Currently Viewing:
The American Journal of Managed Care November 2016
Referrals and the PCMH: How Well Do We Know Our Neighborhood?
Andrew Schreiner, MD; Patrick Mauldin, PhD, Jingwen Zhang, MS; Justin Marsden, BS; and William Moran, MD, MS
Does Medicare Advantage Enrollment Affect Home Healthcare Use?
Daniel A. Waxman, MD, PhD; Lillian Min, MD, MSHS; Claude M. Setodji, PhD; Mark Hanson, PhD; Neil S. Wenger, MD, MPH; and David A. Ganz, MD, PhD
A New Chapter in Health Reform
Michael E. Chernew, PhD, and A. Mark Fendrick, MD
Prescribers' Perceptions of Medication Discontinuation: Survey Instrument Development and Validation
Amy Linsky, MD, MSc; Steven R. Simon, MD, MPH; Kelly Stolzmann, MS; Barbara G. Bokhour, PhD; and Mark Meterko, PhD
Enhancing Patient and Family Engagement Through Meaningful Use Stage 3: Opportunities and Barriers to Implementation
Jaclyn Rappaport, MPP, MBA; Sara Galantowicz, MPH; Andrea Hassol, MSPH; Anisha Illa, BS; Sid Thornton, PhD; Shan He, PhD; Jean Adams, RN, ACIO; and Charlie Sawyer, MD, FACP
Integrated Care Organizations: Medicare Financing for Care at Home
Karen Davis, PhD; Amber Willink, PhD; and Cathy Schoen, MS
Currently Reading
Reconsidering the Economic Value of Multiple Sclerosis Therapies
Tiffany Shih, PhD; Craig Wakeford, MA; Dennis Meletiche, PharmD; Jesse Sussell, PhD; Adrienne Chung, PhD; Yanmei Liu, MS; Jin Joo Shim, MS; and Darius Lakdawalla, PhD
Maternal Mental Health and Infant Mortality for Healthy-Weight Infants
Susan E. White, PhD, RHIA, CHDA, and Robert W. Gladden, MA, BS
The Role of Internal Medicine Subspecialists in Patient Care Management
Jonathan L. Vandergrift, MS; Bradley M. Gray, PhD; James D. Reschovsky, PhD; Eric S. Holmboe, MD; and Rebecca S. Lipner, PhD
Medical Home Transformation and Breast Cancer Screening
Amy W. Baughman, MD, MPH; Phyllis Brawarsky, MPH; Tracy Onega, PhD, MS; Tor D. Tosteson, ScD; Qianfei Wang, MS; Anna N.A. Tosteson, ScD; and Jennifer S. Haas, MD, MSc

Reconsidering the Economic Value of Multiple Sclerosis Therapies

Tiffany Shih, PhD; Craig Wakeford, MA; Dennis Meletiche, PharmD; Jesse Sussell, PhD; Adrienne Chung, PhD; Yanmei Liu, MS; Jin Joo Shim, MS; and Darius Lakdawalla, PhD
Availability of multiple sclerosis (MS) therapies provides substantial value to the currently healthy (who may contract MS in the future), particularly when treatment is fully covered by insurance.
This paper brings tools of economic analysis to bear on the question of value in healthcare. Our approach resolves 2 key omissions in prior valuations of MS therapies. First, this study quantified the role of insurance coverage in enhancing the value of therapy. Second, this study examined how MS therapies improve the outlook of those who face the risk of future MS onset, in addition to providing benefits to those who are already sick.4 We found that accounting for these 2 factors more accurately depicts the estimated overall value of the therapies considered here.


The authors thank Sarah Beers, Oliver Diaz, Melissa Frasco, Barney Hartman-Glaser, Sarah Green, and Anshu Shrestha for excellent research assistance and technical support. They also thank Dr Lawrence Steinman for clinical advice. 

Author Affiliations: Precision Health Economics (TS, JS, AC, YL, JJS), Los Angeles, CA; Biogen (CW, DM), Cambridge, MA; Schaeffer Center for Health Policy and Economics, University of Southern California (DL), Los Angeles, CA.

Source of Funding: Biogen.

Author Disclosures: Drs Shih and Sussell, and Ms Liu, and Ms Shim are employees of Precision Health Economics (PHE), a consulting firm that received research funding from Biogen. Dr Chung was an employee of PHE at the time this research was performed. Dr Meletiche and Mr Wakeford are employees of Biogen, which funded this research project. Dr Lakdawalla is chief strategy officer and holds equity at PHE.

Authorship Information: Concept and design (TS, CW, DM, DL); acquisition of data (YL); analysis and interpretation of data (TS, CW, JS, YL, JJS, DL); drafting of the manuscript (TS, JS, AC); critical revision of the manuscript for important intellectual content (TS, CW, DM, JS, AC, YL, JJS, DL); statistical analysis (TS, JS, YL, JJS); obtaining funding (CW, DM); administrative, technical, or logistic support (AC); and supervision (TS, CW, DM, JS, DL).

Address Correspondence to: Jesse Sussell, PhD, Precision Health Economics, 11100 Santa Monica Blvd, Ste 500, Los Angeles, CA 90025. E-mail:

1. Abboud C, Berman E, Cohen A, et al; Experts in Chronic Myeloid Leukemia. The price of drugs for chronic myeloid leukemia (CML) is a reflection of the unsustainable prices of cancer drugs: from the perspective of a large group of CML experts. Blood. 2013;121(22):4439-4442. doi: 10.1182/blood-2013-03-490003.

2. Kantarjian HM, Fojo T, Mathisen M, Zwelling LA. Cancer drugs in the united states: justum pretium—the just price. J Clin Oncol. 2013;31(28):3600-3604.

3. Ehrlich I, Becker GS. Market insurance, self-insurance, and self-protection. J Polit Econ. 1972;80(4):623-648.

4. Lakdawalla D, Malani A, Reif J. The insurance value of medical innovation [NBER working paper No. 21015]. Wisconsin School of Business website. Published 2015. Accessed August 1, 2015.

5. Philipson TJ, Zanjani G. Economic analysis of risk and uncertainty induced by health shocks: A review and extension. 2013;1(8):453.

6. Chetty R. A new method of estimating risk aversion. Am Econ Rev. 2006;96(5):1821-1834.

7. Mehra R, Prescott EC. The equity premium: A puzzle. J Monet Econ. 1985;15(2):145-161.

8. Kocherlakota NR. The equity premium: It’s still a puzzle. J Econ Lit. 1996;34(1):42-71.

9. Cohen A, Einav L. Estimating risk preferences from deductible choice. Am Econ Rev. 2007;97(3):745-788.

10. Barsky RB, Juster FT, Kimball MS, Shapiro MD. Preference parameters and behavioral heterogeneity: An experimental approach in the health and retirement study. Q J Econ. 1997;112(2):537-579. doi: 10.1162/003355397555280.

11. Campbell JD, Ghushchyan V, Brett McQueen R, et al. Burden of multiple sclerosis on direct, indirect costs and quality of life: National US estimates. Mult Scler Relat Disord. 2014;3(2):227-236. doi: 10.1016/j.msard.2013.09.004.

12. Adelman G, Rane SG, Villa KF. The cost burden of multiple sclerosis in the United States: a systematic review of the literature. J Med Econ. 2013;16(5):639-647. doi: 10.3111/13696998.2013.778268.

13. Mitchell AJ, Benito-León J, González J-MM, Rivera-Navarro J. Quality of life and its assessment in multiple sclerosis: integrating physical and psychological components of wellbeing. Lancet Neurol. 2005;4(9):556-566.

14. Merkelbach S, Sittinger H, Koenig J. Is there a differential impact of fatigue and physical disability on quality of life in multiple sclerosis? J Nerv Ment Dis. 2002;190(6):388-393.

15. Hemmett L, Holmes J, Barnes M, Russell N. What drives quality of life in multiple sclerosis? QJM. 2004;97(10):671-676.

16. Noyes K, Bajorska A, Chappel A, et al. Cost-effectiveness of disease-modifying therapy for multiple sclerosis: a population-based study. Neurology. 2011;77(4):355-363. doi: 10.1212/WNL.0b013e3182270402.

17. Raftery J. Multiple sclerosis risk sharing scheme: a costly failure. BMJ. 2010;340. doi: 10.1136/bmj.c1672.

18. Grossman M. On the concept of health capital and the demand for health. J Polit Econ. 1972:223-255.

19. King JT Jr, Tsevat J, Lave JR, Roberts MS. Willingness to pay for a quality-adjusted life year: implications for societal health care resource allocation. Med Decis Making. 2005;25(6):667-677.

20. Gan T, Sloan F, Dear Gde L, El-Moalem HE, Lubarsky DA. How much are patients willing to pay to avoid postoperative nausea and vomiting? Anesth Analg. 2001;92(2):393-400.

21. Torrance GW, Feeny D. Utilities and quality-adjusted life years. Int J Technol Assess Health Care. 1989;5(4):559-575.

22. Torrance GW. Utility approach to measuring health-related quality of life. J Chronic Dis. 1987;40(6):593-600.

23. Torrance GW. Measurement of health state utilities for economic appraisal. J Health Econ. 1986;5(1):1-30.

24. Dendrou CA, Fugger L, Friese MA. Immunopathology of multiple sclerosis. Nat Rev Immunol. 2015;15(9):545-558. doi: 10.1038/nri3871.

25. Weiner HL. Multiple sclerosis is an inflammatory T-cell-mediated autoimmune disease. Arch Neurol. 2004;61(10):1613-1615.

26. Weiner HL. The challenge of multiple sclerosis: how do we cure a chronic heterogeneous disease? Ann Neurol. 2009;65(3):239-248. doi: 10.1002/ana.21640.

27. Hutchinson M, Fox RJ, Havrdova E, et al. Efficacy and safety of BG-12 (dimethyl fumarate) and other disease-modifying therapies for the treatment of relapsing-remitting multiple sclerosis: a systematic review and mixed treatment comparison. Curr Med Res Opin. 2014;30(4):613-627. doi: 10.1185/03007995.2013.863755.

28. Langer-Gould A, Brara SM, Beaber BE, Zhang JL. The incidence of clinically isolated syndrome in a multi-ethnic cohort. J Neurol. 2014;261(7):1349-1355. doi: 10.1007/s00415-014-7349-0.

29. Mayr WT, Pittock SJ, McClelland RL, Jorgensen NW, Noseworthy JH, Rodriguez M. Incidence and prevalence of multiple sclerosis in Olmsted County, Minnesota, 1985-2000. Neurology. 2003;61(10):1373-1377.

30. Thompson JP, Noyes K, Dorsey ER, Schwid SR, Holloway RG. Quantitative risk-benefit analysis of natalizumab. Neurology. 2008;71(5):357-364.

31. Zhang X, Hay JW, Niu X. Cost effectiveness of fingolimod, teriflunomide, dimethyl fumarate and intramuscular interferon-beta1a in relapsing-remitting multiple sclerosis. CNS Drugs. 2015;29(1):71-81. doi: 10.1007/s40263-014-0207-x.

32. Edwards RD. Health risk and portfolio choice. J Bus Econ Stat. 2008;26(4):472-485.

33. Damodaran A. Cost of capital by sector (US). Leonard N. Stern School of Business website. Updated January 2016. Accessed October 2016.

34. DiMasi JA, Grabowski GG, Hansen RW. Innovation in the pharmaceutical industry: new estimates of R&D costs. J Health Econ. 2016;47(1): 20-33.

35. Karaca-Mandic P, Abraham JM, Phelps CE. How do health insurance loading fees vary by group size?: implications for Healthcare reform. Int J Health Care Finance Econ. 2011;11(3):181-207. doi: 10.1007/s10754-011-9096-4.

36. Cohen RA, Martinez ME. Health insurance coverage: early release of estimates from the National Health Interview Survey, 2014. CDC website. Published June 2015. Accessed September 11, 2016.

37. DeNavas-Walt C, Proctor BD, Hill Lee C. Income, poverty, and health insurance coverage in the United States: 2005. US Census Bureau website. Published August 2006. Accessed October 2016.

38. Bentley TG, Effros RM, Palar K, Keeler EB. Waste in the US health care system: a conceptual framework. Milbank Q. 2008;86(4):629-659. doi: 10.1111/j.1468-0009.2008.00537.x. 
Copyright AJMC 2006-2020 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