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As the Debate About Value Assessment Flares, Where Is the Middle Ground?

The Innovation and Value Initiative (IVI) is a collaboration of scientists, patient organizations, payers, life sciences companies, providers and delivery systems dedicated to finding scientifically credible approaches to measuring value in healthcare. Inspired by the open-source software process, IVI established the Open-Source Value Project, a platform for the development of dynamic, transparent and flexible scientific models that allows diverse health care stakeholders to measure value in health care treatments or services. IVI’s first two open-source models focus on the value of treatments for moderate to severe rheumatoid arthritis and non-small cell lung cancer. 
The current environment for healthcare value assessment seems to mirror American politics: a rush to the extreme at a time when collaboration in the sensible middle is most needed.

A recent announcement by the pharmacy benefit manager, CVS Caremark, has caused the long-simmering debate about cost effectiveness to flare, bringing the polarizing positions in the debate into sharp relief.

CVS’s new program relies on results of cost-effectiveness analyses (CEA) conducted by the Institute for Clinical and Economic Research (ICER). In this new program, CVS Caremark’s customers will be allowed to exclude from coverage any medication whose relative cost effectiveness exceeds a threshold of $100,000 per Quality Adjusted Life Year (QALY). The program will exclude therapies deemed “breakthrough therapies” by the FDA.

The reaction was swift. The Partnership to Improve Patient Care (PIPC), an organization run by Tony Coelho, the former California congressman who sponsored the Americans with Disabilities Act, organized 90 patient groups to write to CVS CEO Larry Merlo saying that relying on a deeply flawed cost-effectiveness assessment powered by ICER would discriminate against individuals with disabilities and chronic illnesses.

So who is right? The short answer is that both arguments have merits and flaws. The long answer is that what’s lacking is collaboration, a process that gives different interests an opportunity to put down their measurement armament and have a transparent discussion about value assessment, to understand what value means from other points of view. The goal must be to create value assessment tools that enable decision makers to measure value from different angles, including patient perspectives, to arrive at more reliable (and real-world) assessments.

In our environment of scarce resources, cost-effectiveness analysis (CEA) provides a concise metric that serves the immediate demand for answers and for tools that can rein in escalating costs. But it’s not the only approach that can give insight. CEA typically calculates value based on costs and health benefits for the “average” patient with a given condition. One of the fundamental errors we’re making in running toward “value based” healthcare is the assumption that we can use only one price assessment tool to define value.

At issue is the way that value assessments are used. Price and value are related, but not synonymous—and conflating them is misguided. Even more concerning is the use of value assessment as a blunt instrument for cost containment. Rather, value assessment should be used to home in more precisely on the highest value (read: greatest overall benefit relative to cost) for patients.

Value is not one-dimensional. Just as clinicians need diverse medical tools to treat patients, it takes multiple tools to accommodate the complexity of value in healthcare. Relying solely on a single, population-wide estimate of cost effectiveness essentially assumes that all patients will respond similarly to the medication. The reality is that even cost effectiveness estimates like those that CVS propose to use do not capture the variation in value within a population. Many treatments are more effective for specific sub-types of patients, or offer immense benefits to only a share of patients, but these nuances are often glossed over.

On the other hand, it would be rash to abandon cost effectiveness entirely. Though imperfect, it is nonetheless a valuable source of information on the relative value of therapies. When patients see cost effectiveness being used to justify denials of coverage, however, it is perhaps not surprising that they react with strong opposition to its use in any form.

A critical contributor to this opposition to cost-effectiveness analysis in any form is the lack of patient input. When patient perspectives are not sought as part of value assessment, an understanding about what’s most important for patients (such as time away from work, costs of transportation, risk of specific side effects) remain hidden from therapy value calculations. This leaves healthcare decision makers—from clinical trial designers to employee benefit designers—with blind spots into factors affecting choice and adherence to treatment, which masks true value and may cost the payer or employer more in the long run than the therapy price tag. Cost effectiveness analysis often lacks the means to effectively incorporate all of these considerations—but productive discourse is the first step toward collaboratively improving cost effectiveness.

It was a pleasant surprise to see CVS’ reaction to the PIPC-organized letter, in which they committed to sit down with patients in the disability community to understand their views on CEA. That’s an encouraging sign on which additional collaboration should be built. 

Cost-effectiveness analysis shouldn’t be viewed as the end game in value assessment.  While it may sound too existential, there really should be no final estimate on value. Rather, all value assessment tools should be seen as aiding decision making, and a foundation on which new and more advanced methods to measure healthcare value can be built.  For example, value assessment now should include CEA as well as multi-criteria decision analysis. We need to, and are, making progress towards finding methods to incorporate sources of real-world data to increase the applicability of value assessment to patient subgroups that may differ from those in population-health focused models.

For value-based care to fulfill its promise, those assessing value would be best served by ignoring the course of political debates by eschewing the extremes and forging a middle ground where productive collaboration can occur and the science of value assessment be improved. Patients, policymakers, payers, PBMs, providers, and manufacturers all have important contributions to make if we are to move to value-based decision making. It’s vital that healthcare decision makers collaborate so innovation can be fostered, tested, and evaluated and the right patient can get the right therapy from the right provider in the right setting at the right time.

About the Authors

Jennifer Bright, MPA, is the executive director of IVI, and Mark Linthicum, MPP, is the director of scientific communications.

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