How to indicate if an innovation is worthwhile to pay for in view of the claimed benefit it will bring? Per assumption, innovation will change ‘something’ versus the current situation .

In theory, the goal of innovation is to generate an improvement versus the current situation. Healthcare is a business focusing on optimisation of resource use and/or patient benefit. Thanks to continuous innovation, one can obtain more health with the same budget versus the past and/or one can generate more health thanks to the investment made.

Let’s start with a hypothetical example in which the intervention will generate benefit for the patient resulting in an improved quality of life versus standard of care (SoC). Quality of life can be expressed in ‘utilities’ (or QALYs). If you are not familiar with this terminology, we refer to our former blog ‘Quality of Life – be vigilant’.

Let’s assume that the concerned innovation is powerful enough to generate 1 extra utility (1 QALY) versus SoC over a concerned time horizon. What would then be the acceptable extra budget to invest to generate this QALY? A well known instrument to measure this is the ‘willingness to pay’ (WTP).

Most countries have determined their country specific WTP, e.g. 35 000 € / QALY gained. If the extra budget needed to obtain the concerned health benefit is higher than the WTP (example 40 000 € extra versus SoC), the extra cost is considered not to be in balance with the expected health gain (1 QALY). In health economic terms, this intervention is not cost effective and thus ‘dominated’ by the SoC. In contrast, if the concerned intervention can be introduced at a lower cost versus the WTP, the product is ‘cost effective’. And, for completeness, if the intervention is expected to generate budgetary savings while achieving at least an equal number of utilities versus the SoC, the innovator is ‘dominant’ versus SoC.

As outlined above, health economic outcomes are in general the result of a ratio (cost per QALY).  Thus, when comparing 2 interventions, the incremental cost is positioned versus the incremental benefit, abbreviated as ICER (incremental cost effective ratio).

As ICERs are calculated as a ratio, comparing two ICERs will be less powerful. Optionally, one can map the ICERs in a diagram (costs versus QALYs) yielding the ‘efficacy frontier’. A more elegant way is the use of the ‘net monetary benefit’ (NMB).

The net monetary benefit is expressed as a monetary value (€). The NMB is calculated as the ‘[incremental health benefit] * [WTP]’, subtracting the ‘[incremental costs]’.  In the example given above, the NMB is  [35.000 €] – 40.000 € = – 5.000 €.

A ‘negative NMB’ indicates a potential situation in which the intervention will be outbalanced by the SoC, and it will in general be associated with an ICER above the predefined WTP.

However, a negative NMB value should be interpreted with care. Not all ‘negative NMB results’ should result in a refusal to pay for the intervention, as other variables need to be taken into account, such as ease of use, speed of result generation of a diagnostic test, high medical need, … These variables can be included in the NMB analysis, which is not always the case when using health economics (ICER based) in line with HTA guidelines.

A positive NMB result indicates that the budget needed to achieve the targeted health gain versus SoC is acceptable. The money to invest ‘on top’ of SoC is thus lower than the maximum additional money a payer is willing to invest to achieve health gain (and thus extra utilities). The intervention therefore is at least cost-effective.

The beauty of a NMB is that two interventions can be compared by subtracting the NMB of ‘intervention A’ from the NMB of ‘intervention B’, resulting in the incremental NMB (iNMB). Based on the result, the decision maker can select the intervention which will generate the absolute highest clinical value versus the budget to invest benefit based on the iNMB, whereas the ‘ranking’ of the ICERs from two independent datasets will not necessarily result in a similar conclusion as an ICER is the result of a ratio.

In Belgian economic assessments, the use of the NMB is outside the KCE guidelines (KCE 183c). As a service provider, we can only encourage the use of the NMB as an extra instrument to demonstrate the value of the concerned innovation.

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