Adrian's slides on the relationships between cost effectiveness and affordability

1. Professor Adrian Towse
Director of the Office of Health Economics
ISPOR Boston May 2017
IP9: PERSPECTIVES ON THE
RELATIONSHIP BETWEEN COST
EFFECTIVENESS AND AFFORDABILITY

2. The Panellists
• Steve Pearson MD, MSc, is the Founder
and President of the Institute for Clinical
and Economic Review (ICER)
• Mark Sculpher PhD, Professor of Health
Economics at the Centre for Health
Economics, University of York, UK
• Patricia Danzon PhD, is the Celia Moh
Professor at The Wharton School,
University of Pennsylvania.

3. ViH Themed Section on Affordability
Jo Mauskopf and Adrian Towse co-editors
• Steve Pearson paper: The ICER Value Framework: Integrating
Cost-Effectiveness and Affordability in the Assessment of Health
Care Value
• James Lomas et al. paper: Resolving the ‘cost-effective but
unaffordable’ ‘paradox’: estimating the health opportunity costs
of non-marginal changes in available expenditure
• Patricia Danzon paper: Value-Based Pricing Beyond the Basics:
Incorporating Budget Impact and Orphan Status
• OHE / CMTP paper: Paying for Cures: Perspectives on Solutions
to the “Affordability Issue”
• Commentary by the co-editors
• Commentary by John Watkins, Premera

4. Introductory remarks based on three papers
• The OHE / CMTP paper Paying for Cures: Perspectives on
Solutions to the “Affordability Issue” (forthcoming in ViH)
• The ICER / OHE paper Gene Therapy: Understanding the
Science, Assessing the Evidence, and Paying for Value
(available at https://www.ohe.org/news/new-publication-gene-therapy-
understanding-science-assessing-evidence-and-paying-value
• The OHE / HTAi paper for the 2016 AHPF Assessing
Value, Budget Impact and Affordability to Inform
Discussions on Access and Reimbursement: Principles
and Practice, with Special Reference to High Cost
Technologies (available at
https://www.ohe.org/publications/assessing-value-budget-impact-and-
affordability-inform-discussions-access-and

5. What do we mean by affordability? Are payers
and economists living on the same planet?
• Absolutely unaffordable as the cost exceeds all
available current and potential future resourcing
• Non-marginal impact on the cost-effectiveness
threshold so need to move down the “league table” of
interventions, or increase the budget to match the
threshold
• Time to adjust to a different spending pattern – need to
disinvest, get efficiency improvements, use marketplace
competition, or obtain higher budgets
• Not paying “too much” Discounts and revenue caps
(e.g. for Hep C around the world) are implicitly capping
returns on R&D to “reasonable” or “affordable” levels
• Annualisation - need for a way of matching payments
over the time during which benefits are realised

6. Views of payers on affordability
• Payers struggled with Hep C, and are nervous
about gene therapy, orphan drug prices, and
(for example) an effective treatment for
Alzheimer’s
• Payers expect rising costs to be controlled
through fine tuning existing policy instruments
and exploitation of marketplace competition
rather than alternative financing mechanisms or
major policy changes
• They do expect governments to provide back
up with additional resources if necessary

7. Adrian Towse
The Office of Health Economics
The Office of Health Economics is a charity (registration number
1170829) and a company limited by guarantee (registered number
09848965)
Southside, 7th Floor, 105 Victoria Street, London SW1E 6QT
Website: www.ohe.org Blog: http://news.ohe.org
Email: atowse@ohe.org
THANK YOU FOR YOUR ATTENTION