Quantifying the Insurance Value for Rare Diseases: Duchenne Muscular Dystrophy

ABSTRACT

Objectives: To quantify the magnitude of an ISPOR novel value element, insurance value, as applied to new treatments for a rare, severe disease with pediatric onset: Duchenne muscular dystrophy (DMD).

Study Design: Prospective survey of individuals planning to have children in the future.

Methods: A survey was administered to US adults (aged ≥ 21 years) planning to have a child in the future to elicit willingness to pay (WTP) for insurance coverage for a new hypothetical DMD treatment that improved mortality and morbidity relative to the current standard of care. To identify an indifference point between status quo insurance and insurance with additional cost that would cover the treatment if respondents had a child with DMD, a multiple random staircase design was used. Insurance value—the value individuals receive from a reduction in future health risks—was calculated as the difference between respondent’s WTP and what a risk-neutral individual would pay. The risk-neutral value was the product of the (1) probability of having a child with DMD (decision weighted), (2) quality-adjusted life-years (QALYs) gained from the new treatment, and (3) WTP per QALY.

Results: Among 207 respondents, 80.2% (n = 166) were aged 25 to 44 years, and 59.9% (n = 124) were women. WTP for insurance coverage of the hypothetical treatment was $973 annually, whereas the decision-weighted risk-neutral value was $452 per year. Thus, insurance value constituted 53.5% ($520) of value for new DMD treatments.

Conclusions: Individuals planning to have children in the future are willing to pay more for insurance coverage of novel DMD treatments than is assumed under risk-neutral, QALY-based frameworks.

Am J Manag Care. 2024;30(7):e217-e222. https://doi.org/10.37765/ajmc.2024.89584

Takeaway Points

• This study estimates the insurance value—the value individuals receive from a reduction in future health risks—of novel Duchenne muscular dystrophy (DMD) treatment from a survey of individuals planning to have children.
• For novel DMD treatments, the majority of treatment value (> 53%) comes from the insurance value a parent places on having treatment available for their future children who may or may not have DMD.
• The public has a high willingness to pay for rare, severe diseases that impact children—higher than is estimated by conventional methods of treatment valuations.

Duchenne muscular dystrophy (DMD) is a rare X-linked genetic neuromuscular disease resulting from mutations in the DMD gene that leads to the degeneration of skeletal and cardiac muscle tissue, affecting approximately 1 in 5050 live male births worldwide.¹ Although signs of DMD may present in early childhood, the average age of diagnosis is between 4 and 5 years, typically a few years after symptoms begin.² The progression of the disease is severe, resulting in muscular weakness, associated motor delays, loss of ambulation, respiratory impairment, and cardiomyopathy.³ Moreover, DMD progression often requires patients to utilize wheelchairs to carry out daily activities by early adolescence, and patients commonly die in their twenties due to respiratory muscle weakness and cardiomyopathy.⁴

Although there is no cure for DMD, recent advancements in diagnosis, treatment, and long-term care have increased the median life expectancy of affected individuals from approximately 22.9 years for those born between 1970 and 1990 to 28.1 years for those born after 1990.⁵ The use of glucocorticoids, mainly prednisone/prednisolone and deflazacort, is the current standard of care along with medical management and has been shown to delay DMD progression.⁴ For instance, longer durations of glucocorticoid therapy have demonstrated prolonging the time to loss of mobility and upper limb milestones by approximately 2 to 4 years and 3 to 8 years, respectively.^6-8 Scientists have endeavored to develop novel treatments for DMD, such as exon-skipping and gene therapies, that restore a functional version of dystrophin to target tissues to further delay disease progression.⁹ However, even with new developments in DMD treatment, it is not possible to reverse muscle damage, so the morbidity and mortality remain considerable.

Although standard approaches to quantify the value of treatments (ie, traditional cost-effectiveness analyses) assume individuals are all risk neutral (ie, consider only mean outcomes rather than their distribution), the value of innovative treatments may depend on not only mean outcomes but also the likelihood that individuals will experience very good or very bad health outcomes. If individuals are risk averse, they may place high value on new treatments for the most severe diseases because new health technologies reduce the variance of health outcomes between “healthy” and “sick” health states when a disease is severe.¹⁰ This value that individuals receive from a reduction in future health risks—above and beyond the ex ante expected value—is called insurance value, a novel value element of the ISPOR—The Professional Society for Health Economics and Outcomes Research “value flower.”¹¹ Although many health technology assessments examine treatment costs and benefits from a payer perspective, the ISPOR value flower aims to capture additional dimensions value when using a societal perspective. Empirical estimates in multiple sclerosis¹² and lung cancer^13,14 show that a large share of treatment value—particularly for severe disease—may be due to insurance value. Previous empirical estimates of insurance value generally measure value from reduction in health risk for diseases that individuals may develop later in life, but the authors are not aware of any work that has attempted to measure the insurance value from the perspective of parents or prospective parents for genetic diseases that impact children.

This study aims to quantify the insurance value for novel treatments for a severe genetic disease: DMD. Given that DMD is a genetic disease with symptoms beginning in early childhood, adults could not assess the value of insurance for themselves (because adults would already know whether they had DMD). Thus, insurance value is measured from the perspective of adults planning to have children in the future.

METHODS

Overview of Study Design

This study used a web-based, cross-sectional survey to estimate the insurance value of novel treatments for DMD. Estimating the insurance value requires estimating 2 quantities: (1) the value that individuals at risk for the disease place on insurance coverage of these treatments and (2) conventional health value as measured by the ex ante value for patients with a DMD diagnosis under a risk-neutral, quality-adjusted life-year (QALY)–based framework. To measure both quantities empirically, the former is derived from individual responses in the fielded survey; the latter is calculated as the expected value based on the change in QALYs from improved treatment in monetary terms (ie, probability of disease × incremental QALYs gained × value per QALY). In the base case, probability of disease is adjusted by prospect theory decision weights to account for the fact that respondents may overestimate the value of very small probabilities. Using these 2 quantities, the premium that individuals at risk for the disease place on insurance coverage of a novel therapy relative to the expected value of a risk-neutral individual was calculated. The approach for estimating insurance value largely follows methods outlined by Shafrin et al¹³ and is based on a willingness-to-pay (WTP) rather than an opportunity cost approach.

The insurance value estimates were derived from respondents who intend to have children (or more children among those already with children) in the future via their WTP an additional monthly premium for coverage of a novel DMD treatment that could be given to their future children. Because individuals planning to have children in the future are at risk of having a child with DMD, the methodology can estimate insurance value for these respondents. Conversely, individuals not planning to have children are not at risk of having a child with DMD, and thus any WTP for generous coverage of DMD treatments would be for purely altruistic reasons.

Study Population

The survey was administered to members of the general public who were 21 years and older, were US residents, and completed an informed consent form. Participants who indicated that they intend to have a child in the future (or more children if they already have children) were included in the analysis. The cohort in this study was drawn from a global community panel (Sago, formerly Schlesinger Group).¹⁵

Survey Design

The survey began with an informed consent form and determination of survey eligibility. Next, the WTP module of the survey was administered to respondents to estimate their WTP an additional premium for insurance coverage for their family to ensure access to a novel DMD treatment. Finally, individuals answered questions about their demographics, socioeconomic status, and health.

To measure the amount that a respondent was willing to pay to have novel DMD treatments available for their future children, respondents were presented with 6 questions involving binary choice pairs of different insurance plans. Respondents were required to repeatedly choose between 2 health plans that were identical in terms of non-DMD out-of-pocket costs and doctors included in the plan network but differed in terms of cost associated with coverage of conventional treatments for DMD (insurance plan 1) or a new treatment for DMD that improved morbidity and mortality (insurance plan 2) (Figure 1). The respondent was informed that if they chose the standard treatment option, they did not have access to the newer DMD treatment for their future children, nor could they purchase the newer DMD treatment outside the health insurance system. Conversely, if the respondent chose the alternative plan that covers newer DMD treatment, they were informed that they will pay an additional premium each month and that any of their future children born with DMD will have access to the newer treatment at no additional out-of-pocket cost. Coverage of all other treatments aside from DMD would remain unchanged.

This study used a multiple random staircase approach to reduce the probability of protest responses and manipulation bias.¹⁶ Individuals were first presented with a choice of a standard health plan at no cost (insurance plan 1) or $50 per month for the health plan that would cover the novel treatment for DMD (insurance plan 2). A starting point of $50 was selected based on pilot test results to the survey. If the person selected insurance plan 2, the question was repeated with a higher premium for the generous plan; conversely, if the person selected insurance plan 1, the question was repeated with a lower premium for insurance plan 2. The feasible range was set at double the expected value. This process was repeated 6 times (see eAppendix [available at ajmc.com] for details).

Survey Administration

To ensure survey intelligibility by respondents, 3 pilot tests were conducted between June and July 2022. Based on the pilot test results, the survey was revised so that individuals were required to answer questions on a desktop or laptop rather than a smartphone to ensure users could clearly view the survey graphics. Respondents were renumerated for completing the survey. The study received institutional review board (IRB) approval from Advarra IRB.

Statistical Analysis

A 3-step approach was used to measure the empirical value that individuals at risk for the disease place on insurance coverage that would include a novel DMD treatment and the conventional health value of patients with a DMD diagnosis. First, the respondents’ WTP for generous coverage of a novel DMD treatment was estimated based on their responses to the survey. This quantity was estimated in terms of an incremental additional monthly premium to be paid. Second, the WTP was converted from a monthly payment to an annual payment. Finally, the per-person value of novel DMD treatment to individuals at risk for the disease was decomposed into 2 components: (1) ex ante conventional value of the health gains to a risk-neutral individual (based on the value of the QALY gains) and (2) the value of insurance coverage of a novel DMD therapy.

The first and second steps of the analysis are captured in the implied treatment valuation (assuming risk neutrality), which was calculated as shown in the eAppendix (Equation 1) with an estimated disease incidence of 1 in 10,000 births. This specific figure was presented to the respondents in the survey and is an approximation drawn from a meta-analysis—which estimated pooled global DMD prevalence as 19.8 per 100,000 live male births—that was then simplified to reflect all live births.¹

The conventional value of the health gains provided by the DMD treatments was measured using an expected QALY-based approach. QALY estimates were calculated based on the duration that individuals with DMD spent in each of the 3 health states presented (ie, ambulatory, early nonambulatory, late nonambulatory) and the utility in each health state. Health state utilities and time spent in each health state on average without the novel DMD treatment were estimated from literature.^5,6,17 Insurance plan 1 covered medical management that would provide patients with DMD with 9.60 QALYs; insurance plan 2 additionally covered a hypothetical novel treatment that would provide patients with DMD with 14.13 QALYs, a net gain of 4.53 QALYs (eAppendix Table 1). Using a WTP per QALY of $100,000, the ex post risk-neutral value of health benefits is $453,000 per patient using a QALY-based approach. Next, the implied treatment value based on incremental WTP for insurance plan 2 was compared against this QALY-based, risk-neutral value, generating a net insurance value (see eAppendix, Equation 3), where the incremental WTP per month for an individual is their indifference point in the study. Finally, cumulative prospect theory decision weights, using the function

derived by Takemura and Murakami¹⁸ with the value of γ = 0.75, were used to estimate insurance value incorporating that respondents could overestimate the risk of the low-probability event that their child would have DMD. The value of γ was the approximate midpoint of the range found by Stott in a review paper¹⁹ and is more conservative than a γ of 0.8 used by Takemura and Murakami.¹⁸

Sensitivity Analysis

To evaluate the robustness of the results, we conducted a series of sensitivity analyses. First, respondent characteristics (age, gender, annual income, employment status, education, and parent status) were explored to determine whether they affected the insurance valuations. Second, sensitivity analyses were conducted based on health insurance status/coverage type. Third, the survey population was reweighted to match the US national population by demographics and income. Finally, the WTP per QALY was varied to $50,000 and $150,000 to examine the impact on the insurance valuations.

RESULTS

Study Population

A total of 207 adult respondents who intended to have children in the future were included in the insurance value analysis. Approximately 80.2% (n = 166) of these respondents were between the ages of 25 and 44 years, 59.9% (n = 124) were women, 39.6% (n = 82) were men, and 0.5% (n = 1) identified as nonbinary. Further, 49.8% (n = 103) of respondents reported an annual income between $10,000 and $74,999 (Table).

Willingness to Pay

Respondents were willing to pay $81.07 (95% CI, $51.20-$110.94) on average per month (ie, $972.85 per year) in additional premiums for novel DMD treatment coverage. The distribution of this cohort’s WTP estimates was heavily left skewed—160 of 207 respondents (77.3%) had a WTP between $70 and $100 per month, with 132 of them (63.8%) being willing to pay between $90 and $100 per month (Figure 2)—resulting in a median WTP per month at the maximum value (ie, $99.20).

The majority of treatment value for DMD was due to the value of insurance coverage for the novel DMD treatment. Under the approach that WTP per QALY was $100,000, the expected value of the treatment was calculated to be $45.30. After applying decision weights for the possible overestimation of the probability of having a child with DMD, the ex ante treatment value increased to $452.44 per year. Accordingly, the risk-neutral QALY-based expected treatment value of $452.44 made up 46.5% of the $972.85 total annual value from the survey responses; in other words, $520.41 of the $972.85 (53.5%) was due to the insurance value (Figure 3). When decision weights were removed from the QALY-based approach to rescale the ex post value, insurance value was much larger (up to 95.3%).

Sensitivity Analyses

The robustness of the insurance value results was largely consistent across the 4 sensitivity analyses performed. First, age, gender, income, employment status, education level, and parental status did not result in significant variations of insurance value estimates. Second, type of health insurance coverage did not materially impact WTP estimates. Third, insurance valuations were largely insensitive when the survey population was reweighted to match the US national population by either age/gender or age/income. Finally, varying the WTP per QALY assumption while using decision weights changed the insurance value’s share of total implied treatment value to 76.7% and 30.2% when a QALY was valued at $50,000 or $150,000, respectively.

DISCUSSION

This study is the first of which the authors are aware to estimate insurance value for a pediatric disease that is rare, severe, and genetic. Of the total annual WTP for coverage for a hypothetical novel DMD treatment that provides substantial morbidity and mortality gains, the estimated share attributed to annual insurance value was 53.5% of the total value after applying decision weights for respondent overestimation of probability. This value falls in line with those found in other studies of insurance value related to cancer-specific cures (ranging from 24% to 63%, depending on disease severity and prevalence).²⁰ Insurance value for treatments for multiple sclerosis comprised approximately one-third of the treatment value¹²; a more general study of insurance value for hypothetical quality-of-life treatments ranged from 40% to 60% of its conventional value.¹⁰ On the other hand, removing the decision weights resulted in 95.3% of the total value being attributed to insurance value, which is more in line with the 89.8% found in previous research related to another severe disease: metastatic cancer.¹³

Based on the findings of this study, health technology assessment bodies may wish to consider whether a disease is both severe and impacts children in its value assessment methodology to better reflect society’s preferences. Conventional value assessments—which assume severity independence and scope insensitivity²¹—may underestimate treatment value when these assumptions are violated. Thus, explicit consideration of disease severity, rarity, and whether the disease impacts children should be taken into account quantitatively—using stated preference methods or generalized risk-adjusted cost-effectiveness (GRACE)^22,23—or qualitatively when decision makers assess treatment value.

Limitations

This study has several limitations. Every effort was made to address potential biases, including a very factual description of high-level DMD health states and pretesting with a small group of respondents. However, this is a stated preference survey, so respondents did not actually have to pay their own money for increased premiums; stated preferences may differ from real-world actions. Second, because this was a voluntary survey conducted online, it could have been biased toward individuals who are more educated and biased away from older individuals or those who are less comfortable with computers. Moreover, our sample was disproportionately female and White. In the sensitivity analysis, however, reweighting respondent demographics or socioeconomic status did not impact the results materially. Third, the risk of DMD is small, and evidence from prospect theory indicates that respondents may have problems comprehending very small probabilities.^24,25 Removing decision weights creates estimates of insurance value of 95.3%, suggesting that patients may overestimate the true probability of developing DMD. Despite these cognitive challenges, however, individuals in the real world do need to make decisions regarding insurance coverage for rare diseases at their interpretation of risk levels. Finally, QALYs gained in the future were not discounted in this analysis. This choice made the results more conservative because discounting the value of future QALYs gained would have reduced the value of a risk-neutral, QALY-based approach and thus increased the share of value attributed to insurance value.

CONCLUSIONS

Insurance value comprises at least 53.5% of the total value for novel DMD treatments. The high insurance value estimates in this study suggest that the public has a very high WTP for insurance that covers rare, severe diseases that may impact future children—higher, in fact, than would be found using conventional value assessment methods.

Acknowledgments

Sensitivity analyses and manuscript writing for this study were provided by Khounish Sharma, BA, BS. Rucha Kulkarni, MS, assisted with the design of the survey.

Author Affiliations: Center for Healthcare Economics and Policy, FTI Consulting, Inc, Los Angeles, CA (JS), and Washington, DC (ST); Economics and Reimbursement Access (ACK), Patient-Centered Outcomes (IA), and Global Market Access (IA, LES), Sarepta Therapeutics, Inc, Cambridge, MA; Sol Price School of Public Policy, University of Southern California (JAR), Los Angeles, CA.

Source of Funding: This study was funded by Sarepta Therapeutics. Employees of the funder were involved in the design of the study, the review or approval of the manuscript, and the decision to submit the manuscript for publication.

Author Disclosures: Dr Shafrin is employed by FTI Consulting and has received honoraria as a guest lecturer at the University of Southern California; FTI Consulting received payment for involvement in the preparation of this manuscript from Sarepta. Mr Thahir is employed by FTI Consulting. Ms Klimchak, Ms Audhya, and Ms Sedita are employed by and own stock in Sarepta Therapeutics, which develops therapies for Duchenne muscular dystrophy. Dr Romley reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (JS, ST, ACK, LES, JAR); acquisition of data (JS, ST); analysis and interpretation of data (JS, ST, IA, JAR); drafting of the manuscript (JS, ST, IA); critical revision of the manuscript for important intellectual content (JS, ACK, IA, LES, JAR); statistical analysis (JS, ST); obtaining funding (ACK, LES); administrative, technical, or logistic support (ST); and supervision (JS, ACK).

Address Correspondence to: Jason Shafrin, PhD, Center for Healthcare Economics and Policy, FTI Consulting, 350 S Grande Ave, Los Angeles, CA 90071. Email: jason.shafrin@fticonsulting.com.

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