Contributor: Sharpening All the Tools in the Value Assessment Toolbox

The adoption of a German-style drug pricing panel – which relies heavily on comparative clinical research conducted during the first year a drug or other treatment hits the market ­­– is an idea that has captured the interest of President Biden’s health team. While this notion of injecting additional clinical and economic analyses into Medicare’s purchasing decisions is gaining currency, a vital question is left unanswered: What factors are essential to determining a therapy’s fair value?

Knowing whether we are getting the best outcome for the price of any intervention is impossible without understanding value. And understanding value can only be fully realized by measuring what matters to patients and their lived experiences with a disease, which sometimes extends beyond just price and affordability.

Now is a crucial time to be absolutely clear about value – and how to measure it with patients’ perspectives fully represented. Otherwise, we’ll make enormous mistakes pursuing short-term budgetary goals that are not aligned with the needs of and effects on patients.

Many countries already employ a panel approach to evaluating value and pricing. The United Kingdom’s National Institute for Health and Care Excellence (NICE) relies on the Quality Adjusted Life Year (QALY) as a health outcome measurement and subjective threshold to determine coverage and price.

The QALY is generally accepted as the “gold standard” for value measurement by many health economists, but labeled discriminatory by disability and rare-disease advocates who believe it assigns lesser value to the lives of those with chronic conditions, disabilities, or rare diseases. As a result, many in the health economics field are exploring augmented metrics and other approaches to better capture differences in these groups.

While such marginal exploration of improved methods is laudable, the ongoing debates over the QALY’s merits demonstrate that the inputs we’re currently using in value assessment don’t adequately answer what a drug’s value is for patients. Simply put, we are guessing at value determinations based on incomplete data to drive crucial decisions about market pricing, resource allocation and, ultimately, access.

If we hope to avoid hard-coding existing inequities in access and delivery of care, it is critical that we invest in robust methods that improve representativeness of patient factors in any assessment of value. The Biden Administration would take an important step by stimulating consensus among all stakeholder communities – from health economists to the patients most affected – that fair-pricing measurements must improve in two fundamental ways. First, by considering value elements that matter most to patients. And second, by utilizing economic modeling that includes patient input in the underlying analyses. While complex, this isn’t an impossible task. Rather, such an endeavor requires an open and constructive dialogue that establishes patient input as a minimum threshold.

Make no mistake: Value assessment is an important process to inform national and local deliberations about allocating resources and achieving the best clinical health and quality-of life-outcomes. But using only one health measurement and incomplete data inputs to make life-altering decisions for diverse patients because it’s the “best we have right now” simply isn’t good enough. Instead, we must lean in to improve the data and explore all scientific methods to ensure we can transparently and inclusively identify, measure, and hold treatments of all kinds against a barometer of patient-centered value.

The organization I represent, the Innovation and Value Initiative (IVI), is a non-profit dedicated to improving the science and practice of value assessment. We just published a set of principles we believe can guide the development of high-quality value assessment in the U.S. Before a value assessment system is employed by government payers, we must ensure it:

• Sustains authentic patient-centricity by consistently establishing diverse patient partnerships in governance, priority setting, and the creation of models. 
• Advances transparency by using open-source modeling and application to foster public validation and stimulate replication across disease and interventional analyses.
• Cultivates modernized methods by using traditional cost-effectiveness analyses, like the QALY, and complementary approaches that address societal perspectives and broader cost parameters to reduce discrimination and disparities.
• Focuses value discussion across treatment interventions to consider benefit, risk, and cost trade-offs for all optimal treatment approaches, not just drugs.
• Employs clinical and real-world data to measure patient-provided information such as burden of disease, patient preferences, patient reported outcomes and impacts, as well as clinical endpoints like the QALY does. 
• Facilitates customizable decision-making to account for the needs of employers, plans, clinicians, and patients within our nation’s diverse population. 
• Adapts to and evolves with scientific evidence by accounting for scientific uncertainty, patient heterogeneity, and evolving evidence related to disease states and clinical outcomes, quality-of-life impacts, and disparities in care.
• Supports health equity to reflect diverse communities and experiences within our healthcare system.
• Fosters long-run innovation to recognize and distinguish transformative therapies and inform national dialogue about incentivizing and rewarding technological innovation.

IVI’s principles aren’t a panacea that will guarantee that every cost-effectiveness decision is the right one. But they present a minimum standard to achieve better balance of cost, risk, and benefit in healthcare. Before the Biden administration confronts the thorny issue of drug pricing, shouldn’t it sharpen all the tools in its toolbox?

Jennifer Bright is the executive director of the Innovation and Value Initiative, a nonprofit organization dedicated to advancing the science, practice, and use of value assessment in healthcare.