If the cost to develop and bring to market the medical treatment is around $104,000 per quality year of life gained by the patient, it could be justified and included in a health plan. (Photo: Shutterstock)At what precise point does spending on a new medical treatment tip the scales and become too much to justify the investment?
The matter of the cost-effectiveness of new medical procedures, drugs and surgeries has been a topic of debate for decades. In the U.S. in particular, the debate has often been framed in political tones, such as: How can we deny a sick person their one chance to live a longer life by denying them access to a brand-new designer drug that costs a lot?
Related: Balancing between compassion and responsibility in covering high-cost drug claims
Other nations are less squeamish about the consequences of not offering every drug and procedure to every citizen. They are more comfortable with spending thresholds–the point at which a new drug or treatment is too costly to be included in insurance plans for a general population.
But as U.S. health care spending continues to explode with no end in sight, more voices are entering the discussion.
One step forward–perhaps small, perhaps not–was taken recently by researchers from Pennsylvania State University and University of York (U.K.). Using a highly complex simulated model, the team sought to identify a threshold range for spending on a new medical drug/treatment that would not negatively affect the overall health of the U.S. population.
Their estimate: If the cost to develop and bring to market the medical treatment is around $104,000 per quality year of life gained by the patient, it could be justified and included in a health plan. But if that number got up around $150,000 per year of life, it means that the health of too many other people is being unnecessarily placed at risk.
“We know that we are spending more and more on health care in the U.S. and that we’re getting less and less for it,” said lead researcher David Vanness, professor of health policy and administration at Penn State. “We do a good job of developing new treatments in this country, but we don’t do a good job of covering everybody or making sure that people have access to basic health care. We’re spending a lot on our medical treatments, but many of those treatments just don’t have a lot of value.”
The researchers did not base their estimate on a specific patient population. Instead, they relied on existing national data to simulate the ripple effects on health plan members of certain levels of spending on a new medical treatment.
Here’s a brief look at the methodology: Medical Thing A would cost $10 million to bring to market and be ready for patient application. Because Insurance Plan B, which covers 100,000 lives, would include it, premiums for all members would need to increase by $100/mo. As a result, based on studies relating premium thresholds to dropped coverage, 1,860 people would lose coverage.
Next, the researchers estimated how many of those folks who lost coverage would die, how many would suffer lost years due to both death and illness, and how many total years of life would be lost due to need to pay for Medical Thing A. The total lost years: 96.
Now the cost of Medical Thing A can be put to the coverage test. If it generates more than 96 quality years, then the investment in it can be justified and plans can cover it. But if more people are losing more years of life than the new miracle drug is saving, then it surpasses the cost threshold and is not covered.
The researchers stated that their outcomes should be taken in the context of a simulated model with a specific focus: how health plan premiums, and membership, can be influenced by medical research. Other methods of setting thresholds have been constructed, and several other nations have set thresholds for new treatments.
But they pointed out that, without some sort of threshold policy, U.S. health care is doomed to remain a free-spending realm with no true strategy for improving overall population health.
“Despite the limitations of our analysis—and of cost-effectiveness more broadly—we believe that it is reasonable to expect that when an authority, be it a government agency or a private insurance plan, agrees on whether or how much to pay for a treatment, that decision will ‘first, do no harm’ to population health. Setting cost-effectiveness thresholds too high (or ignoring them altogether) sustains current conditions for a self-reinforcing cycle of escalating health care costs and continued disappointing progress on improving population health.”
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November 05, 2020 at 09:55PM
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Medical treatment spending: How much is too much? - BenefitsPro
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