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The American Journal of Managed Care December 2018
Feasibility of Expanded Emergency Department Screening for Behavioral Health Problems
Mamata Kene, MD, MPH; Christopher Miller Rosales, MS; Sabrina Wood, MS; Adina S. Rauchwerger, MPH; David R. Vinson, MD; and Stacy A. Sterling, DrPH, MSW
From the Editorial Board: Jonas de Souza, MD, MBA
Jonas de Souza, MD, MBA
Risk Adjusting Medicare Advantage Star Ratings for Socioeconomic Status
Margaret E. O’Kane, MHA, President, National Committee for Quality Assurance
Reducing Disparities Requires Multiple Strategies
Melony E. Sorbero, PhD, MS, MPH; Susan M. Paddock, PhD; and Cheryl L. Damberg, PhD
Cost Variation and Savings Opportunities in the Oncology Care Model
James Baumgardner, PhD; Ahva Shahabi, PhD; Christopher Zacker, RPh, PhD; and Darius Lakdawalla, PhD
Patient Attribution: Why the Method Matters
Rozalina G. McCoy, MD, MS; Kari S. Bunkers, MD; Priya Ramar, MPH; Sarah K. Meier, PhD; Lorelle L. Benetti, BA; Robert E. Nesse, MD; and James M. Naessens, ScD, MPH
Patient Experience During a Large Primary Care Practice Transformation Initiative
Kaylyn E. Swankoski, MA; Deborah N. Peikes, PhD, MPA; Nikkilyn Morrison, MPPA; John J. Holland, BS; Nancy Duda, PhD; Nancy A. Clusen, MS; Timothy J. Day, MSPH; and Randall S. Brown, PhD
Relationships Between Provider-Led Health Plans and Quality, Utilization, and Satisfaction
Natasha Parekh, MD, MS; Inmaculada Hernandez, PharmD, PhD; Thomas R. Radomski, MD, MS; and William H. Shrank, MD, MSHS
Primary Care Burnout and Populist Discontent
James O. Breen, MD
Adalimumab Persistence for Inflammatory Bowel Disease in Veteran and Insured Cohorts
Shail M. Govani, MD, MSc; Rachel Lipson, MSc; Mohamed Noureldin, MBBS, MSc; Wyndy Wiitala, PhD; Peter D.R. Higgins, MD, PhD, MSc; Sameer D. Saini, MD, MSc; Jacqueline A. Pugh, MD; Dawn I. Velligan, PhD; Ryan W. Stidham, MD, MSc; and Akbar K. Waljee, MD, MSc
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The Value of Novel Immuno-Oncology Treatments
John A. Romley, PhD; Andrew Delgado, PharmD; Jinjoo Shim, MS; and Katharine Batt, MD
Provider-Owned Insurers in the Individual Market
David H. Howard, PhD; Brad Herring, PhD; John Graves, PhD; and Erin Trish, PhD
Mixed Messages to Consumers From Medicare: Hospital Compare Grades Versus Value-Based Payment Penalty
Jennifer Meddings, MD, MSc; Shawna N. Smith, PhD; Timothy P. Hofer, MD, MSc; Mary A.M. Rogers, PhD, MS; Laura Petersen, MHSA; and Laurence F. McMahon Jr, MD, MPH

The Value of Novel Immuno-Oncology Treatments

John A. Romley, PhD; Andrew Delgado, PharmD; Jinjoo Shim, MS; and Katharine Batt, MD
This study assesses the value of novel immuno-oncology treatments to society.
Share of Social Value Flowing to the Manufacturer

We focused on revenues minus production costs—that is, profits. To calculate revenues for the manufacturer, we first determined the typical dose of an infusion treatment from our reference studies17,28; this dose accounts for the average weight of US adults of the same age, adjusted for gender composition in the studies.29 We then multiplied dose per infusion by number of infusions from the 2 published studies. Ipilimumab was administered over 4 infusions; for nivolumab, the median number of infusions was 8. Finally, total dosage was multiplied by the Average Sales Price used to determine payments under Medicare Part B and decreased by 10% to reflect the typical manufacturer rebate for oncology drugs.30,31 Industry reporting points to a cost of $100 per gram for a well-established production line.32 Estimated profits per patient were then aggregated across the patient cohorts and divided by social value from the preceding analytic step to quantify the share of value flowing to the pharmaceutical manufacturer.


Based on the literature and our analytic approach, we estimate that an individual with advanced unresectable or metastatic melanoma could expect real-world survival of 65.6 months with ipilimumab treatment compared with 23.1 months with an existing standard of care (gp100). Within 45 months of treatment, when gp100 follow-up ended, average survival was 17.4 months with ipilimumab versus 11.2 months with gp100. Overall, discounting future years at a 3% rate, life expectancies were 32.4 months and 14.2 months, respectively, as Figure 1 shows. Based on average age at diagnosis from SEER (as described previously), the life expectancy estimates are 31.7 and 13.9 months; further allowing for variability in age at diagnosis, the estimates are 30.7 and 13.5 months.

For advanced previously treated squamous NSCLC, average survival through 24 months is estimated to be 7.9 months on a discounted real-world basis for an existing standard of care (docetaxel). Based on our preferred survival functions, life expectancy is projected to be 11.4 months for the existing standard of care and 27.7 months with nivolumab, for a survival gain of 16.3 months. If patients who are alive at 36 months are cured of cancer, survival is estimated to increase to 14.3 months with docetaxel compared with 28.1 months with nivolumab, as shown in Figure 1. This survival gain (13.9 months) is smaller because the survival analysis of patients receiving docetaxel points to continued cancer mortality beyond 36 months. If just half of patients are cured, the survival gain with nivolumab would grow to 15.6 months. In the remainder of our analysis, we use the estimated gain of 13.9 months from the durable survival scenario.

As Figure 2 shows, based on the economic model for valuing discrete changes in longevity, the total (present discounted) value of the expected survival gain from treating a patient with melanoma with ipilimumab, as in the reference studies, is estimated to be $465,000, assuming a full income level (described previously) of $200,000. If full income were $100,000, the value of the survival gain would be $232,000, and the value would be $697,000 if full income were $300,000. Similarly, the value of the survival gain from treating a patient with NSCLC with nivolumab is estimated to range from $180,000 to $586,000, according to the magnitude of full income.

Aggregating across patients over a 5-year window, the total value to society of the survival gains from treating patients with melanoma with ipilimumab is estimated to be $1.9 billion, based on a full income of $200,000, as shown in Figure 3. In sensitivity analysis, we estimated that aggregate utilization would decrease 36% if all patients with melanoma who had the BRAF V600 mutation were first treated with BRAF inhibitors. On the other hand, we estimated that the potential treatment of patients with early-stage melanoma who survive but progress to advanced disease could increase the size of the treated cohort by 70%, generating a social value of $3.2 billion under our survival projections. Turning to nivolumab treatment of NSCLC, the total social value of survival gains is $1.7 billion. If the rate of second-line NSCLC treatment increased 25% in response to the availability of a more effective therapy, this figure would be $2.2 billion.

Finally, we estimate that the pharmaceutical manufacturer receives $132,000 in profits from each patient with melanoma treated with ipilimumab and $45,000 from each patient with NSCLC treated with nivolumab. Thus, as Figure 4 shows, less than 30% (28.4%) of the value of treating melanoma patients with ipilimumab flows to the manufacturer as profits. For nivolumab treatment of NSCLC, the manufacturer’s profits are a notably smaller share (11.8%) of the value of the survival gains experienced by patients.

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