Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
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Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#2The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us.
1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it.
2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more from the drug than the average patient it's actually prescribed for.
3. U.S. per-capita GDP is $60k. One's person's life being extended by one year consumes the entire income of 2.5 people.
4. There is an implicit assumption that drug companies are entitled to be paid by government, the entire value that their products provide. In normal competitive markets, there is a producer surplus and a consumer surplus, i.e. prices are higher than the cost of production, but lower than the value they deliver.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#3The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
A look at an actual ICER review provides more info. As an example, this is the working evaluation of Zolgensma, the most expensive drug in the world [0]
1. The ICER review considers the cost of drug as well as the non-drug related healthcare costs (see tables ES11 and ES12 among others)
2. ICER's cost-effectiveness recommendations cover specifically the patient populations that are studied. It is not scientifically valid to draw conclusions about a drug's effectiveness in populations in which the drug hasn't been studied. Companies must study drugs in prespecified patient populations in order to power their studies and create pre-defined statistical analysis plans. Studies that are not adequately powered, properly designed or that dont have predefined statistical analysis plans are not robust methods of discovering whether a drug is save and effective
3. This is a very complex topic and ICER evaluates cost-effective prices at a range of QALY thresholds because this is a subjective number (tables ES20 and ES21)
4. Because of the patent system, drug makers capture most of the consumer surplus before patent expiry,but after patent expiry then consumers capture essentially all of the consumer surplus. Something like 80% of prescriptions written in the US are for generic drugs
[0] https://icer-review.org/wp-content/uploads/2018/07/ICER_SMA_...
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#4The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
The NHS price cap on drugs here in the UK is somewhere in the low tens of thousands per QALY. This does drive down drug costs, but also means that some treatments just aren't available.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#5The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
The NHS price cap on drugs here in the UK is somewhere in the low tens of thousands per QALY. This does drive down drug costs, but also means that some treatments just aren't available.
Which is reasonable IMHO as every health system has some form of constraint on what is available. None gets a blank cheque.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#6The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
The NHS price cap on drugs here in the UK is somewhere in the low tens of thousands per QALY. This does drive down drug costs, but also means that some treatments just aren't available.
>This does drive down drug costs, but also means that some treatments just aren't available.
If you aren't rejecting some treatments, you aren't controlling healthcare costs. A drug or device must be safe and effective to gain market authorisation, but the threshold of efficacy is statistical significance rather than clinical significance. Many drugs and devices on the market are almost useless - not actually useless, but very nearly so.
The usual examples of controlling care costs are stupendously expensive novel treatments for rare and serious diseases, but an equally serious problem is marginally effective or ineffective treatments for common complaints.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#7The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
A look at an actual ICER review provides more info. As an example, this is the working evaluation of Zolgensma, the most expensive drug in the world [0] 1. The ICER review considers the cost of drug as well as the non-drug related healthcare costs (see tables ES11 and ES12 among others) 2. ICER's cost-effectiveness recommendations cover specifically the patient populations that are studied. It is not scientifically v…
1. Thanks for the correction.
2. I don't think we disagree here. However, it's not possible to do a cost effectiveness study of every possible patient population. As long as the studies are funded by the drug manufacturers, the data we have will be skewed to make the drug look most effective.
3. I'm not sure it's such a complex topic. If drug companies do their jobs well and come up with genuinely useful products that extend people's quality and length of life significantly, and they price according to $150k/QALY, we will all go broke. The best we can hope for is that they fail to come up with anything useful so that we can still afford to eat. Perhaps the food companies will get wise and start charging the government $150k/yr for beans and rice for everyone in the country.
4. It's not the patent system that's causing this, it's a very complex network of regulatory and institutional capture including Medicare, PBMs, insurance companies, insurance regulation, and drug regulation. All other western countries also have patents but don't have the same drug price problems. These problems are showing up even in generic drugs now.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#8The relatively straightforward concept of the model is great for comparing drugs' relative effectiveness. The ICER number of $150k/QALY is wildly out of line though and will bankrupt us. 1. The $150k/QALY covers only the cost of the drug, not the cost of the physician to prescribe it. 2. The $150k/QALY pricing is based on the manufacturer's hand-picked population of patients and indications, which may benefit more fr…
3. That is not what GDP means.
Re: Obscure Model Puts a Price on Good Health and Drives Down Drug Costs
#9Anyone has a non-paywall link to this article?