A health economic analysis is usually measured over three dimensions: delta costs, health gain (expressed in QALYs or live years gained) and time. Together, these three parameters result in an ‘incremental cost-effectiveness ratio’, or ‘ICER’ for short.

The ‘ICER‘ is a well-known measure to assess the extra cost to be invested to win one QALY (or one life year). In Belgium, an (unofficial) cost of 35 000 € per QALY (or life year) gained is often applied as benchmark to assess whether an innovation is cost effective. This limit is called the ‘willingness to pay‘ (WTP) threshold and is related the gross domestic product value per capita (GDP) which can vary per country.

However, the ICER provides little or no insights into how much the ‘medical need’ is met by introducing the innovation. In other words, does the payer invest the budget where the highest medical need lies or not?  It might be useful to illustrate this with a hypothetic example.

Suppose you know someone with a chronic disease that, if not adequately treated, generates a significant impact on the quality of life and the economic contribution of the patient. Fortunately for the patient, an effective drug has been available and reimbursed for decades. With optimal compliance to the weekly subcutaneous injection schedule, daily function is almost normal and the patient’s quality of life is comparable to the national average taking into account age. The governmental budget needed is 1000 € per month, quite a lot, but actually quite balanced versus the potential consequences (and costs) of treatment discontinuation. However, this subcutaneous treatment carries the potential of kidney failure, an adverse event with very low incidence, and which in 90% of the cases appears in the first year of treatment. Our hypothetical patient was lucky not to develop any kidney problems and he/she can pursue the treatment with almost no risk of kidney failure.

Imagine a few years later a new treatment option becomes available, a daily tablet to replace the weekly subcutaneous injection, which was not problematic to the patient. The cost for the patient is very limited, as it was with the subcutaneous treatment. The governmental cost however rises to 1100 € per month, a 10% increase versus the self-injectable treatment.

In this case, the applicant has been able to motivate the government to extra costs for the tablets, based on controlled clinical trial data. On the one hand, the syringes were reported to be  uncomfortable for newly diagnosed patients and on the other hand, there was the clinical gain in terms of kidney failure. Using these study data, the benefits resulted in a well-balanced extra cost versus the health gain.

You don’t have to be a mathematician to understand that the WTP (35 000 / QALY gained)  is a nice tool to ‘measure’ the additional costs which can be projected versus clinical benefit, but one can generate a spirited dialogue as to whether it sufficiently includes the medical need.

But then, how to measure ‘medical need‘?

A ‘gain’ in QALYs says little about the patients ‘need’ to win the QALYs! From a patient’s perspective, the same gain of e.g. 0.2 QALYs is more valuable for a patient with a relatively low QALY compared to a patient with a higher baseline QALY.

As of today, an absolute delta in QALY is mostly used by the authorities to set cost limits for innovation. A more effective way of quantifying whether the innovation answers a medical need might be to take into account the relative gain in quality of life, for instance by including in the current (informal) WTP system a coefficient reflecting the baseline QALY. This coefficient could be regarded as a 4^th dimension of a CE analysis.

But how is the WTP defined in other countries?

If we take a look at neighboring countries, the willingness to pay is sometimes set differently. For example, in the Netherlands a new approach was introduced in 2015. ‘Zorginstituut Nederland’ (ZiN) set a higher WTP for healthcare solutions with meaningful benefit to patients with severe health conditions, making budget available for innovations in the context of life threatening diseases. This however, does not solve the problem in the example described above (subcutaneous syringes > tablets). After all, it is the same disease and the same WTP is used even for minor improvements made.

In France, the value of one life (estimated at 3 Mio €) is used as starting point, which is  converted to one life year, resulting in a WTP between +/- 150 000 and 200 000 € / life year when taking into account the age and discounting factor (measure to anticipate on future inflation). The thresholds in France are even higher compared to other countries like Belgium (35 000 €), Wales (£ 20 000), the United Kingdom (£ 30 000), … . But in common, the medical need is not the driving parameter.

Moving forward…

A starting point might be the value of one life. In France this would mean +/- 3 Mio €. Using a linear scale (the profit of 0,1 QALY corresponding to 0.3 Mio €) would not make sense in our view, but a logarithmic scaling or the use of a modified metric system could be used to assess where to invest the budget more optimally, i.e. where the real medical need is. There might then be a higher willingness to pay when proportionally more QALYs can be gained.

Anyhow, it is worthwhile initiating these discussions, in order to protect future healthcare expenditures, in the interest of the patient and the healthcare system as a whole.

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