Unbiased Analysis of Today's Healthcare Issues

The Innovation and Value Initiative (IVI) has launched

Written By: Jason Shafrin - Sep• 29•16

I’m excited to announce that the Innovation and Value Initiative (IVI) has just launched.  I will be serving as the Director of Research.  Below, I have reposted the IVI press release so you can lear more about the initiative.

Precision Health Economics today launched the Innovation and Value Initiative (IVI), a multi-stakeholder scientific initiative to advance the way value is measured and rewarded in the healthcare marketplace.

Rapid biomedical progress and rising healthcare costs have led to increasing calls to link spending to value rather than volume of care in the United States. In response, a number of organizations have released “value frameworks” intended to guide purchasing to higher-value treatments, but these existing efforts face key limitations including incomplete value measurement, lack of integration of value assessments into marketplace decision-making, and an absence of true multi-stakeholder perspectives into value measurement.

IVI will advance the science of value measurement and find common ground in how value is measured and rewarded in healthcare by pioneering new scientific methods, developing novel approaches to pricing new technologies, and promoting best practices in value assessment. IVI researchers will conduct scientific studies, analyze public policy, and apply state-of-the-art methods to assess value in the real world.

The IVI scientific agenda will be guided by a Panel of Health Advisors and will include experts from academia, healthcare providers, health plans, life sciences industries, and patient advocacy groups. The Co-Chairs of the IVI Panel of Health Advisors are Dr. Samuel Nussbaum, previously the Executive Vice President for Clinical Health Policy and Chief Medical Officer for Anthem and current Senior Fellow at the USC Schaeffer Center for Health Policy and Economics, and Dr. Dana Goldman, a professor of health economics at the University of Southern California and the Director of the Schaeffer Center for Health Policy and Economics.

“To deliver the best possible care to patients—and make sure that healthcare dollars are going to the most beneficial treatments—it is absolutely essential that we evolve our understanding of value and think about creative ways to pay for healthcare,” noted Dr. Neil Weissman, President of the MedStar Health Research Institute and Professor of Medicine at Georgetown University. “IVI will fill a much-needed role in leading this effort.”

The Executive Director of IVI is Dr. Darius Lakdawalla, a professor of health economics at the University of Southern California, where he serves on the faculties of the School of Pharmacy, the Price School of Public Policy, and the Schaeffer Center for Health Policy and Economics.

“The rapid rate of scientific innovation in healthcare has far outpaced innovation in the way we pay for new technologies,” according to Dr. Lakdawalla. “Nearly all stakeholders now agree that we need new and better ways to link spending to value, but efforts in this area have not been well-grounded in science or in the institutions of the US healthcare marketplace. IVI seeks to change that.”

“IVI takes the critical step of including multiple stakeholder groups’ perspectives in its work,” said Dr. Nussbaum. “The research agenda is established by a diverse panel of leading voices in care delivery, insurance, pharmaceuticals, and patient advocacy. These viewpoints will shape the actual research, and allow diverse voices on quality, access and affordability to be heard and inform public policy.”

As Dr. Nussbaum describes on the Health Affairs blog, IVI will lead the development of an “approach to technology assessment that reflects multiple perspectives and defines a new role for the United States as an engine of value-based innovation.”

IVI is based in Bethesda, MD, and Los Angeles, CA. For more information, visit IVI’s website at www.TheValueInitiative.org.


Written By: Jason Shafrin - Sep• 27•16

Not what the Healthcare Economist would do, but entertaining nonetheless…cog-bias

Plus this quotation:

“Since learning about confirmation bias, I keep seeing it everywhere!”

Hat tip: Better Humans and The Browser

Dismal Arithmetic of Hepatitis C Treatment?

Written By: Jason Shafrin - Sep• 26•16

The American Journal of Managed Care has an interesting special issue on treatment for the hepatitus C virus (HCV).  Jay Bhattacharya provides the introductory commentary, and starts off with the following.

Although the medical prospects facing patients with hepatitis C virus (HCV) have never been better, the prospect of gaining access to a cure is another matter for many patients. About 2.7 million Americans suffer from chronic HCV, with 170 million worldwide.1 After decades of research and billions of dollars in investment, we now have a definitive treatment—direct-acting antivirals (DAAs)—that can cure this serious illness.2 Better still, the pills are relatively cheap to produce and future improvements in production technology are likely to make them even cheaper in the future.3  

Despite this obviously great news for patients with HCV, there is good reason to worry about the high costs of DAA treatment: the average cost for a complete 12-week course of one such treatment is $84,000.4 At this price, many insurers are reluctant to provide full access to DAAs for all patients with HCV; Medicaid programs provide only limited access.5   

What does Bhattacharya propose?  He proposes that the government buy the rights to these innovative treatments.

Thus, my proposal is the following: a benevolent buyer could purchase the intellectual property rights to these drugs and make them public. Without patent protection, the cost of the pill would likely fall precipitously toward the relatively low marginal costs of production, subsequently making universal access to treatment achievable not only in the United States, but in many other countries as well. A $50-billion investment by an altruistic philanthropist would unleash more than $1 trillion in value for society, and it would do so without jeopardizing incentives for finding future cures. 

This proposal is not without merit.  It would provide manufacturers incentives to create novel treatments in HCV and other diseases.  At the same time, by ending the monopoly, prices would fall and access would grow.

However, this process requires not only a benevolent buyer, but an insightful one. What if a benevolent buyer decided to pay $50 billion dollars for a drug and 1 year later there was another drug invented that was twice as good?  Maximizing social welfare could require another investment of $50 billion for the next advance.  Additionally, government has historically been poor at setting prices and its ability to set prices for these licenses would likely also be poor and even more likely subject to cronyism.

Paying for licenses is a good idea in theory–and may even be a good idea for treatments that serve as a cure such as direct-acting antivirals–but in practice there are significant challenges to overcome.

Effect of job loss on physical and mental health

Written By: Jason Shafrin - Sep• 26•16

Previous research has found that losing your job has an adverse effect on your physical and mental health.  Because losing your job is endogenous, often studies of this sort look at plant closures as an individual’s job loss is largely uncorrelated with individual performance.

An interesting paper by Schiele and Schmitz (2016) take this a step further by conducting a quantile regression and looking at how job loss effects physical and mental health based on baseline health status.  They find:

Job loss due to plant closures affects physical health adversely for individuals in the middle and lower part of the health distribution while those in best physical condition do not seem to be affected. The results for mental health, though less distinct, point in the same direction. We find no effects on BMI.


HWR is up

Written By: Jason Shafrin - Sep• 22•16

Louise and Jay Norris mark Colorado Health Insurance Insider’s 10 year blogging anniversary – congratulations!! – with a rousing edition of Health Wonk Review. She notes that there’s a little something for everyone, and highlights the fact that healthcare reform is still very much a work in progress.


You can find a link to the post here  https://www.healthinsurancecolorado.net/tenth-anniversary/

Economic Dimensions of Personalized and Precision Medicine

Written By: Jason Shafrin - Sep• 21•16

I am attending a National Bureau of Economic Research (NBER) Pre-Conference on Economic Dimensions of Personalized and Precision Medicine. You can find the meeting agenda here. The speakers today were very interesting and touched on a number of topics with respect to precision medicine including:

  • Measuring the value of a precision medicine diagnostic test
  • Determining the appropriate cost sharing for precision medicine under various conditions
  • Examining whether the hype behind genome-wide association study (GWAS) was warrented
  • Considering the game theoretic implications for innovators for targeting broader compared to more precise patient populations
  • Estimating the value that could be generated from personalized medicine due to better treatment targeting in multiple sclerosis
  • Characterizing the drug development pipeline for precision medicines

My presentations is tomorrow. So far it’s been a blast.

The anti-tremor spoon

Written By: Jason Shafrin - Sep• 20•16

This is not a paid endorsement.   My uncle just got one of these and he said it’s really amazing.  Just checked out some videos and it is pretty amazing what technology and innovation can do.


Does private ownership improve quality of care?

Written By: Jason Shafrin - Sep• 19•16

In the case of elderly care services in Sweden, the answer is ‘yes’.  In Bergman et al. (2016), the authors…

assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates – an important and not easily contractible quality dimension – using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates.

Clearly, privatization does not guarantee improved quality in all countries and in all care settings, but this study provides some evidence that competition in the health care field results in better care for patients.


Links to Start your Week

Written By: Jason Shafrin - Sep• 18•16

How do we measure the value of and pay for biomedical innovation?

Written By: Jason Shafrin - Sep• 15•16

Dana Goldman, Samuel Nussbaum, and Mark Linthicum have an interesting post on the Health Affairs blog about innovation, value measurement and pricing.  The article mentions the new Innovation and Value Initiative, where I serve as the Director of Research.  An excerpt is below.

New pricing mechanisms are needed to effectively link prices to value; we need innovation in pricing, not just treatment. Potential pricing mechanisms include outcomes-based contracts and indication-specific pricing, but other approaches are possible, such as selling licenses for pharmaceuticals like we do for software.

Our challenge is to design a system that: (1) measures value appropriately; (2) links reimbursement to that value; and, (3) does so in a way that stimulates innovation in high-need areas. European-style HTA is not really up to the task. Moving forward will be daunting and will require multiple viewpoints, which is why we are helping to lead the Innovation and Value Initiative to advance the field. The result, we hope, will be an approach to technology assessment that reflects multiple perspectives and defines a new role for the United States as an engine of value-based innovation.