It’s hard to gauge the value of a drug. After all, how much is a patient’s life worth? A recent report from consulting firm Milliman found that Explore new metrics This will enable a more focused lens on health equity by determining the value of medicines and adding real-world evidence to traditional equations.
Currently, the standard way to look at a drug’s cost-effectiveness, used by the UK’s national NICE program and the US watchdog ICER, is the “quality-adjusted life year,” or QALY. Simply put, one QALY is equivalent to one year of a patient’s healthy life gained by a drug. These organizations collect clinical data to determine how many QALYs a drug provides to patients and assign a monetary value to that benefit.
The system is not perfect. Putting a value on a patient’s life ignores many other factors, but no system can be perfect in a world of healthcare that demands capital compensation. “Good health” is not the same for all patients.
Milliman’s new concept, called “standard of living valuation,” or SoLV, takes QALY a step further by incorporating real-world evidence that considers not only the clinical benefits of treatment but also other parts of a patient’s life that contribute to health outcomes.Unlike the QALY method, the SoLV equation takes health differences into account.
“In the SoLV framework, treatments for diseases with greater disparity in health outcomes due to socioeconomic factors will generate higher value, all else being equal,” Milliman wrote in a report commissioned by the Alliance for Aging Research. “The methodology leverages a wealth of[real-world]data on income, social determinants of health, and outcomes.”
Not Enough
According to the Milliman report, QALYs have been the primary way of assessing the value of medicines for more than 30 years, and have been used to determine coverage and compare medical interventions.
But the standard approach of combining quality of life and longevity into one metric has its caveats, especially for people with disabilities, as it doesn’t distinguish between long-term interventions that offer better short-term outcomes. Milliman points out that other metrics have been developed to take disability into account, so as not to discount the value of patients’ lives.
And with regards to price negotiations by the US government, Medicare Negotiations Program Under the Inflation Control Act, QALYs are not used due to the perception that the elderly, disabled, and terminally ill are not given as much importance. These restrictions keep valuable information out of the hands of governments and off the negotiating table.
That’s why Milliman suggests real-world evidence can go beyond performance in controlled trial environments to better guide cost-effectiveness. For example, a new cancer drug may significantly extend patients’ lives in clinical trials, but be less effective in rural or low-income areas where resources are limited.
“Real-world evidence obtained after a treatment has been brought to market can provide additional insight beyond early results,” the report states. “If the goal of value assessment is to provide guidance about which health policy choices will lead to better outcomes in the real world, then real-world evidence is a powerful resource.”
When QALYs are scarce, the SoLV method could offer a new way of examining the value of medicines by taking into account factors that are important contributors to overall health, such as income, education, housing, diet, family support, and leisure activities.
Also, if a treatment addresses a condition where there is a large difference between the two groups, that difference is factored into the decision value. Milliman gives the example of heart attacks: real-world data shows that the incidence of heart attacks is significantly higher in low-income patients than in higher-income patients, so if a drug consistently reduces heart attacks in clinical trials, then that drug is actually more beneficial for low-income families who have a higher incidence. So that difference is factored into the SoLV equation.
The SoLV method takes all these factors into account, as well as QALYs, to arrive at a recommended price for a drug based on value, although Milliman stresses that “value does not mean price.”
Adina Lasser, public policy manager at the Alliance for Research on Aging, said the new method is long needed.
“While the National Council on Disability and patient advocacy groups have documented the shortcomings of QALY, all we’ve seen from health economists is tweaks to the basic QALY framework,” Lasser said in a statement, noting that Medicare could use SoLV in price negotiations. “We now have a framework that is independent of QALYs, QALY-like alternatives, and their weaknesses. Using SoLV is advantageous for patients, and by incorporating data that reflect the real-world experiences of the health care system and other considerations, we can get to the root of what matters to patients.”
At a time when there is much discussion about drug prices and the value that medicines provide to patients, these equations provide a level-playing benchmark to begin those discussions. While a cost-effectiveness framework cannot perfectly summarise all the nuances of a given drug or the needs of patients, it brings a wealth of real-world evidence to the table and can be one place to start.
