Proving Cost-Effectiveness using Health Economics and an iPad

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Cost-effectiveness or cost-utility analysis is an essential part of many reimbursement processes. Health technology assessment (HTA) bodies - such as NICE in the UK - require this kind of information as part of a submission for a new drug or medical device, and it is in this context that analyses of this kind are usually deployed.

At the sub-national level, health economists and market access managers have not tended to use cost- effectiveness analysis in their discussions with budget holders or formulary decision makers. There are two reasons for this. First, outcomes generated through cost-effectiveness analyses are often too broad in scope to be relevant to sub-national payers. Second, a cost-effectiveness study is often quite data heavy; presenting a complex cost-effectiveness analysis can be seen as a drag on the impact of a payer discussion.

There is good cause to reappraise both of these reasons. At a time of economic restraint, pharmaceutical and medical device companies should take an interest in using more widely what is a very powerful tool for modeling fiscal scenarios. With suitable modifications, a cost-effectiveness analysis can be used very effectively at the sub-national level. At the same time, new technologies have made it possible to communicate complex HEOR evidence without compromising on impact.

The scope of a cost-effectiveness analysis

A country-level cost-effectiveness analysis incorporates costs and effects that matter to society as a whole, such as non-medical costs and the impact on productivity. The results are often expressed as costs per quality adjusted life year (QALY). The range of these analyses is clearly too wide to be relevant to the more narrow interests involved at the sub-national level, for example in a hospital setting.

But the health outcomes collectively used in a country-level cost-effectiveness analysis are, individually, of great interest here. If we take a step back from the QALY we can find a wealth of outcomes that matter at the clinical level, and which can be interpreted easily. Instead of the cost per QALY, a market access manager can present the cost per clinically relevant outcome. Examples are:

  • Cost per infection averted.
  • Cost per patient hospital day averted.
  • Cost per unit of time without symptoms.
  • Cost per adverse event avoided.

Presenting cost-effectiveness as a component of a broader value story can be very powerful, for example in combination with a health outcomes analysis at the population level and a budget impact analysis.

This is especially so if a new treatment evaluated in a cost-effectiveness analysis is ‘dominant’ over existing strategies, meaning it both improves health and lowers costs. In this case, a cost-effectiveness analysis is simply too valuable to be included in the reimbursement application alone, and manufacturers should do everything they can to communicate the information to stakeholders at all levels.

Communicating cost-effectiveness on the iPad

Technological innovation has made it possible to communicate complex value propositions with high impact. Whereas an HTA body like NICE will demand a ream of documentation breaking down a cost-effectiveness claim, market access managers can incorporate these tools without having to introduce ring binders full of speadsheets and equations to a discussion.

BaseCase is a platform to create spreadsheet-based apps that produce highly intuitive data visualizations. The below example demonstrates the way in which market access executives can put HEOR evidence front and center, without having to make use of inaccessible spreadsheets or unwieldy macros.

The data visualization seen here is connected to a full spreadsheet running in the background. Complex evidence such as a cost-effectiveness analysis can be integrated into payer communications that are unique to a particular drug or treatment. These tools let market access managers make use of their economic models, without having to present them directly.

With the correct approach, pharma and device companies are now able to add a powerful tool to their value communication strategy, making clear to payers the cost-effectiveness of the products they offer.

Wondering why we haven’t posted in a while?

Our blog has moved to a different location.
Visit http://blog.basecase.net to check out our latest blog posts.