A review of the various value calculators that have emerged to measure the value of cancer therapies—these calculators reflect the interests of their developers and vary substantially in their intention, format, and usability.
The proliferation of high-cost cancer therapies has prompted efforts to quantify their value to healthcare stakeholders and society. The inherent challenge in achieving this goal is that each stakeholder holds differing perspectives of value. Calculators that have emerged to measure the value of cancer therapies reflect the interests of their developers and vary substantially in their intention, format, and usability. Input from each stakeholder is critical to construct a tool that has applicability to individuals, populations, and the healthcare system.
In today’s healthcare delivery and reimbursement environment, the focus has shifted from volume to value. Purchasers and payers now compel providers and pharmaceutical manufacturers to demonstrate the value of services and products through metrics that can be measured. In theory, the provision of value-based care also improves the patient experience through higher quality and satisfaction.
The shift to value-based care has been rapid in high-cost specialties where clearly established care protocols can result in predictable outcomes, such as cardiology and orthopedics. In oncology, where personalized treatment approaches are more common, the value-based paradigm has been slower to take root. Scientific advances in our understanding of cancer defy population-based approaches to care, which often form the foundation of value-based reimbursement programs.
Our evolving recognition of cancer, as a complex gallery of molecularly driven diseases, has led to the development of niche drugs, often costing $100,000 or more per year of treatment.1 Escalating drug costs have prompted several individuals and organizations to develop tools or, “calculators,” intended to pinpoint the value of new drug therapies. To date, 4 value calculators have been developed for public dissemination of information, and more are likely to emerge.
In March 2016, The American Journal of Managed Care assembled an expert panel representing payers, providers, pharmaceutical companies, and patients to discuss meaningful considerations for building a value calculator. The group examined the strengths and weaknesses of existing calculators and reached consensus on additional considerations that are relevant across stakeholder groups.
The panel was moderated by Bruce A. Feinberg, DO, vice president and chief medical officer, Cardinal Health Specialty Solutions. Experts who lent their opinions to the discussion included Alan Balch, PhD, chief executive officer, Patient Advocate Foundation; James C. Gilroy, senior director, Market Access, Eli Lilly & Co; Ira Klein, MD, MBA, FACP, senior director, Quality, Strategic Customer Group, Janssen Pharmaceutical Companies of Johnson & Johnson; Michael A. Kolodziej, MD, national medical director, Oncology Solutions, Aetna; and Ted Okon, MBA, executive director, Community Oncology Alliance.
Definitions of Value
The need to define value in healthcare stems from the steady growth of healthcare consumption. Following the enactment of Medicare, Pauly predicted that a health insurance setup that reduces the price of healthcare to consumers, but not the cost of producing healthcare, would result in excess consumption and a loss of economic prosperity.2 Since then, health spending, as a share of Gross Domestic Product, has increased from 6.2% to 17.5%.3
Government actions that limit healthcare demand would be politically unpalatable, so payers have moved to control the supply side. Evidence—or a lack of it—to support a healthcare intervention, validates controls on supply. The growth of the evidence base for cancer therapies has enabled the development of empirical tools for measuring their value. Despite the limitations inherent in the new value calculators, their effort to bring rigor to the assessment of novel therapies is a positive development, especially in light of the fast-growing array of choices to treat cancer.
Existing value calculators tend to be grounded in the developer’s interpretation of value. In developing a value calculator that considers the needs and objectives of all stakeholders, a useful starting point is to begin with an equation for value and examine stakeholder perspectives that define it.
By definition, value-based care incorporates cost into clinical decision making. In the context of healthcare, then, value can be expressed as an equation4: Value = Outcomes/Cost.
This seemingly simple idea becomes more complex when one considers what constitutes
. Porter noted that outcomes are “inherently condition-specific and…no single outcome captures the results of care.” Cost, he said, refers to the total cost for a full cycle of care, and that “to reduce cost, the best approach is often to spend more on some services and reduce the need for others.”
The relevance of outcomes also differs among stakeholders, and even within a single stakeholder group. Payers, for instance, would welcome an outcome which measures the total cost of care affected by a therapeutic regimen. Patients may prefer a continuum of outcomes ranging from cure to amelioration of disease to assurance that they will be able to resume normal activities.
Understanding which of these outcomes is attainable is critical for a patient to determine the value of the available treatment options. For a variety of reasons— fragmentation within healthcare, reimbursement that discourages providers from taking the time to explain options, or the lack of price transparency associated with first-dollar coverage, to name a few—patients historically have been shielded from intelligence they need to discern treatment options that match their preferences. As cancer treatments become more specialized, patients will need tools to help them decide which outcomes are important to them. This becomes even more important as changing benefit designs increasingly shift costs to patients.
If defining the numerator (outcomes) seems complex, then defining the denominator (cost) is equally challenging. Existing calculators, for measuring the value of a drug, consider its cost in isolation outside of the larger context of total cost of care for an episode. As such, a calculator may not necessarily be useful for determining the intervention’s true value (
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For patients, costs are both absolute and relative. A patient’s benefit design, for instance, defines his absolute out-of-pocket cost for an intervention. The patient’s willingness to pay, however, depends on how that cost affects his ability to afford aspects of everyday life, such as utilities, rent, or transportation. The availability of co-payment assistance for physician visits, hospital bills, and the drug itself also factor into willingness to pay. This series of tradeoffs is unique to each patient and contributes to his judgment about the “worth” of a drug’s cost.
Perspectives on Value
As perspectives on cost differ from one stakeholder to the next, so do perceptions of value. Let us consider how each stakeholder formulates value judgments.
Oncologists. To an oncologist, the cost half of the value equation is simple: does the patient believe he can afford a particular treatment? Whether the patient can accept the economic burden of a particular therapy is a decision that only the patient can make. Many oncology practices have financial counselors on staff to help guide the patient, but in the end, the choice is up to the patient.
The outcomes half of the equation is more complicated. In treating patients, oncologists think about several types of outcomes, primarily:
Payers. Payers may view value through 2 lenses: population-based care and personalized medicine.
At the population level, value-based insurance design can be implemented for some high-prevalence conditions that have,
Making beta blockers accessible to patients who have had a heart attack, for instance, is an evidence-based, low-cost investment whose value is reflected in the potential for avoidance of readmission or a recurrent cardiac event. Similar value judgments can be made about the accessibility of treatments for people with type 2 diabetes to help them avoid complications, or to people with asthma to prevent exacerbations.
For low-incidence, high-cost diseases in which a small minority of the population incurs a disproportionate share of costs, decisions about value are more frequently made on an individual basis. Sometimes, the value judgment lies neither with the patient nor the payer, but with the provider group if the group is obligated to follow clinical pathways or has taken on financial risk.
Pharmaceutical companies. For brand manufacturers, value lies in true innovation. Is a drug first in its class? Does it represent a breakthrough over existing therapies? Even drugs that are not first-in-class may demonstrate value if it can be shown how some populations respond to the product relative to other drugs in its class.
Manufacturers measure the value of new products using FDA-specified endpoints for efficacy and safety. As more specialized therapies are developed, however, some of those endpoints, such as overall survival (OS), PFS, or time to progression, may not capture the true value of the drug, especially for subpopulations of so-called, super responders.
The industry’s ability to communicate value for a product is further complicated by the fact that its true value may not be fully understood at launch. Determining the value of a drug is a dynamic process that takes into account real-world experience, though the industry is limited to marketing efficacy on the basis of clinical trial data.
Patients. Patients often perceive value in terms of what they want from their care. Is the patient, for instance, most concerned about making it to her child’s wedding? Controlling nausea? The patient’s treatment goals can lead to a discussion with her oncologist about outcomes, such as PFS or side-effect profiles, that are most meaningful to the patient.
On the cost side of the equation, a drug’s cost is part of the larger milieu of treatment-related expenses. Considering the patient’s individual treatment goals and the overall expense of treating her cancer, the cost of the drug itself may become less relevant as a focal point.
Tools for Measuring Value
In recent years, 4 organizations have released calculators, and other tools, for assessing the value of high-cost specialty drugs. The first, launched 3 years ago, was Memorial Sloan-Kettering Cancer Center’s (MSKCC), DrugAbacus. In 2015, the American Society of Clinical Oncology (ASCO) released its Value Framework, which was followed by the rollout of the National Comprehensive Cancer Network’s (NCCN), Evidence Blocks. This year, the Institute for Clinical and Economic Review (ICER) began to assess the value of individual drugs through evidence reports.
Each of these tools has substantial differences. These tools are summarized here, along with the expert panel’s analysis of their strengths and weaknesses.
Developed by Peter Bach, MD, director of the Center for Health Policy and Outcomes, at MSKCC, DrugAbacus is an online tool that prompts users to make their own judgment about whether the cost of a drug is in line with its value.
In the top panel, each drug’s average wholesale price is represented by the gray points. Its “Abacus price” is represented by the green and red points, which rise or fall, as the user adjusts the inputs below.
The DrugAbacus begins with a fixed dollar value for efficacy, then allows the user to adjust that value up or down on the basis of 6 inputs (). The user can adjust the importance of each input, in essence assigning a value to each of the 6 components. The resulting price, or “Abacus price,” can be compared to the drug’s average wholesale price at launch.5
The Abacus’s baseline price for efficacy and the magnitude of the variable inputs are based on data supplied by the manufacturer to the FDA. Strengths and weaknesses of the model are summarized in .
TABLE 1. Analysis of the DrugAbacus
Memorial Sloan Kettering Cancer Center DrugAbacus
ASCO Value Framework
In August 2015, ASCO’s Value in Cancer Care Task Force released a framework for comparing the relative clinical benefit, toxicity, and cost of a treatment.6
In the first step of this 2-step tool, the user calculates a net health benefit (NHB) score for a drug based on its clinical benefit and toxicity. This calculation awards points for levels of improvement in either median OS or PFS, as shown on product labeling. If neither endpoint is available, response rate may be used. Points are subtracted or added for the presence or lack of grade 3 to 5 toxicities ().
Next, the regimen’s drug acquisition cost and patient’s out-of-pocket costs are listed separately. The framework intentionally does not incorporate costs into the net value of the drug; rather, costs are to be juxtaposed against the NHB. This allows the user to look at both to reach a conclusion about value.
Clinicians use package labeling to score a net health benefit (NHB) for a drug. The components that make up the NHB are weighted. The NHB score is then presented, side by side, with a price component.
Two versions of the framework exist: 1 for advanced cancer, and 1 for potentially curative disease, in recognition of clinical concerns unique to each. Strengths and weaknesses of the model are summarized in .
TABLE 2. Analysis of the ASCO Value Framework
American Society of Clinical Oncology Value Framework
EHR indicates electronic health record; NHB, net health benefit.
NCCN Evidence Blocks
NCCN began publishing NCCN Guidelines with Evidence Blocks in October 2015, beginning with chronic myelogenous leukemia and multiple myeloma. Throughout 2016, NCCN will add evidence blocks to the updated guidelines for major cancer types. By the end of 2017, NCCN’s entire library of guidelines will incorporate evidence blocks.7
The blocks represent 5 key components of value for specific therapeutic regimens (). A rating of 1 (lowest) to 5 (highest) is assigned to blocks for efficacy (E), safety (S), and the quality (Q) and consistency (C) of evidence, providing a visual representation of existing criteria for NCCN recommendations.
A 5th block, a measure of “affordability,” is based on NCCN Guidelines panel members’ knowledge of overall costs of the regimen—1 represents “very expensive”, and 5 represents “very inexpensive.” Strengths and weaknesses of the model are summarized in .
TABLE 3. Analysis of the NCCN Evidence Blocks
National Comprehensive Cancer Network Evidence Blocks
Institute for Clinical and Economic Review Evidence Reports
ICER generates evidence reports for newly approved drugs and procedures that have the potential for a significant impact on patient care and health system budgets.8 The development of a report on a new drug therapy is modeled on the Medicare Payment Advisory Commission process of producing a staff report, making it public, holding a meeting for comment, and taking a final panel vote. Final reports are made available soon after FDA approval.9
Each report includes a comparative effectiveness analysis, a cost-effectiveness analysis, and potential budget impact. After analyzing the evidence, reviewers use a scale of low, intermediate, or high to rate both the clinical value of a therapy relative to a benchmark (such as standard of care) and its value to the healthcare system.
If a drug’s cost per additional quality-adjusted life year, commonly referred to as QALY, exceeds thresholds for cost-effectiveness, ICER suggests a price at which the drug would add value to the system ().
Strengths and weaknesses of the model are summarized in .
TABLE 4. Analysis of ICER Evidence Reports
Institute for Clinical and Economic Review Evidence Reports
NICE indicates National Institute for Health and Care Excellence; QALY, quality-adjusted life year.
Determining the value of a pharmaceutical product is a daunting task because of stakeholder variations in perception of value. Any single model for measuring value that does not involve the participation of all stakeholders is likely to have inherent limitations.
Those who develop value-measurement tools should make the rationale for the endeavor clear from the outset. Is the intent of the tool to facilitate a conversation about shared decision making? Is it to develop numeric cutoffs for access to a drug? Is it to promote public policy? No tool will be perfect, but calculators that advance the value conversation in a meaningful way for all stakeholders provide a good starting point for definitive action.
Two of the calculators reviewed here may drive conversations between physicians and patients about choice of therapy. Porter’s concept of creating shared value is realized through shared decision making rooted in patient preferences.10 A regimen that is complicated or toxic, for instance, may present the potential for adherence issues, enabling discussion about choices that may be more effective—not to mention cost effective through better adherence or avoidance of complications. Affordability concerns may lead the patient toward co-payment assistance programs that foster access to therapies best suited to the patient’s clinical circumstances.
Affordability is subjective, relative, and complicated. It takes into account a patient’s income and financial reserves, benefit design, whether the patient is a Medicare or commercial beneficiary, site of care, the drug’s acquisition cost to the site of care, and, importantly, the total cost of care. Thus, drug cost alone is not an adequate determinant of value. Calculators that focus specifically on drug costs do not capture most of the factors that patients identify as their primary sources of financial duress.
Two other tools reviewed here appear to be aimed at payers and policy makers. These tools attempt to address issues related to drug pricing and society’s responsibility to use healthcare resources wisely. However, the inclusiveness of inputs and their relevance to some stakeholders is subject to debate. Cost-benefit analyses, for instance, can be useful but do not account for things that society and individuals value in ways that cannot always be monetized.
Using the QALY to determine cutoff points for access introduces a value construct used in the United Kingdom, where the National Institute for Health and Care Excellence integrates cost into coverage decisions. The approach may work for the blockbuster drug model, but its applicability to personalized medicine or niche populations, such as those whose cancer is driven by genetic mutations, is unclear.
In general, practicality is an important feature of any value calculator. ASCO may have moved in the right direction with its effort to tell a comprehensive story, but even ASCO acknowledges its model is too complex for clinical application. NCCN’s Evidence Blocks are easier to understand—perhaps the closest thing we have seen to an app—but the subjectivity of affordability confounds the simplicity of the model. The complexities of the healthcare system make practicality and simplicity elusive, but stakeholders who develop value tools should not fear the complexities. While their initial model may not be perfect, it can be refined over time.
However useful they may be, current value calculator limitations are, to some extent, a function of not having all of the right inputs. For instance, none of the models take into account site of service, which influences costs. None include patient-reported outcomes, which is a legacy of the FDA’s drug-approval process. Because all of the models are powered by clinical trial data, the information they provide may not be reflective of the patient in front of the clinician.
The FDA can do its part, modernizing clinical trial endpoints and providing a regulatory pathway that enables rapid access for subpopulations who respond well even as manufacturers continue to study the benefit to a broader population. Manufacturers, too, can help by collaborating with payers to track real-world experience and renew a product’s value proposition, which may change over time.
The current focus on value, as reflected in federal regulatory initiatives and payment reforms, is useful for fostering a shift away from fee-for-service. However, value-based initiatives, that exclude major stakeholder groups from their development, may have an unintended consequence: the formation of value judgments based on institutional pressures and the creation of value-assessment tools that do not fully capture value. The input of all stakeholders is critical for constructing a tool that has applicability to individual stakeholders, populations, and the healthcare system.
In thinking about value, it is not constructive to assume that stakeholders’ perceptions of value are adversarial, or that they fall into an either/or paradigm. There are, in fact, commonalities; both patients and payers think about costs, for instance, but in ways that are unique to their own ecosystems. The differences are nuance. When the focus of defining value is benefit to the patient—the ultimate recipient of care—agreement across stakeholders on how to move forward becomes easier.
We welcome how payment reform has stimulated conversations about value and opened the door to rethinking healthcare delivery and treatment. A common vision of what the healthcare system, as a whole, is trying to deliver, will help to align incentives in the development of formulas for determining value. Having all stakeholders at the table facilitate that conversation is critically important to creating a unified vision. A collaborative process using patient-centered care, as the organizing principle, provides a path forward.
Are Drug-Based Value Calculators Relevant for Addressing Costs of Cancer?
In the context of total cancer treatment costs, drug therapy is a relatively small slice of the pie. Drugs account for 18% of total treatment costs in the Medicare population and 20% in the commercial population.11 The vast majority of costs are attributable to inpatient admissions, outpatient services, and surgeries.
Complex issues related to society, bureaucracy, and lack of political will are embedded in some of the costs of cancer care. First, there is end-of-life care, for one: the 6% of Medicare patients who die each year consume as much as 30% of Medicare costs.12 Second, there are hidden costs: one drug manufacturer recently reported that its customers pay only 19% to 67% of list prices across its portfolio, but as many as 10 to 30 middlemen touch a drug before it gets to the patient, driving up costs to payers and patients.13 Third, there are entitlements: health technology assessments are unpopular because they mean someone has to say “no,” which is uncomfortable in American society. When the Patient-Centered Outcomes Research Institute (PCORI) was established, it was thought it would do cost-effectiveness (CE) research, but PCORI interpreted its mandate as being unable to fund CE analyses.14
These are difficult systemic issues, and in a world where politicians want quick fixes, the high cost of some specialty drugs has made them an easy political target. So-called value calculators provide a Consumer Reports-type device designed to reduce the likelihood of arbitrary decision making on the basis of cost alone, placing a drug’s cost in the context of total value. A calculator may not be perfect, but it has a place in advancing the discussion about value-based care.
You can view videos from the Oncology Stakeholders Summit, Spring 2016, here.