What is the added value of innovation? When the concerned innovation is a potential gamechanger in healthcare, patient’s benefit are forefront and immediately noticed. However, sometimes the benefit is only indirectly noticeable for the patients, e.g. in case of an improved drug administration method during surgery, which can facilitate the procedure, while the patient himself will not really notice the positive impact).

Almost all companies bringing innovation(s) to the market will request for well-balanced price(s) but… what is ‘well balanced’? No need to say that the payer’s perception of the added value most probably is not the same as the companies’. To facilitate price negotiations some instruments can be used to measure the impact of innovation : length of stay in a hospital, number of injections needed, overall survival, … .’Quality of Life’ (QoL), expressed in utilities, is one of the most commonly used elements in health economic evaluations (which is mostly mandatory in the Belgian scene for Class 1 applications). We refer to our former blog for more details about ‘QoL’. (Blog – Quality of life, be vigilant) In a nutshell, QoL can be measured via generic tools (example: EQ-5D surveys).

The concerned innovation can positively impact the QoL. The positive impact of an innovation can be used as a measure to be balanced out versus the extra budget needed. This is done in classic health economic evaluations: one measures the QoL (utilities) for the ‘original product’ (the selected comparator) as well as for the new product. Comparison of these ends up in an ‘Incremental Cost Effectiveness Ratio’ (ICER). The beauty is that the ICER can be used as a reference value versus a predefined threshold defined by the payer (example: the government). If the value is below the concerned threshold, the willingness to pay (WTP) for the concerned innovation at the requested price will be higher (we refer to our former Blog concerning WTP – NMB).

Unfortunately, measuring the impact on QoL is not always possible. As mentioned above, patients subjected to surgery can benefit indirectly from innovation, and the impact on the QoL will be difficult to prove. In addition, other clinical benefits can be absent as well (no survival benefit, no reduction in length of stay, … ). Only the costs are reduced and can influence the budget needed positively.

In such cases, the option to perform a health economics analysis is reduced to cost comparison. In line with Belgian guidelines for economic assessments, a cost minimisation model can be used to prove the financial benefit versus current clinical practice towards the government. A robust cost minimisation model should include all variables which can trigger an impact on the cost dependencies (number and type of resources, time, gain in space, …). Such models should be built in a bottom up approach and all single costs parameters should be quantified in as much as detail possible. An important difference versus ‘budget impact analysis’ is that the comparison is limited to 1 single case (patient or event) while budget impact exercises are used to estimate the impact versus the population of interest over a limited number of years. In addition, the impact of a certain product (e.g. diagnostic instruments) can be used over a long time horizon and generate savings over many years. No need to say that the time horizon should be sufficiently long to capture all potential cost effects.

What about the patient in cost minimisation models? When, thanks to an innovation, more patients can be treated (availability of resources, higher access to operation theatre, … ), this can play an important role to society and thus indirectly to the patient!

As you can feel, the value of innovation can be hidden in non-visible benefits! We believe this can be valid for consultancy as well 😊.

Do you have questions or do you want to get in touch with us:

contact

Your Hebias team.