May 11, 2026
Welcome to Perspectives, a signature podcast series from The Leerink Center for Pharmacoeconomics. Hosted by Dr. Mel Whittington, a health economist and Head of the Center for Pharmacoeconomics, we will be hearing from individuals across the industry to better understand and appreciate the societal impact of healthcare innovations.
Melanie Whittington: Hi everyone, thanks for coming back to the show. Last month I had the honor of attending the CEVR annual meeting. CEVR stands for the Center for the Evaluation of Value and Risk in Health. It’s a research center at Tufts Medical Center, and every year, they hold this annual meeting for the sponsors of their center and for some invited guests. The purpose of the meeting is to talk about what’s new with prescription drug policy, prescription drug pricing, and the valuing of prescription drugs. It’s a meeting I look forward to every year because it brings together this unique mix of biopharma executives, payors, academics and even a few investors this year to really talk about what’s going on in the prescription drug policy world. And so obviously, this year, there was not a lack of information to talk about. We talked about things like most favored nation, Medicare drug price negotiation, cost effectiveness analysis, health technology assessment, coverage restrictions, all sorts of things. And so, this episode, we want to do things a little bit differently. Rather than taking a deep dive into one single topic, we want to bring some of the conversations that we heard at that annual meeting to this audience of biopharma execs and investors. And so, I’m very pleased to be joined by Dr. Peter Neumann, the director of CEVR, also an internationally recognized health economist, and the brain behind the agenda of that annual meeting. Peter, thanks so much for coming on the podcast.
Peter Neumann: Well, thanks, Mel. Thanks so much for having me.
Melanie Whittington: And I should say we now have video for the podcast. This audience should be pretty familiar with Dr. Peter Newman, because his center puts out a lot of stuff that my Center for Pharmacoeconomics shares. And I often cite him in a lot of my content. So, feel free to watch this video and you can put a face to the name. So, Peter, the meeting was great. Thank you for the opportunity to attend it. There’s a lot I want to get your perspective on. You always do such a good job at the meeting highlighting your team. So, I’ve always been wanting to know, like, what does Peter think about these topics? One of the very first speakers said something along the lines of the science of drug pricing is still young and evolving. And this has stuck with me for a few reasons. One, I think when we think about like the science of prescription drugs, we have a pretty well established framework and methods for, you know, the science of efficacy and safety. But not often do we probably think of pricing as a science? And so, I liked that, that the word choice was science. But then the speaker went on to talk about different factors that impact a drug’s price. And they brought up things like disease severity, unmet need, treatment effect, population size. And so, me being a pharmacoeconomist, you as well, I think of all the US cost effectiveness analyses conducted. You and I have been part of a large portion of those. Not all of those factors are captured in cost effectiveness analysis, right? Although cost effectiveness analysis is often used as a framework for pricing. And so, I want to hear your reaction to like, what do you think about pricing as a science. And you know, why doesn’t cost effectiveness analysis account for all of those other factors?
Peter Neumann: Yeah. Well, you know, this framing of the science of pricing is sort of an interesting one, perhaps not the one I would use, but I would say that this will always be challenging. How to price drugs. We would like to try to align the prices with value and our frameworks. Cost effectiveness analysis helps us to do that. There’s been debates for a long time about how we do that and those debates will go on, but the basic convention of trying to construct a cost effectiveness ratio as an input into the pricing decision, I think is a useful one. It’s imperfect. Sometimes factors we think should be included are left out and we can continue to work on that. But, you know, a cost effectiveness ratio, as you know very well, includes costs and cost offsets. And it includes, if we’re calculating, say, quality adjusted life years, which is one way of doing it. It includes impacts on quality of life. It includes impacts on length of life. Those are things that people care about. And so, the idea of using that as a key input or a starting point for a very, you know, complicated conversation about pricing, I think remains a useful approach. Sure.
Melanie Whittington: And, you know, those factors that were discussed, treatment effect, I think cost effectiveness analysis does a tremendous job accounting for that. And cost offsets, like you mentioned, kind of the economic value of these products. I think cost effectiveness does a good job of quantifying. Then there’s those other factors like disease severity and unmet need and population size that I’m not for sure, even if the user of cost effectiveness analyses understands that like population size isn’t a factor here. And so do you think this is something that is addressable through methods and, and is this where the field of health economics and pharmacoeconomics is going to advance the thinking about how can we make these methods, you know, incorporate some of those other factors like population size, or is this just a reality that pricing maybe isn’t a science, that there’s always going to be these contextual considerations that need to be considered here? And one single model can’t give you that answer.
Peter Neumann: I think there will always be these contextual considerations, and they need to be considered alongside, you know, the frameworks, the empirical analyses. Now, certainly we can try to, and we have been trying to expand the frameworks to incorporate some of these factors. You know, again, the cost effectiveness ratio is telling us something about what we’re getting for what we’re spending on an intervention. Obviously, the payers care enormously about the budget impacts. And that factors in population size. That has to be a key consideration in their decisions. There are many other things that may warrant consideration. You mentioned severity. For example. We know that if you ask people how they want to allocate resources, they want to give priority to people who are vulnerable, people who have, say, low baseline health, people who have more severe disease, even if it’s not the most cost effective thing to do. That’s just a basic, uh, ethic or moral underpinning that people tend to have. We tend not to consider that well or at all in our typical cost effectiveness analyses. So, you know, we may want to expand the frameworks to consider that. We may want to consider that alongside some of the frameworks. And there are others. And maybe we’ll get to some of them. If you have a treatment that is effective for depression, for cancer, for what have you, we know that there is value created for families, for caregivers, for, you know, employers, for society. And, you know, we tend not to capture that, but, but we could at the very least, we could consider it alongside the cost effectiveness ratio.
Melanie Whittington: Yeah, I agree with that. I think it’s still, you know, as we’re thinking about international reference pricing and ex-US countries often using cost effectiveness analysis more strictly, I do still fear that there might not be broad understanding as to what is included and what isn’t included. I think it, it provides strength to deliberation and to a more market-based approach in the US that is able to capture those things. Um, I want to pivot a little bit. There was another presentation about how much autoimmune disease costs, and I think the estimate from your team was something like six hundred billion dollars per year in the US for autoimmune disease. So, there’s clearly this like, you know, big unmet need, the health system and society is already paying a lot of money for autoimmune disease. We clearly need some innovation here to alleviate the health and the economic impact of these things. So separately, we’re seeing CAR-T cell therapies being studied for autoimmune conditions. These cell therapies, at least in the cancer space, have been priced in the hundreds of thousands of dollars. And so, if these therapies work, if these cell therapies, one-time therapies work for something like an autoimmune condition, do you think they could ever be considered valuable or cost effective under these traditional frameworks?
Peter Neumann: Well, it’s an empirical question whether any particular intervention, including a CAR-T therapy, is going to be cost effective under our traditional frameworks. Some of them, as you know, have actually fared pretty well under some of the cost effectiveness analyses. Why? Because they’re very effective. And it depends, of course, on the particular therapy and the particular population. But some of them have generated a lot of health per you know, the spend. So, now we may want to give priority to some of these therapies even if they’re not cost effective. That is, we may want to pay some of these high prices even if they don’t meet some of our traditional benchmarks. You know why? Again, it gets to what you were saying before. We may have unmet need that we may want to be addressing. We may want to give priority to rare conditions. Not that all these autoimmune conditions are rare. Some are, some are not. But there may be a reason for that. You know, typically these are rare disease drugs. These orphan drugs have high development costs and their small populations, they wouldn’t have been developed otherwise unless we, you know, pay a premium for them.
Melanie Whittington: Yeah. And I think that’s a good point about there’s still reasons to pay for them, even if they might not be cost effective. It’s also a good point that many of these cell therapies have been found to be cost effective, even in, you know, six figure pricing. I think a reason for that, this is a bit of a tangent, but it’s a personal interest of mine. I think a reason for that is the single administration, you get this lifetime of benefit all rolled up at once in year one, whereas say, if it’s chronically administered treatment, then it’s, you know, spread out across many years, you could have generic entry. And so now the innovator is only getting a portion of that total lifetime benefit, something like that. Maybe a separate question besides finding them valuable or cost effective, is the system set up to reimburse for these?
Peter Neumann: Yeah. Well, this is a challenge, not only for the cost effectiveness analysis, but for, you know, the field. All of us, you know, as patients and potential patients in health care, we’re finding, you know, with the cell and the gene therapies for that matter, very effective in many cases, very expensive. But the systems, as you say, are just not set up to implement them. That, by the way, is typically not something we consider in our cost effectiveness analysis. I think one of the criticisms that’s fair is we don’t tend to consider the real world implementation challenges when we do these analyses. So sometimes we’re showing that good value for money. But in practice they’re just not being adopted. And I think that’s something we need to at least incorporate someplace when we do these analyses. Maybe it’s alongside of the analyses, implementation challenges, real world behavioral and practical challenges.
Melanie Whittington: Right. And I think it could play into the budget impact too, so that we make more realistic assumptions about uptake. So, budget impact is going to be dependent on those costs. Like I just talked about, you know, cost of the drug, cost offsets, but then also, okay, what’s the “n”? How many people are going to uptake this drug? And trying to lean on real world data or real-world lessons or be pragmatic as possible to accurately estimate those.
Peter Neumann: Just one point on this burden of autoimmune study, which didn’t have any information on the health impacts. It was really just trying to understand the costs. But that’s still an important study because it’s putting some boundaries around the cost of these autoimmune diseases. And it was an attempt to really look broadly at all autoimmune diseases. But it also shows us the potential if we had good interventions to reduce some of those costs. And I think that’s the value of a study like that.
Melanie Whittington: Yes, yes, one hundred percent agree. One of the other presentations was from Dr. James Chambers. James Chambers is a friend of the podcast. He was on an episode a few months ago. The audience loved him. He was talking about how US health insurers are using clinical outcomes assessments to shape coverage decisions. And it seemed like from his work in that shaping of the coverage restrictions was more in a way to restrict or narrow coverage rather than to expand coverage. And one interesting conversation I overheard at the meeting was someone asking, you know, does publishing this kind of research risk accelerating that behavior by showing payers, you know, what’s possible? Here’s a way to restrict or narrow coverage. So, I wanted to hear your take on that. And just maybe more broadly, is there a concern that the tools that we, including you and me, are developing to measure value, end up being used as either a cost containment tool or kind of a reason to restrict or narrow access?
Peter Neumann: Yeah. You know, I think it’s important to do research like the study you’re talking about to really try to understand how the clinical outcomes assessments are being used in coverage. It helps us understand what’s going on behind coverage policies. It’s a way of trying to improve transparency around coverage decisions and restrictions. I don’t worry so much about the fact that it might be used, you know, in a way to further restrict, I think possibly it could be used in ways to expand. It’s hard to know, but I think this is information that’s just useful to put out to the marketplace and payers will have access to it. Others will too. Patients will have access to it, clinicians and so forth. So, I think it’s just good information for the field.
Melanie Whittington: Yeah. And so that largely comes from the SPEC database. And James talked about SPEC when he was on the show a couple of months ago. But, CEVR has another registry called the CEA Registry–Cost Effectiveness Analysis Registry. I obviously love it as somebody who loves cost effectiveness analyses, but I think there’s like tens of thousands of cost effectiveness studies in that registry spanning many decades. There were a lot of studies and work talked about at the meeting that used data from that registry. One was a recent paper that you were part of that compared the cost effectiveness thresholds used in the US versus the cost effectiveness thresholds used in ex US countries, more so the most favored nation comparator basket countries. And I believe your work pitched it as kind of a function of GDP per capita to kind of normalize a little bit across those across these countries. And there were some fascinating things presented there. And with MFN being talked about everywhere, and I think nobody thinks MFN is going to go away anytime soon. Can you share what you found and kind of what that means for innovation?
Peter Neumann: Yeah. So, we looked at this large database of cost effectiveness analyses, which as you mentioned, I think it’s sixteen thousand studies now in there. And it’s global. It’s all English language studies, but only about forty percent is US. The rest is the rest of the world. A lot in Europe and elsewhere now. So, we have a variable that captures how the study authors benchmark their study against a threshold. So, we can compare what authors of cost effectiveness analyses believe is a reasonable threshold in the US versus authors in other countries, and we compared US versus the MFN countries. And what we found, perhaps not surprisingly, is that the authors in the US are using considerably higher thresholds for what is good value for money. The US does have higher per capita income than other countries, so we did adjust for that. But even when you adjust for that in the US, authors tend to cite thresholds one to two times per capita. And in the MFN countries, it’s typically one times or lower than one times per capita. And it’s been declining over time. So, the takeaway is if we really do adopt prices from these most favored nation countries, we’re also adopting their preferences, their kind of sense of what’s good value for money, their fiscal constraints, their health systems. And so, you know, I think that’s an important takeaway. There’s a lot of reasons to be concerned about most favored nation policy. But I think that’s a key one to keep in mind.
Melanie Whittington: Yeah, I think the most interesting part of your paper was looking, I think it’s starting in 2010, that in MFN countries, the majority of the studies started citing thresholds less than one GDP per capita after 2010. So, it was actually going down over time where I think the majority had more than one GDP per capita in the MFN countries prior to 2010. And then there was this shift. And it’s like, well, that’s interesting. If you’re thinking about, you know, the type of innovation that we’ve been getting over the last ten, fifteen years. It’s actually a lower valuation per health outcome gained. I wasn’t expecting that and think that was a really interesting addition. I also think it’s like if we’re thinking about MFN. If we say, okay, US prices might go down a little bit, but then ex-US countries, those MFN countries, will increase their prices a little bit. I think that trajectory, that curve that you had looking at the GDP per capita over time and the MFN countries, there hasn’t been a willingness to pay more over time. It’s actually been a willingness to pay less. And so, if the thought is US prices go down a little bit, and ex US prices go up a little bit, and then everything’s the same. Your research seems to conflict that a little bit.
Peter Neumann: Yeah, we’ll continue to track this of course. So, it’ll be interesting to see going forward if we see any increase in these other countries. But you know, I think to your point, we haven’t seen a big willingness to increase prices in these other countries. And you know that if that continues, that has, you know, very important implications for MFN policies because it may mean and likely would mean, US and manufacturers elsewhere too, will not launch in some of these countries or will launch later in some of these countries. US prices might remain high at the same time. Obviously, we’ll see.
Melanie Whittington: Absolutely. Another application of the CEA registry. Another paper you were involved in compared the Medicare negotiated maximum fair prices. I think it was for the IPAY2027 drugs, compared those to kind of their threshold-based price from a cost effectiveness analysis. So, when you build a cost effectiveness analysis for the listeners who haven’t ever built a cost effectiveness analysis, you build this cost effectiveness analysis, and one input is your treatment price. And then you can kind of back into, okay, what treatment price would then meet a certain cost effectiveness threshold. And so, in the US, maybe we use one to two GDP per capita or $100,000 to $150,000 per quality adjusted life year gained. That’s not a hard and fast rule, but it’s cited most often. You can read Peter’s paper to see why that’s cited most often. So, you can kind of back into the price that would meet that threshold. And so that’s often thought about as kind of the cost-effective price. And so, in this study you were involved in, Peter, you compared the Medicare negotiated prices, those maximum fair prices for IPAY 2027 to an estimate of their threshold-based price or their cost-effective price. Did you use $100,000 or $150,000?
Peter Neumann: We did both.
Melanie Whittington: Okay. So, kind of tell us what you found. Did those match up pretty well?
Peter Neumann: Yeah. So, you know, we were very interested in this question. We’re now seeing the Medicare negotiated prices coming out. And you know, they’re lower than the existing net prices. And, you know, a lot of people are applauding that. But there is a question of what is an appropriate price? What should the price be ideally? And one way to think about that is, well, it should align with a value-based price. And we can define that in different ways. But one way is to look at the price that’s commensurate with $100,000 per QALY, or $150,000 per QALY, which is what we did. And we found that the Medicare negotiated prices are really kind of all over the place. Some of the Medicare prices and a few cases at least seem too high. That is, the prices actually should come down to be value based prices. Some of the cancer drugs fell into that category for some of the drugs, they were roughly aligned with the Medicare negotiated prices. But for many of the Medicare negotiated prices, we found that they were too low compared to the value-based price. In other words, the value-based price was higher than the Medicare negotiated prices, suggesting that the Medicare price might be too low. There are a lot of caveats with this study, and we’re very careful about talking about all of them. But you know, we hope that this is a useful bit of research for the field and for the Medicare negotiators for that matter to think about what might be an appropriate price. And a final point on this. Why do we want the price to align with value-based prices, which might sound like a, you know, obvious or straightforward thing to do. But the reason is, you know, we don’t want the prices to be above that because there are better uses of resources to improve health, but we don’t want the prices to be too low either, because if the prices are too low, we won’t have the right signals for the innovators to produce products that patients and society value. So it’s important to try to align with value.
Melanie Whittington: Yeah. Okay. So, this is where I want to push back on it a little bit is I think that framing, which I’m aligned with, but it kind of says like, okay, the cost effectiveness analysis, that threshold-based price at $100,000 to $150,000, that’s kind of this value price. And we have this, I’m going to say single threshold. I know $100,000 to $150,000 is a range, but like it’s a relatively narrow range. And so, one thing that I’m trying to do some exploring on is another way to think about value is through revealed preferences, like what has the system or the market historically been willing to pay for a health outcome gained? And so, in this exercise of looking at here’s a cost effectiveness analysis and here’s the cost-effective price at some single threshold, I think that’s kind of saying this is this value price. Whereas could we look and say, okay, let’s look at the GLP-1s for obesity. The market was not willing to pay anywhere close to as much as the value-based price. That was way too high for the market to be able to sustain. And so, the market has kind of worked to be able to get a price that is lower than that threshold-based price. I recently just put out some work in the multiple sclerosis space. So, in multiple sclerosis, the cost effectiveness estimates were in the like $500,000 per QALY range. And so, you know, I think that would be easy to be able to say, wow, you know, multiple sclerosis, these prices are priced too high. They’re priced over the cost-effective price. But then I think where my head is going if, you know, back to that very first statement that was made at the annual meeting about there’s all these factors of pricing, there’s treatment effect, there’s population size, there’s disease severity, there’s unmet need. Do all of those different factors really mean we don’t have a single threshold or a threshold range from $100,000 to $150,000 per QALY gained. But, you know, are there some conditions that might be so prevalent like obesity, where it’s a much lower threshold or a much lower proportion of GDP per capita? And then are there other conditions that are so severe or have such unmet need, or have a small population size, like the rare disease example you were giving earlier that then justify a much higher threshold? And like, is that a way to think about it? Could the takeaway be from your paper comparing the Medicare MFPs to cost effectiveness price, could the reverse conclusion be one single threshold may not be appropriate to use for pricing to be able to capture all these kind of contextual considerations.
Peter Neumann: Yeah. So, there’s a lot in your question. I do think what you just said, a single threshold, is never going to capture the complexity of these decisions and the heterogeneity of the populations underlying them, but it’s still a useful starting point to think about value. We’ve done some work looking at drugs that are successful in the marketplace but have poor cost effectiveness ratios. You mentioned MS drugs, but there are many and, you know, cancer drugs, a lot of the drugs for the rare conditions. And there are others. Um, and on the flip side, there are some drugs with really good cost effectiveness that are not being adopted or adopted as much as you would think. You mentioned the GLP-1s and we can think of others. So, what to make of that? I think part of it is what you’re saying. The studies are not capturing what people really care about. People are willing to pay more for drugs for severe conditions. People are willing to pay more for drugs for rare diseases. And, and when there are high budget impacts, people are not willing to pay at those prices for the, you know, favorable cost effectiveness drugs. And so, I, you know, I think that’s important to recognize. And again, it suggests that maybe we’re not capturing in the analyses really what what’s driving these decisions. But it’s not to say that these ratios or these analyses are still not useful. I think they could be useful as imperfect, crude, but still somewhat informative starting points for very difficult decisions.
Melanie Whittington: No, I agree with that too. You know, how can we use empirical evidence and quantify the economic value and health value where we can use that to inform these decisions? I do think, you know, a drug that creates ten times the benefit should be priced more than a drug that improves the benefit by one time. Right? So, you know, I think that these methods can be really useful to be able to do that. There’s two concerns I have. One, I think a lot of people want a number like “what is the price?” And that’s challenging. I think the science is still too young and evolving to be able to do that. And then I also think, you know, users of these findings, are they aware of all of these nuances? Do they know how to interpret these appropriately? I think that’s something our field of health economics could probably do better. And kind of the education component and, and dissemination of that. But this does remind me of another conversation we had at the meeting. I was honored to be able to moderate a policy roundtable with Brian Reid and Dan Ollendorf and it was a blast. So much fun. But one of the nuances we got into was the difference between price and value. And I think that’s where, you know, the conversation you and I were just having is really centered on and that there’s value and cost effectiveness that I think we have methods that are able to say, okay, what is the value of this to the health system? How cost effective is this to the health system? But then oftentimes these same models can then be used to say, okay, at what price? What’s that threshold price? And when we start talking about price, that’s when we start getting into this world of reward to the innovator, what is the optimal reward for the innovator? And so, do you think we are conflating these two things, cost effectiveness/value versus, you know, optimal reward to, to the innovator?
Peter Neumann: Yeah. I mean, first of all, your moderation was great. So, thank you very much for that at the annual meeting. I think people do conflate price and value. I’m not sure that’s exactly what you were saying. But, you know, price is obviously what you pay. And value is something that’s worth whatever to patients and society. We’d like to have a price that reflects the value created while preserving incentives for the innovators. And again, if you really have a price that’s aligned with value, ideally that’s going to do that. Um, there are many complexities as we’ve been talking about, but I do think, um, you know, the cost-effective price is supposed to be the price that’s justified by the value given some threshold. And that’s a way to think about all of this. And, and the reason we have to think about this is we just don’t have well-functioning markets. And in health and in pharmaceuticals in particular. So, we need to think about value with, you know, external bodies sort of measuring value and presenting that information to the decision makers.
Melanie Whittington: So related to external bodies. In the policy roundtable with Brian and Dan, it seemed like consensus was that MFN was not the solution to our problems, but there seemed to be much more openness to health technology assessment in the US, which I was surprised about. I have mixed feelings about it. And so I guess my question to you is given, you know, all of these nuances of drug pricing and unmet need and population size and severity, and of course, the value that they provide the health system, patients and society, do you think the tools and frameworks we have now are robust enough to support a centralized HTA system in the US? And given, you know, historically, the US has been the major market for innovators and future biopharma innovation. Do you think we have these tools and frameworks that can integrate value conversations while also preserving the incentives for innovation?
Peter Neumann: Right. Yeah. I mean, I think, first of all, the part of the answer is always compared to what? I think one reason why this came out in the panel, as you said, HTA is favored over an MFN policy, is the MFN policy is really about driving the price down without a lot of discussion of evidence or evidence of value. It’s really more about the price. So, the HTA discussion at the very least is a discussion about the value. And so, I think, you know, one might reasonably conclude, in a world that if we’re choosing between MFN and HTA, you might want an HTA because it’s at least a discussion about the value of the product. So that’s, you know, first thing I would say. The second is do we have the tools and do we have the, you know, the methods? And again, you know, we’ve been talking about this, the methods are certainly evolving and will continue to evolve. We’ve been doing health technology assessment in the US and around the world for decades and decades now. I think the information can be useful to decision makers. They’re very important questions about how it’s done. Is it done by a single centralized body and how are they governed and what is their scope? And are they looking only at drugs or other kinds of interventions and, you know, on and on. So, I do think there’s a good argument to be made that health technology assessment is kind of a public good that would be underproduced by the private markets. And there’s a government role that’s legitimate here. But I think, again, they’re really critical questions about, you know, how it’s done and who’s doing it.
Melanie Whittington: Yeah, I think those critical questions is why I have mixed feelings. Aligning prices with value and having more of an evidence-based negotiation and conversation. I’m certainly behind that. But then I think there’s issues in application. Are we ready? Are we confident with it? You know, the rigor of the strength of the methods and ability now to actually make decisions that are going to determine which drugs come to market? Are there certain areas that don’t come to market? What do we do about a different threshold for rare conditions versus high severity? And so, there’s all of these unanswered questions in my head. And then I think the field is still grappling with that. This gives me pause or reservations for this to be done, you know, in the US, which has been, you know, the primary market to keep novel innovation going.
Peter Neumann: Yeah. Agreed. You know, I guess one thing I would say is does the health technology assessment body, if we were to have one, you know, are there recommendations sort of mandating coverage in some way? You know, is it a requirement that public and maybe even private entities abide by those recommendations, or is it simply information for the marketplace that could be useful? But the other point I’d make is and others have made this too, like it or not, CMS is now a health technology assessment organization negotiating drug prices. They’re evaluating these drugs based on clinical evidence and value and other dimensions. Similarly, they’re making coverage decisions about devices and diagnostics. And those coverage decisions are being informed by the clinical evidence and other, you know, information. So, they’re in the business of, of being a health technology assessment organization right now. And you can make the same case about, you know, the Veterans Administration, some of the Medicaid programs and state agencies. So, we already are doing this. Now, we’re not doing it with one central body, and we can have a debate about whether that’s a good idea, but it is going on at other levels.
Melanie Whittington: That’s a very good point, that there’s already some HTA that is formalized in the US. And I like your point about using evidence to inform the marketplace. I think that’s still where I’m comfortable sitting is value should be considered. It should be quantified where possible. It should be understood what’s in, what’s out. And then there needs to be a lot of space for contextual considerations. Thinking about, okay, where does the budget impact come in? What is the unmet need here? Do we have any other innovation? Do we have generic equivalents already? You know, there’s all of these things that are so important to patients, to the health system, to society, to, you know, innovation that there has to be still a lot of deliberation and conversation and negotiation. One thing I feel like I have to ask you since I have you here. So last episode, I went on like a 45-minute rant talking about health system perspective versus societal perspective. And I gave a little bit of a history lesson. I talked about the gold book and then the second panel of cost effectiveness and health and medicine, which you led. And then I talked about the value flower, which you were a part of as well. So, you’ve been involved in foundational work here in this debate of, okay, health system perspective, more narrow view on value thinking about patient health and health system costs. Whereas societal, we start thinking about all sorts of other things. Maybe it’s productivity, caregiver, all sorts of things. So where do you land or where do you think the the world is landing in this debate of health system versus societal.
Peter Neumann: Yeah, we could have a whole podcast just on that question. I co-chaired the second panel on cost effectiveness and we had big debates about the health versus societal perspective. And the first panel had recommended a societal perspective. Second panel said analysts should do both a health and a societal perspective. And, you know, the reasons for that were several fold. One was a conceptual reason that if you’re really going to allocate a budget and try to think about what’s being displaced, when you add something, you need a budget holders perspective. We call it a health care perspective. A societal perspective is not a budget holder. And that’s part of the sort of conceptual debate about if you really want to think about what’s in, what’s being added and what’s being displaced, you need to think about a budget. And other people would say, well, it’s still important to know where all the costs and benefits land when you’re adding an intervention, regardless of who is paying and who’s receiving them. And that’s a societal perspective. The other consideration was, if you look at some of the actual bodies that use cost effectiveness, NICE being a very prominent one, they use a health care perspective. You know, they may call it a health system perspective or an NHS perspective, but it’s a health perspective and there are other examples. So that’s a kind of revealed preference of sorts. Right? But the other reason we landed on both a health and societal is we argued, if you do both, you can more clearly show what’s being left out if you only do a health perspective. And that would be an important part of the analysis. So, I wouldn’t consider the recommendation that came out of the second panel as a narrowing of a perspective from the first panel. I would call it more of a, you know, a kind of a reasonable way to really show how, um, interventions, consequences land when you consider different perspectives. Also, I would just point out we’ve been tracking whether published analyses actually use a societal perspective. There’s been some increase over time. It’s still the case that most analyses are health perspective analyses. Health care you know, maybe budget holder perspectives. But there is some movement. And ICER has moved over time to a modified societal perspective. So obviously these are, you know, big issues about what’s included and what’s not. And the debates will go on. But I think that’s where we are.
Melanie Whittington: Yeah, I love that the second panel said do both because again, that’s then more evidence to inform these conversations. And I think more evidence transparently reported the better, because then it allows decision makers to say, okay, what’s appropriate here? What’s in, what’s out? And it might differ by disease area treatment type, etc. And so, I like the multiple perspectives. I like more evidence, more information.
Peter Neumann: Just one quick thing on this too. The second panel also recommended that analysts construct what we call an impact inventory, which is a kind of a checklist of all the items that one might consider when doing a cost effectiveness analysis, including spillover effects to other sectors and, you know, things like that. I continue to believe that it’s a good practice.
I do too. And I think that could be really helpful for users of the findings from these analysis who might not be as familiar about like what actually goes in into these models. It’s such a clear way. It’s just this checklist to say what’s in and what’s out and what did you include versus what did you not include. And so, I think it helps with transparency. And I think it helps with kind of the usability of these findings too. I do want to end on one final provocative question. You’ve taught me a lot through my career, and you’ve always been like, you know, ask people some provocative questions, make this interesting. So now you’re in the hot seat. But it does seem like HTA, and decision makers are being more narrow in their assessment of value. And I know you just said that the second panel wasn’t a true narrowing, but there is kind of this up lifting of this budget perspective in the second panel. But also, this is relevant to your recent thresholds paper that looked at the MFN countries and, you know, there was a greater share of analyses citing lower thresholds over time. And so, my question for you is, does this suggest that cost effectiveness analysis is being applied more as a cost containment strategy, a way to like, hey, I’m going to use this so I can pay less for something. And because of the transformative innovation we’ve been getting over the last decades, are developers of these analyses having to be more narrow or more limited to be able to contain these costs and use these as tools to kind of keep prices down?
Peter Neumann: The budget issues, the affordability issues are very real. The constraints are real. And, you know, the pressures are real. And we have seen an increase in the thresholds in the US by the way. In these past years, even as we’ve seen a lowering in the European countries. I think it’s maybe a cynical view that they’re only using it for cost containment. The cost effectiveness framework is really trying to understand how much health we can get given resource constraints. But you could argue it’s really about health, not about costs. Now, of course, maybe people can use it in ways that would help them negotiate a lower price or you know, contain a budget. But I think we put this information out there because we want more health. And we should be trying to use it that way. But again, you know, a lot of the European countries have faced even more constraints than the US over time. And maybe that’s what we’re seeing. And they’re using somewhat lower thresholds. We are seeing a lot of great innovation and, you know, we need to try to incorporate it, but we do have constraints, and these are tools that help us think about what we’re getting and what we’re spending.
Melanie Whittington: Well, Peter, first, thank you for coming on this podcast. Thank you also for the invitation to your annual meeting. It was fabulous. We’ll make sure to include in the show notes, you know, a link to the CEVR website so people can see all the registries and information that you all put out. And thank you again. This was a pleasure.
Peter Neumann: Thank you Mel. And I will say, you know, I’m a big fan of the podcast, so it’s really a pleasure to be on it.
Melanie Whittington: I appreciate it. Thank you.
Thank you for listening to this episode of Perspectives. If you’re interested in participating in future podcasts or would like to learn more about the Leerink Center for Pharmacoeconomics, please email cpe@medacorp.com.
