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Last week, we discussed how to measure the utility value of different health states. These can be used as a proxy for quality in measuring how effective therapies are. How? That's the topic of this week's Healthcare triage.

For those of you who want to read more, go here: http://theincidentaleconomist.com/wordpress/?p=61511

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Last week, we discussed how to measure the utility value of different health states. These utility values can be used as a proxy for quality in measuring how effective therapies are. How? That's the topic of this week's Healthcare Triage.

[intro music]

Last week, we established that the utility value for moderate seizure disorder is about 0.9. By the standard gamble, that means I'd take a 10% risk of death to have a cure right now. By the time trade-off, that means I'd trade about 10% of my remaining life away to be cured for the rest of my life.

We can use that utility value to calculate what's known as a QALY, or a Quality Adjusted Life Year. That's because it takes into account both how long you're gonna live as well as the quality of the life you'd have while alive.

When you take a utility value and multiply it by a number of years, you get a number of QALYs. Let's say moderate seizure disorder has a utility of 0.9. Then, curing me of the illness would gain me 0.9 times about 40 years of remaining life left, or 36 Quality Adjusted Life Years.

So if I had 40 years of moderate seizure disorder left, I'd have 36 QALYs. If I was cured today, I'd have 40 years of perfect health, or 40 QALYs. I've gained 4 QALYs.

And if the treatment costs, let's say $100,000, then the cost-effectiveness would be $100,000 divided by 4 QALYs, equals about $25,000 per QALY. That's pretty cost-effective.

A sample of cost effective things from the Tufts Cost Effectiveness Analysis Registry can give us some comparisons.

For instance, diabetes education and self-management for people with type 2 diabetes has a cost effectiveness of $4,000 per QALY. Daily dialysis for a 60-year-old critically injured male with a kidney injury is $6,000 per QALY. HIV counseling, testing, and referral in high risk populations is $44,000 per QALY. And we do that. Screening 60-year-old heavy smokers with annual CT scans, which I mention in our NNT video cuz it works, and which is recommended by many professional groups, is $140,000 per QALY.

So even though $100,000 seems like an exorbitant amount of money for a treatment to cure moderate seizure disorder, getting that many years of perfect health is a huge gain. Unfortunately, such a cure doesn't exist.

But there are similar real-world examples. Sovaldi, a drug for patients infected with hepatitis C, is being sold right now for about $84,000 for a full treatment. That's a lot of money for a drug. But what do ya get for it?

A study last year found that compared to no treatment with no cost, Sovaldi got people an extra 2.1 QALYs for about $54,000. That's about $26,000 per QALY gained. People are really upset that the drug company is charging so much for the drug, but in the scheme of things, it's sorta cost-effective. Makes one wonder if that's how they came up with the price.

But people, especially people in the United States, are really uncomfortable with this kind of reasoning. They don't like putting a number or a dollar value on life. Some think that discussing cost-effectiveness puts us on the slippery slope to rationing or even death panels.

After all, if we decide that the billion-dollar-for-a-day-of-life pill isn't worth it, what's to stop us from deciding that spending a couple hundred thousand dollars to extend grandma's life for a year isn't worth it either?

In fact, we in the United States are so averse to the idea of cost-effectiveness that when the Patient Centered Outcomes Research Institute was founded, the body that is explicitly tasked with doing comparative effectiveness research, the law that made it so explicitly prohibited PCORI from funding any cost-effectiveness research at all. As it says on their website, and I'm quoting: "We don't consider cost-effectiveness to be an outcome of direct importance to patients."

As a physician, a health services researcher, and as a patient, I have to disagree. I think understanding how much bang for the buck I, my patients, and the general public are getting from our healthcare spending is of great importance.

Other countries routinely use cost-effectiveness data to make decisions about health coverage. In the UK, the National Institute for Health and Care Excellence has a £20,000 to 30,000 per QALY threshold. They don't make decisions on whether to cover therapies based on this number alone, but it's certainly considered as a factor.

We've tried in a limited way to use such data in the United States. In the 1990s, Oregon's Medicaid program began using a strict threshold ranking of 688 procedures according to their cost-effectiveness. They only covered the first 568. Doing so freed up enough money to cover many more people who were previously uninsured.

But the plan hit a snag in 2008. When a woman with recurrent lung cancer was denied a drug that cost $4,000 a month, because the proven benefits weren't enough to warrant the cost, the national backlash to this was indicative of our collective difficulty in discussing the fact that some treatments might not be worth the money.

The Oregon health plan made things worse in this case, however, by offering to cover drugs for the woman's physician-assisted suicide if she wanted it. Even supporters of the plan found the optics of this decision difficult to accept. These actions seem far closer to justifying the claims of those who fear death panels than anything the Affordable Care Act might have created.

But refusing to consider cost-effectiveness at all has implications as well. When the United States Preventive Services Task Force makes a recommendation, they almost always explicitly state that they do not consider the costs of providing a service in their assessment. Because the Affordable Care Act mandates that all insurance must cover, without any cost-sharing, all A and B recommendations the USPSTF makes, that means that we are all paying for these therapies, even if they are incredibly inefficient.

In a recent manuscript at Health Affairs, some health economists made an explicit argument that the USPSTF should begin to consider cost-effectiveness data. If we're all gonna mandate that recommendations and interventions must be covered by health insurance, then it seems logical that we at least consider their economic value.

The cost-effectiveness of a therapy need not be the only thing we use to approve coverage, but ignoring it is akin to putting our heads in the sand.

[outro music]