Alternative approaches to measuring value: an update on innovative methods in the context of the United States Medicare drug price negotiation program

ABSTRACT

Introduction

The United States has begun assessing the value of pharmaceuticals to inform negotiated prices in the Medicare program. Given strong political objections in the United States to the use of QALYs, Medicare will need to adopt an alternative approach to measuring value.

Areas covered

In this narrative review, we identified six alternative approaches to measuring value (equal value life-years, health years in total, generalized risk-adjusted cost-effectiveness, severity weighting based on absolute or proportional shortfall, comparative effectiveness based on conventional clinical endpoints, and comparative effectiveness based on both conventional endpoints and patient-centric value elements) and five criteria for assessing these approaches (responsiveness to concerns about discrimination, feasibility, transparency, flexibility, and the ability to incorporate factors beyond traditional value elements).

Expert opinion

Four of the alternatives are broadly aligned with the cost-effectiveness framework, but none fully addresses all aspects of the stated concerns that QALYs may be used to unintentionally implement discrimination. We note, however, that the extent to which these concerns lead to discrimination in practice is unknown. Finally, we recommend an approach for measuring value in terms of comparative effectiveness that combines quantitative ranking and weighting of distinct criteria (including patient-centric value elements) with deliberation.

KEYWORDS:

• Discrimination
• equal value life-year
• GRACE
• health years in total
• health technology assessment
• QALY

Article highlights

• In the United States, Medicare is the federally financed and administered program that provides health insurance to people aged 65 and older and those with certain disabilities and end-stage renal disease. For most of its history, Medicare has been unable to negotiate the price of prescription drugs, and with very few exceptions, required to cover all drugs approved as safe and effective by the Food and Drug Administration.

• With the creation of the Medicare Drug Price Negotiation Program in late 2022, the United States joins the ranks of countries engaged in health technology assessment to inform decisions about prescription drug coverage and pricing. However, Medicare has clearly stated that it will not use QALYs to assess a drug’s value compared to therapeutic alternatives due to concerns that the measure will lead to discrimination.

• This narrative review examines several alternative approaches for measuring value that Medicare may instead consider. Four of these approaches (evLY, HYT, GRACE, and severity weighting) can be understood as aligned with the cost-effectiveness analysis framework, but none fully addresses all aspects of the stated concerns that QALYs may lead to discrimination. However, we also discuss that the extent to which these concerns lead to discrimination in practice is unknown.

• The other reviewed approaches include assessing comparative effectiveness based on conventional clinical trial endpoints or conventional comparative effectiveness combined with an assessment of patient-centric value elements. A primary challenge for these approaches is how to determine and transparently communicate a summary judgment given a treatment’s performance across several distinct criteria of value.

• A recent approach recommends combining quantitative ranking and weighting of value elements with deliberation. Using this approach, the ranking and weights can help to structure deliberation, potentially reducing cognitive burden and perhaps mitigating biases that may arise in the deliberative format, while the potential benefits of deliberation – higher quality decisions, improved transparency and accountability, and benefits to participants such as learning and a greater respect for different perspectives – are retained.

Declaration of interest

The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

Reviewer disclosures

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Additional information

Funding

This paper was not funded.