Value Based Pricing:Providing evidence for a policy

initiative

Policy Research Unit in Economic Evaluation of Health and Care

Interventions (EEPRU)

wider considerationsThe value of new pharmaceuticals to be based on: • A ‘Basic’ NHS cost per QALY threshold adjusted

for:– Weight QALY gains according to ‘burden of

illness’ – Add extra QALY value for greater

therapeutic innovation and improvement (size of QALY gain)

– Extend cost and QALY to take into account wider societal benefits (e.g. other Government sectors, productivity and carer time)

• Apply methods to displaced activities • Price negotiated on the basis of the cost per

weighted QALY compared to the relevant adjusted threshold (from 2014)

Project 1: Elicitation of societal preferences • Discrete choice experiment (DCE) survey using online UK panel to

elicit societal preferences for:– Burden of illness (QALY loss from condition) (BOI)– Therapeutic improvement (size of QALY gain from treatment) (TI)– End of life (e.g. NICE weights QALY gain more where expected survival is less

than 24 months and survival gain is 3 months or more) (EOL)

• Respondents choose which of 2 patient groups they think the NHS should treat who vary in size of QALY gain and BOI (or EOL)

• Estimation using conditional logit regression model • Weights estimated using the marginal rate of substitution (MRS)

between BOI or EOL and QALY gain

Results• 3669 respondents (55% response rate of those accessing the survey)• Representative for age and gender but more unemployed respondents and

less healthy than UK norm

Regression results• QALYs matter but at a decreasing rate – no support for TI• BOI matters – but not consistent across models• EOL is significant

Weights• MRS of 1 more unit of BOI is -0.040 QALYs i.e. an increase in burden of one

QALY equals 0.04 QALYs• MRS of moving from not being EOL to being EOL is -3.331 QALYs

– Assuming the social value of a QALY gain doesn’t change with size of QALY gain

Limitations: online data collection, robustness of models….

Wider Social BenefitsInformal careProductivity effects

Differences by:Age, gender,Health status (ICD-10)Health related quality of life (EQ-5D)

Data sources:HODaR (N=66k)Understanding Society (N=40k)

Estimated days absent from paid employment due to ill health

(controlling for Age, ICD, EQ-5D)

Estimated days need Informal Care (controlling for Age, ICD, EQ-5D)

Adjusting the thresholds• Recent MRC funded project at York to estimate the cost

effectiveness threshold– How much health (QALYs) is forgone when additional costs are

imposed in the NHS– Central estimate £12,936 per QALY*– Estimates of how forgone QALYs are distributed over ICDs

• If burden and wider social benefits are important for new technologies, they are important for forgone health

• Estimated burden for each ICD by age and gender – Estimate expected burden associated with average forgone QALY

• Facilitated estimate of WSB by ICD (by age and gender)– Estimate of expected WSB associated with average forgone

QALY

* CHE Research Paper # 81, November 2013. http://www.york.ac.uk/che/publications/in-house/

Observations

• Largely responsive work – to policy initative• Overall framework set by policy makers – and

so we had specific tasks within that• Time scale demanding despite complex

technical nature of problems – major problems with data modelling

• Changing policy user – DH to NICE• Impact on methods – we await NICE’s

announcement on VBP