OHE at EuHEA 2016: Opportunity Costs, Value Based Pricing, Economies of Scope and Quality of Life

The biannual EuHEA Conference was held at the Hamburg Center for Health Economics (HCHE), 13-16th July 2016. The topic of the meeting was “Know the Ropes – Balancing Costs and Quality in Health Care”. Members of the OHE team attended and contributed to the conference; this post summarises their activity.

The EuHEA Conference 2016 was held at the Hamburg Center for Health Economics (HCHE), 13-16th July 2016. The topic of the meeting was “Know the Ropes – Balancing Costs and Quality in Health Care”.

OHE’s Adrian Towse, Paula Lorgelly, Karla Hernandez-Villafuerte and Sarah Karlsberg Schaffer attended and contributed to the conference. This post contains summaries of their presentations and the corresponding slides.

Opportunity costs and local health service spending decisions: a qualitative study from Wales by Sarah Karlsberg Schaffer

Sarah presented the results of a recently-published paper investigating what, in practice, is foregone in the NHS when new cost-increasing technologies are recommended by NICE. This is important for understanding the opportunity cost of NICE’s recommendations and thus the level of the cost-effectiveness threshold, which is relevant to all stakeholders involved in health technology assessment.

This work was also the subject of a previous OHE blog post.

Dynamic efficiency and value based pricing by Adrian Towse

Adrian’s presentation drew on two papers:

• Value-Based Differential Pricing: Efficient Prices for Drugs in a Global Context, and
• European Union Pharmaceutical Markets: A Case for Differential Pricing? 

He argued that in countries with universal insurance, if each payer unilaterally sets an incremental cost effectiveness ratio (ICER) threshold based on its citizens’ willingness to pay for health; manufacturers price to that ICER threshold; and payers limit reimbursement to patients for whom a drug is cost-effective at that price and ICER, then the resulting price levels and use within each country and price differentials across countries are consistent with second best static and dynamic efficiency.

These value-based differential prices (VBDPs) are expected to differ cross-nationally with per capita income. To apply such a policy of VBDPs in the EU would enhance access to drugs and overall welfare. It could be done via confidential discounts or confidential voluntary contractual agreements. It is politically feasible and would allow price differences to be agreed at member state level which could remain confidential. It would limit the ability of countries who did not accept the principle of differential pricing to undermine low prices obtained by others. It may not be stable, however, due to the economic value of the hidden information.

Economies of scope and scale in publicly funded biomedical and health research by Karla Hernandez-Villafuerte

Publicly funded biomedical and health research is expected to achieve significant returns for taxpayers and for society generally. It is therefore important to know whether biomedical and health research is more productive if concentrated or if dispersed.

Karla provided an overview of an ongoing research project to:

• compile the existing evidence into a form that can be used by policy makers;
• develop new qualitative insights into the ways in which economies of scope and scale function within biomedical research;
• explore the feasibility of carrying out an econometric examination of the magnitude of the issue in the UK biomedical research context.

This research is still in progress, and as such the slides cannot be shared at this time.

Predicting cancer patients’ quality of life: an analysis of the relationship between utility, treatment regimes and time by Paula Lorgelly.

Many cancer treatments and therapies are considered to be detrimental to a patient’s quality of life. This research seeks to quantify the disutility of specific cancer treatments, including surgery, radiotherapy, chemotherapy and newer targeted treatments.

This is research in progress, but early results suggest that treatment has a lagged effect on quality of life, at least for surgery and radiotherapy. There are some limitations in the analysis, and further research is being undertaken to fully explore the richness of the data.

For further information on any of the above presentations please contact the author(s) via our meet the team webpage.