The Road to GCEA
Outdated health economics is massively undervaluing sorely needed medical interventions and harming patients, society, and innovation…?
In 2022, after years of delay, the life-changing cystic fibrosis drug Trikafta was finally made available to patients in Australia.?
The delay had severe consequences. Cystic fibrosis is a life-limiting hereditary condition which causes a patient’s body to produce thick,?suffocating mucus, leading?to chronic lung disease,?shortened life expectancy, and a host of other symptoms. For 2.5 years, Australian patients with this debilitating condition were left unable to access Trikafta’s life-altering benefits, while patients in the US and Europe could.
This disparity may, in no small part, have been due to the fundamental flaws in the Australian authorities' health economic analyses – flaws that persist across the health economics industry today.
Cost-effectiveness analysis (CEA) is the primary tool used by health technology assessment (HTA) bodies to weigh a treatment's health benefits (measured in QALYs - quality-adjusted life years) against its costs. Such analysis allows HTA bodies to calculate, with convincing precision (often to the nearest pound), how much a treatment will cost for each QALY it adds to a patient’s life. However, CEA fails to capture the full value of medical interventions. It neglects, for example, the value patients place on hope and peace of mind, and ignores the broader societal benefits of innovation. Moreover, its reliance on QALYs can lead to discriminatory treatment of elderly and disabled patients.?
For instance, a 0.1 increase in QALYs for a healthy patient is deemed equal in value to the same increase for a patient with a severe illness. Additionally, QALYs discriminate against the elderly and disabled by assigning lower value to extend their lifespan. In an attempt to correct this flaw, the UK’s NICE has recently introduced a “severity modifier” and the U.S. House of Representatives has outright banned the use of QALYs in federally funded programs like Medicare.?
Enter GCEA - generalised cost-effectiveness analysis. This emerging type of analysis takes a comprehensive view of value, accounting for future uncertainty, and considering a wide variety of factors – each illustrated by a petal of the “value flower”.
Examples include:
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'Genericization' is a particularly significant aspect of value that traditional CEA neglects. Novel drugs are brought to market as branded treatments, with high price tags. However, once a drug’s patent expires (after 10-15 years), the drug becomes “generic” – meaning other companies can manufacture and sell chemically identical non-branded versions. The newly introduced competition drives prices down permanently, often by as much as 99%. In this way, high drug prices are more like a mortgage for society than a rent: the initially high prices justify R&D costs and incentivise innovation, and once the mortgage is paid, society reaps the benefits indefinitely - what Peter Kolchinsky , author of “The Great American Drug Deal”, calls the Biotech Social Contract.
“The Biotech Social Contract is based on the premise that innovative drugs are worth the high prices biopharma companies charge while they’re on-patent because eventually they’ll be practically free for society, forever. [It’s] a delicate balance between innovation and affordability.”?Peter Kolchinsky
On Monday, 6th May 11:30 am to 12:30 pm, ISPOR attendees will have the opportunity to meet Peter Kolchinsky, founder of RA Capital and board member of No Patient Left Behind at the FIECON booth #913. Peter is a staunch advocate for the Biotech Social Contract and Generalized Cost-Effectiveness Analysis (GCEA) and raises awareness of how the cost-effectiveness landscape is evolving in the US, through the growing adoption of GCEA by investors and the industry.?
Thanks to advocacy groups like No Patient Left Behind research into GCEA methodology is ongoing, and GCEA adoption is steadily increasing. Even when stringent HTA bodies insist on traditional CEA, GCEA results can be presented and discussed, potentially swaying reimbursement decisions and at least leaving the door open to future appeals. Health economics consultancies, including FIECON, collaborate with clients to develop GCEAs for novel therapies, building on our expertise in designing health economic models to incorporate all aspects of the 'value flower'.??
For patients and society, the adoption of GCEA cannot come soon enough. Delaying access to emerging medical treatments, or denying access altogether, has tragic consequences for patients and their families. Using traditional CEA to undervalue treatments will stifle innovation, and rob future generations of the advancement in medical technology we enjoy today.??
We are dedicated to partnering with clients and advocates like Peter Kolchinsky to use GCEA to capture the full economic value of novel treatments. FIECON champions life sciences innovation to provide patients with the life-changing treatments they need.
Further resources:?