Currently Viewing:
The American Journal of Managed Care October 2017
Low-Value Antibiotic Prescribing and Clinical Factors Influencing Patient Satisfaction
Adam L. Sharp, MD, MS; Ernest Shen, PhD; Michael H. Kanter, MD; Laura J. Berman, MPH; and Michael K. Gould, MD, MS
Countywide Physician Organization Learning Collaborative and Changes in Hospitalization Rates
Brent D. Fulton, PhD, MBA; Susan L. Ivey, MD, MHSA; Hector P. Rodriguez, PhD, MPH; and Stephen M. Shortell, PhD, MPH, MBA
Boosting Workplace Wellness Programs With Financial Incentives
Alison Cuellar, PhD; Amelia M. Haviland, PhD; Seth Richards-Shubik, PhD; Anthony T. LoSasso, PhD; Alicia Atwood, MPH; Hilary Wolfendale, MA; Mona Shah, MS; and Kevin G. Volpp, MD, PhD
Use of Patient-Reported Outcomes and Satisfaction for Quality Assessments
Anne P. Ehlers, MD, MPH; Sara Khor, MS; Amy M. Cizik, PhD, MPH; Jean-Christophe A. Leveque, MD; Neal S. Shonnard, MD; Rod J. Oskouian, Jr, MD; David R. Flum, MD, MPH; and Danielle C. Lavallee, PharmD,
Trends in Hospital–Physician Integration in Medical Oncology
Jeffrey D. Clough, MD, MBA; Michaela A. Dinan, PhD; and Kevin A. Schulman, MD
Improving Care Transitions: Complex High-Utilizing Patient Experiences Guide Reform
Nancy Ambrose Gallagher, PhD, APRN-BC; Donna Fox, RN; Carrie Dawson, MS, RN; and Brent C. Williams, MD, MPH
Currently Reading
The Option Value of Innovative Treatments for Non–Small Cell Lung Cancer and Renal Cell Carcinoma
Julia Thornton Snider, PhD; Katharine Batt, MD, MSc; Yanyu Wu, PhD; Mahlet Gizaw Tebeka, MS; and Seth Seabury, PhD
Is Higher Patient Satisfaction Associated With Better Stroke Outcomes?
Xiao Xiang, PhD; Wendy Yi Xu, PhD, MS; and Randi E. Foraker, PhD, MA
A Health Plan's Investigation of Healthy Days and Chronic Conditions
Tristan Cordier, MPH; S. Lane Slabaugh, PharmD; Eric Havens, MA; Jonathan Pena, MS; Gil Haugh, MS; Vipin Gopal, PhD; Andrew Renda, MD; Mona Shah, PhD; and Matthew Zack, MD

The Option Value of Innovative Treatments for Non–Small Cell Lung Cancer and Renal Cell Carcinoma

Julia Thornton Snider, PhD; Katharine Batt, MD, MSc; Yanyu Wu, PhD; Mahlet Gizaw Tebeka, MS; and Seth Seabury, PhD
Option value is the benefit a therapy provides patients by enabling them to survive to the next innovation.
In addition, sensitivity analyses showed that option value was quantitatively important across a range of modeling assumptions. In particular, the results were robust to alternative specifications of the survival model, assumptions on the use of nivolumab and its effects, and alternative stage definitions.


Recent innovations in oncology have allowed patients to live long enough to gain access to more effective future treatments; this is their option value. This study quantifies the option value of nivolumab for metastatic RCC and metastatic NSCLC and shows that it is substantial. Option value is therefore important to patients, payers, providers, and society as a whole.

Author Affiliations: Precision Health Economics (JTS, KB, YW, MGT, SS), Los Angeles, CA; Wake Forest University School of Medicine (KB), Winston-Salem, NC; University of Southern California Schaeffer Center (SS), Los Angeles, CA.

Source of Funding: Financial support for this research was provided by Bristol-Myers Squibb.

Author Disclosures: Dr Snider is an employee of and holds equity in Precision Health Economics, which receives consulting payments from life sciences companies and received consulting fees from Bristol-Myers Squibb for the conduct of this study. Dr. Wu and Ms. Tebeka were employees of Precision Health Economics at the time this study was conducted. Drs Batt and Seabury are consultants for Precision Health Economics. 

Authorship Information: Concept and design (JTS, KB, YW, SS); acquisition of data (YW); analysis and interpretation of data (JTS, KB, YW, MGT, SS); drafting of the manuscript (JTS, KB, MGT, SS); critical revision of the manuscript for important intellectual content (JTS, KB, YW, MGT, SS); statistical analysis (JTS, YW, SS); provision of patients or study materials (YW, MGT); obtaining funding (JTS); administrative, technical, or logistic support (YW, MGT); and supervision (JTS, SS).

Address Correspondence to: Seth Seabury, PhD, University of Southern California, USC Schaeffer Center, 635 Downey Way, Los Angeles, CA 90089-3333. E-mail:

1. Leading causes of death. CDC website. Updated March 17, 2017. Accessed September 14, 2017. 

2. Polednak AP. Estimating the prevalence of cancer in the United States. Cancer. 1997;80(1):136-141.

3. SEER cancer statistics review, 1975-2012. Surveillance Epidemiology and End Results Program website. Published April 2015. Updated November 18, 2015. Accessed September 14, 2017.

4. Simon S. Cancer statistics report: death rate down 23% in 21 years. American Cancer Society website. Published January 7, 2016. Accessed May 17, 2016.

5. Smith BD, Smith GL, Hurria A, Hortobagyi GN, Buchholz TA. Future of cancer incidence in the United States: burdens upon an aging, changing nation. J Clin Oncol. 2009;27(17):2758-2765. doi: 10.1200/JCO.2008.20.8983.

6. Population projections of the United States by age, sex, race, and Hispanic origin: 1995 to 2050. US Census Bureau website. Published February 1996. Accessed September 14, 2017.

7. Honore B, Lleras-Muney A. Bounds in competing risks models and the war on cancer. Econometrica. 2006;74(6). doi: 10.1111/j.1468-0262.2006.00722.x.

8. Lakdawalla DN, Sun EC, Jena AB, Reyes CM, Goldman DP, Philipson TJ. An economic evaluation of the war on cancer. Journal of Health Economics. 2010;29(3). doi: 10.1016/j.jhealeco.2010.02.006.

9. Marsa L. The high cost of cancer care: your money or your life? Newsweek website. Published July 23, 2015. Accessed May 17, 2016.

10. Siddiqui M, Rajkumar SV. The high cost of cancer drugs and what we can do about it. Mayo Clin Proc. 2012;87(10):935-943. doi: 10.1016/j.mayocp.2012.07.007.

11. Schnipper LE, Davidson NE, Wollins DS, et al; American Society of Clinical Oncology. American Society of Clinical Oncology statement: a conceptual framework to assess the value of cancer treatment options. J Clin Oncol. 2015;33(23):2563-2577. doi: 10.1200/JCO.2015.61.6706.

12. NCCN Framework for Resource Stratification of NCCN Guidelines (NCCN Framework). National Comprehensive Cancer Network website. Published 2017. Accessed September 14, 2017.

13. California Technology Assessment Forum. Institute for Clinical and Economic Review website. Published 2017. Accessed September 14, 2017.

14. The German Agency for Health Technology Assessment. German Institute of Medical Documentation and Information website. Published 2017. Accessed September 14, 2017.

15. National Institute for Health and Care Excellence website. Published 2017. Accessed September 14, 2017.

16. Weinstein MC, Stason WB. Foundations of cost-effectiveness analysis for health and medical practices. N Engl J Med. 1977;296(13):716-721. doi: 10.1056/NEJM197703312961304.

17. Lakdawalla D, Malani A, Reif J. The insurance value of medical innovation. The National Bureau of Economic Research website. Published March 2015. Accessed September 14, 2017.

18. Lakdawalla DN, Romley JA, Sanchez Y, Maclean JR, Penrod JR, Philipson T. How cancer patients value hope and the implications for cost-effectiveness assessments of high-cost cancer therapies. Health Aff (Millwood). 2012;31(4):676-682. doi: 10.1377/hlthaff.2011.1300.

19. Philipson TJ, Becker G, Goldman D, Murphy KM. Terminal care and the value of life near its end. The National Bureau of Economic Research website. Published January 2010. Accessed September 14, 2017..

20. Philipson TJ, Jena AB. Who benefits from new medical technologies? estimates of consumer and producer surpluses for HIV/AIDS drugs. Forum Health Econ Policy. 2006;9(2). doi: 10.2202/1558-9544.1005.

21. Non-small cell lung cancer treatment (PDQ)—health professional version. National Cancer Institute website. Updated March 31, 2017. Accessed September 14, 2017. 

22. Survival rates for kidney cancer by stage. American Cancer Society website. Published February 24, 2014. Updated May 16, 2016. Accessed May 17, 2016.

23. Breakthrough therapies. Friends of Cancer Research website. Updated August 1, 2017. Accessed September 14, 2017. 

24. Fact sheet: breakthrough therapies. FDA website. Published December 10, 2014. Accessed April 14, 2016.

25. Buffery D. The 2015 oncology drug pipeline: innovation drives the race to cure cancer. Am Health Drug Benefits. 2015;8(4):216-222.

26. Hoffman J. Pipeline series: renal cell carcinoma. Cancer Therapy Advisor website. Published March 18, 2016. Accessed May 17, 2016.

27. Nuijten M, Renkens M, Kogels E. The decision-making process of payers: a pilot survey in the Netherlands. ISPOR Connections. 2011;17(5):8-9. 

28. Key statistics for lung cancer. American Cancer Society website. Updated January 5, 2017. Accessed September 14, 2017. 

29. Sanchez Y, Penrod JR, Qiu XL, Romley J, Thornton Snider J, Philipson T. The option value of innovative treatments in the context of chronic myeloid leukemia. Am J Manag Care. 2012;18(suppl 11):S265-S271.

30. Thornton Snider J, Romley JA, Vogt WB, Philipson TJ. The option value of innovation. Forum Health Econ Policy. 2012;15(2). doi: 10.1515/1558-9544.1306.

31. Surveillance, Epidemiology, and End Results (SEER) Program Database. National Cancer Institute, ed. Washington, DC 2011.  Accessed October 1, 2015. 

32. Overview of the SEER program. National Cancer Institute website. Published 2017. Accessed September 14, 2017.

33. The Human Mortality Database. Accessed 2015.

34. FDA expands approved use of Opdivo to treat lung cancer [news release]. Silver Spring, MD: FDA; March 4, 2015. Accessed April 3, 2015.

35. Motzer RJ, Rini BI, McDermott DF, et al. Nivolumab for metastatic renal cell carcinoma: results of a randomized phase II trial. J Clin Oncol. 2015;33(13):1430-1437. doi: 10.1200/JCO.2014.59.0703.

36. Paz-Ares L, Horn L, Borghaei H, et al. Phase III, randomized trial (CheckMate 057) of nivolumab (NIVO) versus docetaxel (DOC) in advanced non-squamous cell (non-SQ) non-small cell lung cancer (NSCLC). J Clin Oncol. 2015;33(suppl; abstr LBA109).

37. Nivolumab full prescribing information. FDA website. Published 2015. Accessed September 14, 2017.

38. Edge S, Byrd DR, Compton CC, Fritz AG, Greene FL, Trotti A, eds. AJCC Cancer Staging Manual. 7th ed. New York, NY: Springer; 2010. 

39. Lee R, Miller T. Evaluating the performance of the Lee-Carter method for forecasting mortality. Demography. 2001;38(4):537-549.

40. Lee RD, Carter LR. Modeling and forecasting U.S. mortality. J Am Stat Assoc. 1992;87(419):659-671. doi: 10.2307/2290201.

41. Hirth RA, Chernew ME, Miller E, Fendrick AM, Weissert WG. Willingness to pay for a quality-adjusted life year: in search of a standard. Med Decis Making. 2000;20(3):332-342. doi: 10.1177/0272989X0002000310.

42. Viscusi WK, Aldy JE. The value of a statistical life: a critical review of market estimates throughout the world. J Risk Uncertain. 2003;27:5-76.

43. Cancer facts and figures 2015. American Cancer Society website. Published 2015. Accessed March 25, 2016.

44. Ljungberg B, Campbell SC, Choi HY, et al. The epidemiology of renal cell carcinoma. Eur Urol. 2011;60(1):615-621. doi: 10.1016/j.eururo.2011.06.049.

45. SEER Cancer Statistics Review 1975-2012. National Cancer Institute website. Published 2016. Accessed April 14, 2016.

46. Protzel C, Maruschke M, Hakenberg OW. Epidemiology, aetiology, and pathogenesis of renal cell carcinoma. Eur Urol Suppl. 2012;11(3):52-59. doi: 10.1016/j.eursup.2012.05.002.

47. Howden LM, Meyer JA. Age and sex composition: 2010: 2010 Census Briefs. US Census Bureau website. Published May 2011. Accessed May 17, 2016.

48. Whitehead SJ, Ali S. Health outcomes in economic evaluation: the QALY and utilities. Br Med Bull. 2010;96(1):5-21. doi: 10.1093/bmb/ldq033.
Copyright AJMC 2006-2018 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
Welcome the the new and improved, the premier managed market network. Tell us about yourself so that we can serve you better.
Sign Up

Sign In

Not a member? Sign up now!