICE
• Does a
technology get
assessed or
not?
• Exemption /
separate
treatment of
orphan drugs
• End of life
threshold
uprating and
use for small
patient
populations

20. HTAi Tokyo May 2016
Elements of value, assessment, and pricing–
a summary
• Value extends beyond health gain and system cost savings
• No one way to scale, score, and weight
• Decision support tools are essential
• Can convert value to price directly (ICERs and thresholds)
or indirectly (TAV)
• Opportunity cost is important
• But using a threshold is not easy
• TAV with categories and discrete scales are an
alternative

21. HTAi Tokyo May 2016
References
Asch, D., J. Patton, and J. Hershey, 1990. Knowing for the sake of knowing: the value of prognostic
information, Medical Decision Making 10, pp. 47-57.
Cook, J. P., J. H. Golec, J. A. Vernon, and G. H. Pink, 2011. Real option value and path dependence in
oncology innovation, International Journal of the Economics of Business 18(2), pp. 225-238.
Garau, M., Towse, A., Garrison, L., Housman, L. and Ossa, D. (2013). “Can and should value-based
pricing be applied to molecular diagnostics?” Personalized Medicine. 10(1), 61-72.
Garrison L., Mestre-Ferrandiz J, and Zamora B (2016 forthcoming). The Value of Knowing and
Knowing the Value: Improving the Health Technology Assessment of Complementary Diagnostics.
EPEMED
Lakdawalla,D. , Malani, A. and Reif, J. (2015). 'The Insurance Value of Medical Innovation', National
Bureau of Economic Research Working Paper w21015
Lakdawalla, D. N., J. A. Romley, Y. Sanchez, J. R. Maclean, J. R. Penrod, and T. Philipson, 2012. How
cancer patients value hope and the implications for cost-effectiveness assessments of high-cost
cancer therapies, Health Aff (Millwood) 31(4), pp. 676-682.
Towse, A. and Barnsley, P. (2013). “Approaches to identifying, measuring, and aggregating elements
of value.” International Journal of Technology Assessment in Health Care. 29(4), 360-364.
Towse, A. (2014). “Value of drugs in practice”. In A. Culyer ed. Encyclopedia of Health Economics.
San Diego, CA, Elsevier. pp. 432-440.

22. Adrian Towse
The Office of Health Economics
Registered address Southside, 7th Floor, 105 Victoria Street,
London SW1E 6QT
Website: www.ohe.org Blog: http://news.ohe.org
Email: atowse@ohe.org
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