Abstract: What is the right price for a new treatment for COVID-19? One common approach—which is frequently used worldwide and in the United States by the Institute of Clinical and Economic Review—measures treatment value based largely on quality-adjusted life years (QALYs) gained by patients’ net of cost. In the case of COVID-19, however, it is clear that a new vaccine or treatment would be valued by society much more than simply average QALYs gained to patients who contracted the disease. In this commentary, the authors argue that the International Society for Pharmacoeconomics and Outcomes Research “value flower” provides a helpful framework to more accurately value treatments—such as those for COVID-19—which have a transformational impact on the lives of not only of patients, but also caregivers, employers, and broader society.
Cost-effectiveness analyses measure treatment value by quantifying and comparing treatment benefits, risks, and costs. Payers and policymakers often use the results of these analyses to make decisions on treatment coverage, negotiated price, and patient copayments. Thus, a key question is whether these cost-effectiveness models are fully capturing the benefits, risks, and costs of each treatment.
A 2018 International Society for Pharmacoeconomics and Outcomes Research (ISPOR) Task Force Report calls for the inclusion of a broader set of value elements to be included when measuring treatment benefits and risks.1 Inclusion of these novel sources of value into technology assessment has both supporters and detractors, each making a case for or against the supremacy of the quality-adjusted life year (QALY). At the same time, few health technology assessment (HTA) organizations have consistently applied these broader value elements to technology assessment in practice. The Institute for Clinical and Economic Review (ICER), for instance, opted to exclude most novel value elements in their 2020-2023 Value Framework.2
The COVID-19 pandemic provides an interesting case study in favor of considering novel elements of value. While HTA agencies may have previously considered ISPOR’s novel sources of value to be largely of interest to ivory tower academics, the COVID-19 pandemic demonstrates that incorporating broader sources of value as defined in ISPOR’s “value flower” is imperative for fully quantifying the value of innovation to society.
Vindication of the Value Flower
ISPOR’s “value flower” (Figure 1) outlines 12 elements for consideration in quantifying the value of an innovation when assessing a new health technology,1 such as a new treatment for COVID-19. These elements range from the widely-accepted QALY and net cost measures, to the less widely-used productivity and adherence improving factors, to a variety of novel elements that capture a broader continuum of value that are not widely used but for which a strong case can be made for inclusion in full value assessments.
It can be argued that 10 of the 12 elements of value (indicated in Figure 1 with a dotted black outline) are necessary but not sufficient alone in capturing the full benefits of an innovative treatment or vaccine for COVID-19. In the descriptions that follow, each of these value elements is first defined and then its relevance is discussed in relation to valuing a treatment or vaccine for COVID-19.
QALY gains—Captures the value of improved quantity and quality of patient life. This component, however, is limited as it does not capture value beyond the health impact to the average patient with COVID-19.
Productivity—Captures the value from reduced absenteeism, presenteeism, and unemployment. With unemployment and under-employment skyrocketing during the COVID-19 pandemic, any vaccine or treatment will have a substantial impact on productivity at both the individual and societal levels.
Reduction in uncertainty—Captures value from reduced uncertainty in outcomes for patients. For COVID-19, the value of a vaccine/treatment value may be high as it would reduce the uncertainty of when one resumes “normal” life amid the current uncertainty of who may be a carrier or spreader of the virus.
Fear of contagion—Captures value from behavior responses and disutility from preventing transmission of a contagious disease. The real and pressing fear of contagion leads us to stay at home; thus, scientific innovation has the potential to reduce the paralysis currently impacting individuals, families, and society as part of the mandated “lockdown” and social distancing.
Insurance value—Captures the willingness of healthy people to pay for an innovation that may or may not directly benefit them in the future, largely due to risk aversion. For instance, healthy individuals likely have a high willingness to pay for a treatment for COVID-19, and further, this value is typically much higher than its expected value (ie, probability of getting the disease times value of QALYs gained).
Severity of disease—Captures the fact that individuals value treatments for severe disease more than those for less severe disease, even with equivalent QALY gains over a population. For instance, patients may have high willingness to pay for remdesivir (Gilead), which initially demonstrated a 30% reduction in hospital length of stay and a directional evidence of a reduction in mortality.3
Value of hope—Captures that patients may value treatments with curative potential even if these treatments are risky. The Food and Drug Administration’s decision to consider and implement emergency use authorization for COVID-19 treatments and diagnostics4 shows that patients with life-threatening illnesses place value on treatments that give them a chance at returning to normalcy, even with some additional risk.
Real option value—Captures the value that keeping patients alive for a few additional weeks or months could enable them to live to see future treatments with improved survival. Given the rapid pace of R&D in COVID-19 treatment, social distancing may provide value largely by decreasing the odds of contracting the disease in the short-run while increasing the odds individuals contract the disease in the future when the potential for a new treatment exists.
Equity—Captures the value from improved equality of health outcomes across a population. As COVID-19 has disproportionately affected the health of the poor and minorities,5 new treatments have the potential to reduce health care disparities.
Scientific spillovers—Captures the potential benefit of one scientific innovation to facilitate additional innovations. The measurable impact that the surge in vaccine and treatment research in COVID-19, and the ability for telemedicine to treat other diseases, may lead to benefits for the treatment of other serious diseases.
Assessing the value of emerging COVID-19 treatments and vaccines will require estimation and aggregation of these individual value elements, an undoubtedly complex undertaking with ample room for interpretation and criticism.
Do QALYs Capture the Full Treatment Value?
Policymakers around the world have struggled with how to value number of lives saved by an intervention6 as well as how to value a life years incremental gains in quantity or quality of life.7 While QALYs are loved by academics for their conceptual elegance, QALYs have well-known limitations including: (1) ageism concerns that QALYs undervalue health gains to the elderly8; (2) challenges when valuing one-time curative therapies9; and (3) uncertainty of information based on limited trials. The levels of morbidity and mortality from COVID-19 are staggering and obvious. Andrew Briggs offers an objective approach to convert the raw mortality to a QALY-loss for a specific population by adjusting national life tables to reflect the characteristics of those infected and the likely loss of years of life (LY) adjusted for the quality of those years (Q).10
The immediate collapse in stock market indices across the world and the massive levels of public spending to support national economies coupled with the “bounce” in the valuation of individual biotech firms that demonstrate early promise of a vaccine or treatment for COVID-19 are clear indications that the market and wider society place significant and measurable value on innovation. A key question that remains is, how much value does society place on treatments that improve health outcomes for COVID-19 patients?
To examine how society at large values new treatments for COVID-19, we conducted a back-of-the-envelope stock market event study analysis,11 which presents simple calculations examining how the stock market valued the introduction of remdesivir from a US perspective. We assumed that the change in the full valuation of the stock market on the day of the positive remdesivir efficacy results ($771 billion) captures the value that the United States places on a COVID-19 innovation. Early study results suggest that 22,612 lives could have been saved by using remdesivir in all affected COVID-19 patients. Dividing the former by the latter translates to an average value of a life saved of $34 million, much higher than the $7.4 million figure used by the Environmental Protection Agency.12 To estimate the value of a life year, we note that the median COVID-19 death occurred among patients older than 75 years, with a life expectancy of 13.4 years, and as such, calculate the value of a life year to be $2.5 million. Even the most generous assumptions regarding life expectancy in the United States (average 78.5 years) result in estimates of the value of a life year of over $434,000.
Our calculation has clear limitations that could have caused our estimates to be too low or too high. Our number may be an underestimate, as the stock market may not capture all quality-of-life improvements that do not affect worker productivity or novel value elements, such as impact on equity. On the other hand, we may have overestimated value if the stock market believed that remdesivir approval is a signal of the likelihood for additional treatments, a harbinger of other policy changes (eg, ending state stay-at-home orders) or other events such as monetary stimulus.13 Nevertheless, even at 50% of our lower bound, our estimates for the value of a life year are much higher than standard estimates.
The Need for Quantifying Novel Value Elements is Real
Given the current morbidity and mortality from COVID-19, there is no doubt that society will place a high value on a vaccine and/or a treatment for the disease. One could interpret the results of the event study above as meaning that people value QALYs much more than previously thought. More likely—the authors believe—is that the novel value components mentioned by ISPOR represent real value to the economy that are not captured valuing only health improvements using QALYs. While the exact figures calculated above should be seen as directional rather than definitive, the broader point that all ISPOR value flower components should be incorporated into value assessment should be taken seriously. Despite criticism from some quarters as being too broad, we applaud the ISPOR Task Force for their far-sighted framework that offers an inclusive approach to how society considers the value of health care innovation. Future research should examine how each of the ISPOR value flower components could be calculated for a given novel treatment.
From a quantitative, economic perspective, the challenge is how to integrate the years of life lost to date and the potential lives that could be saved with the cost to society for such innovation. Our simplistic exercise suggests that value is much higher than widely used thresholds. In practice, more rigorous studies are needed to quantify each of the novel value elements for each disease. While this more rigorous approach has already been implemented to evaluate new immuno-oncology treatments,14 additional research funding is needed to fully evaluate these value elements for COVID-19 and other diseases. In the case of COVID-19, preliminary evidence hints that many novel value components may have large quantitative impacts on the value new treatments will offer to society. In short, the novel value elements are not ivory tower, esoteric concepts; they may represent a substantial share of the full value of treatment.
Conclusion
The COVID-19 pandemic struck without warning, and the global “lessons learned” will reverberate through society, government, and the public health community for years to come. In the authors’ view, COVID-19 makes clear that ill-health affects more than just health, impacting multiple aspects of society and necessitating that assessments of value capture the full spectrum of impacts on society. Furthermore, a robust biotech industry is a critical engine of innovation. A key to ensuring that life sciences firms continue to innovate worthwhile treatments is making sure that health improvements are valued appropriately. The ISPOR value flower provides a robust template to fully assess the value of health care innovation, and these value components should be incorporated into HTAs, including those by ICER. Specific to the COVID-19 pandemic, determining an appropriate value for a QALY remains a challenge, but health gains from COVID-19 treatments certainly appear to be valued more than is the case when measuring treatment benefits based only on QALYs.
References
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