Can and Should Value Based Pricing Be Applied to Molecular Diagnostics?

Posted on 1 May 2012 by OHE News Editor

Martina Garau

Just out is an OHE Research Paper that examines the issues. The authors note that diagnostics not only facilitate health gain and cost savings, but also provide information to inform patients’ decisions on interventions and to clarify how their behaviour may affect their health in future. Current pricing and reimbursement systems for diagnostics, however, are not efficient and provide poor incentives for new diagnostic approaches. Prices often are driven by administrative practice and expected production cost, rather than assessments of value.

The paper discusses how a value based pricing (VBP) framework for efficient use and pricing of medicines also might be applied to diagnostics. The authors recommend a two-part approach. First, in the case of companion diagnostics introduced at the launch of a drug, the process would follow the new drug assessment processes. It would consider a broad range of value elements and be based on a balanced analysis of diagnostic impact. Second, for diagnostics not paired specifically with a drug at launch, review would be by a diagnostics-dedicated committee using VBP principles.

Download Garau, M., Towse, A., Garrison, L., Housman L. and Ossa, D. Can and should value based pricing be applied to molecular diagnostics? Research Paper 12/03. London: Office of Health Economics.

New Research on VBP: Disease Severity and Unmet Need in the UK

Posted on 24 April 2012 by OHE News Editor

Koonal Shah

The UK Department of Health’s value based pricing (VBP) Consultation Document proposes a process whereby higher prices would be granted to medicines that tackle diseases that produce the greatest burdens of illness – i.e. those diseases that are most severe or are associated with the greatest unmet need. This suggests combining severity of disease and unmet need into a single metric. A literature review reveals that this approach has not been studied adequately (or perhaps at all) to date, either in the UK or elsewhere.

The Department of Health’s Policy Research Unit in Economic Evaluation of Health and Care Interventions (EEPRU) was asked by the Department to conduct an empirical study of society’s resource allocation preferences to obtain weights for burden of illness, therapeutic improvement and end-of-life. The objective would be to apply these, under the coming VBP system, to assessments of both new technologies and displaced activities.

The EEPRU study defines burden of illness as distance from “normal” health; the measure combines health status with the effects of existing standard therapy on both length and quality of life. The value of existing therapy, then, is in its contribution to the degree of burden. Not considered explicitly in the EEPRU study are issues raised by the definition of unmet need implied in the VBP Consultation Document – i.e. that “unmet need” means that no treatment is available at all.

Data collection for the EEPRU study is being conducted online, using discrete choice experiments to elicit preferences. Stakeholders have expressed concern about the limited scope of the EEPRU study in that it does not examine whether people have preferences about the availability of alternative treatments.

To address some of these issues, OHE currently is performing a small study, funded by an unrestricted research grant from the ABPI. Based on interviews with members of the general public, it is intended to develop a more nuanced understanding of the extent of societal support for basing health care resource priorities on disease severity and unmet need.

The OHE survey will be administered in face-to-face interviews conducted by trained interviewers with experience in conducting health care preference studies. Questions will be designed to identify respondents’ levels of support for policies that give greater weight to treatments that address disease severity and unmet medical need than to those that do not. The research also will address whether, controlling for disease severity, unmet need per se affects societal preferences regarding priorities for treatment. In this study, respondents also will be asked probing follow-up questions intended to elicit qualitative information about the thinking behind their choices.

This study will provide important, preliminary information about how disease severity and unmet need should be measured and how best to capture societal preferences. The main points we expect the research to address include the following:

Whether members of the public would support a policy that uses combined disease severity and unmet need as a criterion for priority setting
What societal preferences about disease severity and unmet need can be observed
Whether preferences regarding unmet need depend at least in part on disease severity
The likely reasons for the preferences observed
The strength of the preferences observed

The OHE study, then, will both complement the EEPRU study by exploring additional possible attributes and provide additional evidence about whether preferences regarding unmet need depend on disease severity. It can help define what further research is essential to produce valid measures.

The OHE research team for the project is Koonal Shah and Nancy Devlin. Results are anticipated in summer 2012 and will be published as an OHE Research Paper.

The Tougher the Better: The Effect of GP Performance Thresholds in Scotland

Posted on 20 April 2012 by OHE News Editor

Yan Feng

General Practitioners (GPs) in the NHS are paid based on a mix of factors, including a pay-for-performance element, the Quality and Outcomes Framework (QOF), which was introduced in 2004. QOF rewards GPs based on performance on specific indicators. Although participation in the QOF is voluntary, it represents a key source of potential income for GPs and nearly all participate. The QOF has been criticised, however, for having produced little or no improvement in GP performance; some studies have claimed that the QOF achievement has had a negligible impact on health outcomes.

The OHE’s Yan Feng and her colleagues take a closer look at the effect of changes in the QOF in Scotland in April 2006. They state that “the principal aim of this paper is to evaluate the effect of an increase in the maximum performance threshold in the QOF scheme on the performance of GPs in Scotland.” The paper also examines whether GPs responded to the incentives differently according to the level of their performance before the change.

Under the QOF, GP practices are paid according to a linear schedule between a lower and upper threshold, which varies across indicators. The indicator set was revised in 2006; new indicators were introduced, some were retired and others revised. Moreover, minimum performance thresholds were raised from 25% to 40% for all indicators. Maximum thresholds were raised for nine clinical indicators and left unchanged for 25 other indicators for which definitions also were unchanged. This selective change provides a unique opportunity to analyse the response of GPs by comparing the performance on indicators with an increased threshold to performance on indicators that remained the same.

“The changes in the payment threshold under the QOF scheme may have differential effects on different groups of GPs”, the authors note. The research examines whether GP practices that had initially higher and initially lower performance responded differently. The financial incentives for low-performing GPs were strongest: unless their performance improved, the amount of potential income foregone would be even greater than before the change. High-performing GPs would have the least incentive to change. The study also looks at a middle group.

Data used in the analysis were provided by the Scottish government’s Information Services Division and included financial years 2005/6 and 2006/7. In total, the data include 40,704 observations across 24 indicators.

“The principal finding of this paper,” the authors state, “is that the increased maximum performance threshold under the QOF scheme in 2006 was differentially effective in improving GPs’ performance. Overall, the effect of the policy change in 2006 improved the performance of GPs in Scotland.” The research also bears out the hypothesis that incentives produced greater change among lower-performing GPs.

Download: Feng, Y., Ma, A., Farrar, S. and Sutton, M. (2012) The tougher the better: The effect of an increased performance threshold on the performance of general practitioners. Research Paper 12/02. London: Office of Health Economics.

New: Assessing the Performance of the EQ-VAS in the NHS PROMS Programme

Posted on 16 April 2012 by OHE News Editor

The NHS Patient Reported Outcome Measures (PROMs) programme, introduced in April 2009, is a significant development in the routine collection and use of patient reported outcome data. Currently, data are collected from patients both before and after surgery for four elective surgical procedures in the NHS, with plans to expand the practice. (The procedures are hip and knee replacement, groin hernia repair and varicose vein repair.)

Results from the PROMs data collected already are being used in a broad range of decision making contexts[1]. For example, comparisons of the changes in patient health before and after surgery are being used as one indicator of hospital performance[2]. Commissioners also are using the findings in evaluating the effectiveness and cost effectiveness of a range of services. Ensuring that the data are as accurate and reliable as possible, then, is crucial.

The EQ-5D, used to collect the PROMs data, has two parts. The first, the EQ-5D profile, asks patients to classify their health based on self-assessed levels of problems (“no”, “some”,” extreme”). The second is the EQ-VAS, which asks patients to indicate their overall health on a vertical visual analogue scale, ranging from “worst possible” to “best possible” health. Historically, the EQ-VAS was a warm-up exercise for VAS valuations of EQ-5D, but it has evolved into an integral part of the measure. This paper focuses on two concerns about the EQ-VAS: (1) difficulties with the data because patients may fail to respond to it as the instructions require and (2) substantial differences between patient responses on the EQ-VAS versus the EQ-5D profile and condition specific instruments. According to the authors, these issues raise fundamental questions about the role and use of EQ-VAS in the EQ-5D instrument.

In particular, the paper analyses:

The different ways in which patients complete the EQ-VAS and how their characteristics affect this
How the different ways of completing the EQ-VAS currently are handled in coding the data and the effect this may have on data interpretation and analysis
The relationship between the EQ-VAS, the EQ-5D profile and other summary score data in the NHS PROMs programme

Analyses to address the first two points — potential issues with patient responses and how to handle them – are based on matched before-and-after anonymised EQ-VAS responses from 200 patients across all four elective procedures. The data included background characteristics, namely age, sex, and type of surgery. The third set of analyses, comparing EQ-VAS data to index weighted measures, were based on patient-level NHS PROMs programme data linked to Hospital Episode Statistics. The 331,951 anonymised patient records covered all four elective procedures from 1 April 2009 through 28 February 2011.

The authors’ findings suggest ways for improving EQ-VAS by improving both data collection and coding procedures. They note, for example, that although 95% of patients completed the EQ-VAS in an unambiguous way, fewer than 50% completed it in the way that the instructions intend. Moreover, the guidance provided by the EuroQol Group on coding the imperfect responses is insufficient. The authors note that this potentially can result in unnecessary data wastage or variations across users in interpreting and coding that, in turn, may make data less comparable. “All of these issues,” they note, “could be addressed by providing improved guidance on coding EQ-VAS data or revisiting the instructions for the EQ-VAS”.

The third set of analyses presented in the paper addressed whether and how patient reported outcomes vary using EQ-VAS versus EQ-5D or condition specific instruments. The authors note that “Concern had emerged from the NHS PROMs programme that the EQ-VAS was not adequately reflecting the health gain for patients resulting from surgery, and was therefore a less useful and appropriate measure of health change than the EQ-5D profile or condition specific instruments.” Their findings suggest that this is not the case; the relationship between the EQ-VAS and the EQ-5D profile are predictable and consistent. Moreover, some of the differences between the two are attributable to the characteristics of the particular weightings within the EQ-5D index.

Nevertheless, the results of analyses do confirm the observation of PROMs reports that there are clear differences between the EQ-VAS and index weighted EQ-5D and condition specific profiles. Presumably, patients are freer to consider all components of “health” using the VAS than they are when restricted to “tick boxes” with the EQ-5D profile. “In essence,” the authors state, ”the EQ-VAS is measuring a broader underlying construct than the EQ-5D profile or the condition specific instruments. This does not mean that the data it produces are less meaningful or useful. Indeed, in applications where the patients’ view of their overall health is the measurement goal, the EQ-VAS is prima facie more appropriate than the use of EQ-5D profile data weighted by general public preferences.”

In closing, the authors note that no discoverable research has been done on how patients or members of the general public interpret the upper and lower endpoints of the EQ-VAS – “best” and “worst” possible health. Given the importance of the EQ-VAS, they urge that a better understanding be developed of differences in interpretation, the bases for these, and whether they may change with expectations, health or social circumstances.

Download Feng, Y., Parkin, D. and Devlin, N.J. (2012) Assessing the performance of the EQ-VAS in the NHS PROMs Programme. Research Paper 12/01. London: Office of Health Economics.

[1] See Devlin, N.J. and Appley, J. (2010) Getting the most out of PROMs: Putting health outcomes at the heart of NHS decision making. London: Office of Health Economics.

[2] See our recent blog on new research on analysing hospital variation with EQ-5D.

Join OHE for Its 50th Anniversary Annual Lecture with Sir Michael Rawlins

Posted on 12 April 2012 by OHE News Editor

Sir Michael Rawlins

Every year, OHE sponsors a lecture by an eminent economist or clinician that addresses an important current issue. This year we are pleased to welcome Prof. Sir Michael Rawlins, who argues against reliance on randomized clinical trials as the “gold standard”, instead urging a more pragmatic approach.

Sir Michael’s experience — as a clinician, chair of the Committee on Safety of Medicines, and chair of NICE — uniquely qualifies him to address these issues.

When: 6:00 PM, Monday, 18 June, 2012. The lecture will be followed by a drinks reception.

Where: The Royal College of Physicians, 11 St Andrews Place, Regent’s Park, London

For additional detail, click here.

9 May 2012 editor’s note: This event now is fully booked and no more registrations are being accepted.

New: 50 Years of OHE Publications Are Available Online

Posted on 2 April 2012 by OHE News Editor

All 50 years of OHE publications now are available online Today we celebrate OHE’s 2 April 1962 founding with the launch of our new archival website, ohematerials.org. This site contains OHE’s publications from 1962-2002. The most recent ten years of publications can be found on our main site, ohe.org.

1962 was an important year in health care in the UK. Two key changes were underway that would dramatically affect the pharmaceutical industry for decades to come. Just five years earlier, in 1957, the first Voluntary Price Regulation Scheme (now the PPRS) was adopted, setting the tone for pricing for the next fifty years. In 1962, the Committee on the Safety of Drugs (CSD) was formed in the wake of the thalidomide tragedy. Its objective was to advise, on the basis of safety and efficacy, whether a new drug should be made available on the market. The CSD was replaced when the 1968 Medicines Act made prior approval mandatory and created the Committee on the Safety of Medicines.

1962 also was the year that Sir James Black discovered the first clinically significant use of beta blockers, with propranolol and pronethalol, revolutionising the treatment of angina pectoris. That same year, the oral polio vaccine was introduced in the UK and a new routine immunisation programme was begun. Other long-time scourges were nearly gone – tuberculosis killed 3,000 in England and Wales in 1962, down from over 48,000 per year in the late 1940s. OHE’s first publication examined the economic and social gains from drugs that battle tuberculosis.

Extensive changes were taking place in the NHS in 1962. An ambitious hospital plan was launched to replace seriously outdated infrastructure and create district general hospitals. General practitioners were increasingly upset about pay structures and published the Porritt Report, which criticised the rigid separation of the NHS into hospitals, general practice and local authorities. The report called for unification of the three, sparking a lasting debate on the structure of the NHS.

The changes since 1962, of course, have been extensive in all areas of medicine and in the NHS. Perusing the fifty years of OHE publications, however, show that some issues are perennial. Persistent themes, for example, include the cost of the NHS, how best to organise the NHS and the effects of change in the NHS on both the quality and cost of care. Since the early days of the OHE, another key issue has been how best to define, encourage and evaluate innovation in medicine and medicines. Although perspectives and approaches have evolved, the basic questions have changed very little.

Particularly important changes that have occurred over the fifty years include, for example, the appearance and now-routine use of health economics and health technology assessment methods; the first OHE publications on these topics appeared in the mid 1980s. Attitudes towards ‘the patient’ have changed markedly, too, from being well-meaning but paternalistic, to understanding that the active involvement of patients is crucial both to the success of treatment and to defining the value of care.

During the rest of the year, we will be looking at some of these themes in this blog, using OHE’s publications to track perspectives and policies. We hope that this extensive catalogue will be useful to others who wish to understand better how issues in health care have evolved over the past fifty years and what may be in store in the future.

Can lessons from valuing health be useful in valuing development aid?

Posted on 25 March 2012 by OHE News Editor

OHE's Nancy Devlin in discussion Measuring and evaluating the impact of development aid is a perennial challenge. Various approaches have been tried. Since many have been aimed at donor needs and objectives, whether or not they adequately reflect improvement in the daily lives of the target population is open to question. The UK’s Overseas Development Institute (ODI) recently held a workshop on measuring and valuing wellbeing in health and development, in part to explore how experience in the health sector might help guide the creation of measurements for development efforts.

As the basis for discussion, OHE’s Nancy Devlin co-authored a paper with Claire Melamed of the ODI and John Appleby of the King’s Fund, now available on the ODI’s website: ‘Valuing development’: Could approaches to measuring outcomes in health help make development more accountable? ‘The challenge,’ according to the authors, ‘and the research question, is to establish whether we can devise a way of measuring outcomes, based on poor people’s own values, that strikes the right balance between reasonable representation of reality and usability by policy makers‘.

In the health sector, it is increasingly possible to express actual or expected outcomes using summary numeric measures based on patients’ experiences and/or public preferences — for example through QALYs and patient reported outcomes measures, such as the EQ-5D. The authors explain how these methods have been devised, tested, tweaked and used as the basis of resource allocation decisions. They note that many of the principles that apply in the appropriate design and use of health measures could be applicable to efforts to devise better measures for the effects of development aid.

Challenges in development measurement are likely to be somewhat different in kind and/or degree than those for health. For example, the objective of health care quite clearly is a long life lived in as good health as possible. Measuring the ‘right’ thing in the case of development requires understanding what poor people in developing countries value, which will be more than a single outcome. The authors note, however, that ‘it is striking that participatory exercises of different types reveal a number of strong similarities in the way that people understand poverty and development in different countries and contexts’. Highly valued are physical health and strength, physical safety and security, economic security, and good community relationships. The relative value given to each of these, of course, will vary across and within countries, across subpopulations, among sectors, and over time. Whether people become used to sustained deprivation and adapt their preferences accordingly also is a matter of some debate. Devising a single measure, then, that can allow comparison across countries, as well as within countries, will be a serious methodological challenge. The kind of systematic, iterative approach used in health, however, can help work through the critical methodological issues.

Assuming that the challenges are met successfully, the authors identify the advantages of using a generic outcome measure for development aid as including the following.

Consistent, comparable, reliable measurement can offer a method for comparing the impacts of projects across different sectors — or even within the same sector for projects with slightly different objectives. This could help identify what works and what doesn’t, much as a randomised clinical trial does in medicine.

Outcome measures could be used to compare changes in the whole population or in sectors over time, identifying when aid has been most, and least, successful.

In practical application in decision-making, measurement can help donors and others ‘ensure that the views and preferences of poor people feed directly into assessments of value for money and development spending’.

A standard set of development outcomes and a methodology for exploring the weights attached to them could allow systematic comparisons of priorities across different groups. Understanding the different weights attached to various outcomes by, for example, population subgroups, local communities, donors, and government officials, could help ensure that dialogue about the value of efforts are based on real evidence about what ‘value’ means for different groups and stakeholders.

Of course, the ultimate goal of learning from the experiences of measurement in health care is creating a useful tool for making choices about development aid. A straightforward metric is important in helping policy makers bridge the gap between the complex realities faced by the poor and the need for simplicity in decision-making.

Download: Melamed, C., Devlin, N. and Appleby, J. (2012) ‘Valuing development’: Could approaches to measuring outcomes in health help make development more accountable? Research reports and studies. London: Overseas Development Institute.

Spotlight on OHE: Valuing Spillovers, End-of-Life Decisions and Hospital Outcomes

Posted on 20 March 2012 by OHE News Editor

During January and February 2012, OHE was active in a number of forums and in all three of its main areas of research.

Discussing ways of valuing health and health care Economics of the Pharmaceutical and Life Sciences Industries

The economic benefits of research on medicines, inside and outside the pharmaceutical industry, extend far beyond the development of important new therapies. At two recent conferences, OHE summarised the important direct and indirect returns that accrue from “spillovers” between publicly funded medical research and private pharmaceutical R&D. Dr Jorge Mestre-Ferrandiz presented on this topic at the ABPI Scotland annual conference in February. Jon Sussex’s presentation at the Cancer Research UK Symposium, also in February, is available for viewing in an earlier post by clicking here.

Health Technology Assessment

Koonal Shah participated in the Third Joint CES/HESG Workshop in January, hosted by Inserm-IRD and Aix-Marseille University. His presentation, “Valuing Health at the End of Life: An Empirical Study of Public Preferences”, summarised preliminary findings from an empirical study on the relative priority that members of the general public would give to life-extending treatments at the end of life.

At the Second Annual Oncology Market and Patient Access conference in January, Dr. Jorge Mestre-Ferrandiz presented preliminary results from OHE research in progress. It analyses appraisals of cancer medicines by HTA agencies in a selection of industrialised countries. The goal is to identify what drives HTA decisions and understand the similarities and differences in requirements across countries.

Financing, Organisation and Delivery of Health Care

Prof. Nancy Devlin also presented at the Third Joint CES/HESG Workshop, presenting a paper entitled “Analysing Hospital Variation and Health Outcome at the Level of EQ-5D Dimensions”. With funding from an NIHR HSR grant, this research has investigated the impact of surgery on each EQ-5D dimension; the extent to which treatment impact varies across providers; and the extent to which treatment impact across EQ-5D dimensions is correlated within providers. A summary of the paper reporting this research (see below) is available in an earlier OHE News blog post.

External publications

Gutacker, N., Bojke, C., Daidone, S., Devlin, N., and Street, A. (2012) Analysing hospital variations in health outcomes at the level of EQ-5D dimensions. CHE research paper. 74. York: Centre for Health Economics, University of York.

Spellberg, B., Sharma, P. and Rex, J.H. (2012) The critical impact of time discounting on economic incentives to overcome the antibiotic market failure. Nature Reviews Drug Discovery. 11(2), 168-170.

Watson, V., Sussex, J., Ryan, M. and Tetteh, E. (2012) Managing poorly performing clinicians: Health care providers’ willingness to pay for help. Health Policy. 104(3), 260-271.

Allocating Resources Based on “Happiness” — OHE Lunchtime Seminar

Posted on 16 March 2012 by OHE News Editor

Using Happiness to Value Health OHE’s invitational lunchtime seminar held March 14th featured the research of Prof Paul Dolan of the LSE on using measures of subjective wellbeing – “happiness” – as the bases for health care resource allocation decisions. Prof Dolan’s basic argument is that current measures of gains in health related quality of life, such as QALYs, are incomplete because they do not measure the end result that everyone desires, which is a feeling of wellbeing. If that is indeed the goal of society, then money is best allocated to those services that provide the greatest amount of happiness. (Prof Dolan has summarized his research in a recent OHE publication, available on this website.)

With respect to health care, this could mean spending relatively more on helping improve the mental states of individuals than on their physical status. So, for example, a group of patients who find it difficult to cope with a chronic illness might be allocated relatively more resources, aimed specifically at improving a sense wellbeing, than another group of patients who are coping well.

Following Prof Dolan’s explanation of the concepts, participants engaged in a wide-ranging discussion of the implications of increasing the emphasis on happiness measurement. Most agreed that happiness measurement clearly could apply to allocating resources across sectors – e.g. housing v. social care v. health care — and also be useful in evaluating individual health technologies or treatments.

Download Dolan, P. (2011) Using happiness to value health. London: Office of Health Economics.