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New pharmaceutical products in the US whose prices don't represent good value for money come at a real cost - listen to us on @bridgethecitywi talking about recent work by @djvanness, myself and @hannah__Ahn (and more)! https://www.riverwestradio.com/episode/bridge-the-city-0049-opportunity-costs-of-healthcare-in-the-us/ 1/n
Like most healthcare systems, patients receiving a new pharmaceutical product pay only a fraction of its cost. The rest is paid for by others. 2/n
When the cost of the new pharmaceutical product hits publicly funded healthcare (VA, Medicaid, Medicare), the result is either higher taxes or displacement of existing publicly funded activities. 3/n
When the cost hits employer-sponsored healthcare, itself tax-subsidised, then it is shared between employers and employees. 4/n
Also, crucially, access to less affordable healthcare generally results in patients foregoing needed healthcare that can result in bad health outcomes, including death. https://www.acpjournals.org/doi/10.7326/M20-7052 @icer_review 5/n
Recent research shows that there is a link between the cost of a new pharmaceutical product and an increase in the newly uninsured, where losing coverage causes an increased mortality risk. https://www.acpjournals.org/doi/abs/10.7326/M20-1392 6/n
US is practically the only country that basically does not regulate the prices of new pharmaceutical products in some form or other. 7/n
Recent policy proposals aimed at regulating these prices from both major US political parties revolve around international reference pricing. A recent blog by @Basucally et al convincingly argues that this approach is lazy and misguided. https://www.healthaffairs.org/do/10.1377/hblog20201130.594055/full/ 8/n
Details of the ‘German approach’ rumoured to be favoured by the incoming administration @Transition46 @CeciliaERouse will be crucial. @iqwig guidance itself is limited in its consideration of opportunity cost. See @MJSculpher + Claxton https://onlinelibrary.wiley.com/doi/abs/10.1002/hec.1645 9/n
The approach taken by @icer_review, a non-governmental group gaining traction in the US, seems promising in light of recent evidence that its cost-effectiveness threshold reflects health opportunity costs. @djvanness @hannah__Ahn https://www.acpjournals.org/doi/abs/10.7326/M20-1392 10/n
The work by @icer_review will no doubt attract criticism for its use of a generic health measure and for representing rationing of healthcare. 11/n
The former criticism misunderstands the role of cost-effectiveness analysis in informing decisions alongside other evidence rather than serving as a binding unquestionable decision rule. 12/n
It is addressed to an extent by recent developments that seek to present additional information to decision-makers concerning the distribution of effects on health and impacts on health inequalities. https://www.york.ac.uk/che/research/equity/handbook/ 13/n
Also the expanding array of available generic health measures that incorporate alternative value judgements might make their use more palatable. @Basucally https://www.valueinhealthjournal.com/article/S1098-3015(19)35187-3/abstract 14/n
The latter ‘rationing’ criticism is based on negotiation over prices requiring the ability to credibly state that the price is unacceptably high. However, it ignores that high prices themselves lead to less affordable healthcare which results in self-rationing. 15/n
An additional criticism will be that lowering prices of new pharmaceuticals will result in reduced *quantity* of new pharmaceuticals that are developed through R&D activities. https://www.whitehouse.gov/articles/house-drug-pricing-bill-keep-100-lifesaving-drugs-american-patients/ 16/n
This is true but here the nuance is key. First, the *quality* of new pharmaceuticals that are developed needs to be considered. A great @tradeoffspod podcast on this is here https://tradeoffs.org/2020/01/22/season-1-ep-8/ 17/n
Some evidence suggests that much of the innovation response to changes in market factors is driven by products that are not novel. @C_Garthwaite https://www.nber.org/papers/w27093 18/n
Other evidence shows that an increase in market size results in more new pharmaceuticals but that are lower quality than previously developed products. @carriebennette https://www.journals.uchicago.edu/doi/abs/10.1162/ajhe_a_00125 19/n
Regulation of drug prices should aim to tie prices to expected benefit and not seek to lower prices per se. Examples in the US of this to date have been shown to reduce the number of low-value pharmaceutical products that are developed. @LeilaEcon https://www.nber.org/papers/w27563 20/n
There is an appetite for movement on regulation of the prices of new pharmaceutical products in the US. This should be welcomed. However, careful consideration of the alternative options available and the costs (opportunity costs) and benefits of new drugs will be crucial. n/n
