Cost-effectiveness thresholds can do more than just guide determinations on whether drugs have value, explained Patricia Danzon, PhD, professor at the Wharton School at the University of Pennsylvania. Using these thresholds as a requirement for reimbursement provides an incentive for research and development focused on producing new drugs that will be considered effective enough to pay for.
Cost-effectiveness thresholds can do more than just guide determinations on whether drugs have value, explained Patricia Danzon, PhD, professor at the Wharton School at the University of Pennsylvania. Using these thresholds as a requirement for reimbursement provides an incentive for research and development (R&D) focused on producing new drugs that will be considered effective enough to pay for.
Transcript (slightly modified)
How can attempts to be mindful of cost and budget be balanced with fostering innovation in the US?
When we set a threshold for what is considered a reasonable about to pay per QALY, and let’s say we pick $150,000 per quality-adjusted life year, that amount is picked taking into account what we as a society are willing to pay for health gain, given what we have to give up, the opportunity cost in terms of non-health activities, so whether it’s education or Social Security or other things.
Then, given that threshold, any product that can meet that threshold, we should be willing to pay for. So there is an incentive to R&D to produce drugs that produce effectiveness and cost savings such that they meet that threshold. If we base our prices on that cost-effectiveness threshold, we create an incentive to steer R&D towards the sort of products that will produce drugs that are cost-effective.
That’s the way in which, if we really do use cost-effectiveness as a way of rewarding drugs that do meet that threshold, we are creating an incentive to produce drugs that will meet the threshold and therefore will get reimbursed, whereas if products are priced either above the threshold or don’t have much in the way of efficacy and safety, then they would not be worth it, they would not be considered cost-effective, and that would not be a good investment. Hopefully, by our reimbursement strategy, we’re sending the signals to R&D on what is worth investing in.
ATS 2024: Bridging the Past, Present, and Future of Respiratory Care
May 16th 2024The application of artificial intelligence in medicine is anticipated as a highlight of ATS 2024, with sessions exploring its applications in research, radiological interpretation, and pediatric pulmonology.
Read More
The Importance of Examining and Preventing Atrial Fibrillation
August 29th 2023At this year’s American Society for Preventive Cardiology Congress on CVD Prevention, Emelia J. Benjamin, MD, ScM, delivered the Honorary Fellow Award Lecture, “The Imperative to Focus on the Prevention of Atrial Fibrillation,” as the recipient of this year’s Honorary Fellow of the American Society for Preventive Cardiology award.
Listen
Looking Back on ISPOR 2024: Hot Policy Topics, Welcome Focus on Employers, and More
May 10th 2024Kimberly Westrich, MA, chief strategy officer of the National Pharmaceutical Council, reflects on the most valuable learnings from the 2024 meeting of ISPOR—The Professional Society for Health Economics and Outcomes Research, including lively discussions of the Inflation Reduction Act and workshops on value assessment.
Read More
Promoting Equity in Public Health: Policy, Investment, and Community Engagement Solutions
June 28th 2022On this episode of Managed Care Cast, we speak with Georges C. Benjamin, MD, executive director of the American Public Health Association, on the core takeaways of his keynote session at AHIP 2022 on public health policy and other solutions to promote equitable health and well-being.
Listen
Posters Characterize DMD Caregiver Experiences, Impact of Gene Therapy on Caregiving Demands
May 10th 2024Posters presented at the ISPOR—The Professional Society for Health Economics and Outcomes Research meeting explored Duchenne muscular dystrophy (DMD) caregiver experiences and gene therapy’s impact on work opportunities for caregivers.
Read More
A Focus on Women: AUA Best Posters Highlight Female Athletes, Prenatal Care, and Women in Urology
May 9th 2024Three posters from the American Urological Association (AUA) 2024 Annual Meeting focused on urinary incontinence in female athletes, prenatal care for fetuses with spina bifida in California, and the experiences of women residents at the Brady Urological Institute.
Read More