CADTH 2015 Symposium

1. End-of-life premiums in
reimbursement decision making
Christopher McCabe PhD
Capital Health Endowed Research Chair
University of Alberta

2. Acknowledgements
Funded by Genome Canada, Canadian Institutes
for Health Research, Alberta Innovates Health
Solutions, Capital Health Research Chair
Endowment, UK National Institute for Health
Research.
Co-authors: Mike Paulden, Anthony Culyer,
Richard Edlin, James O’Mahoney, Tania Stafinski,
Devidas Menon

3. Overview
• End-of-life premium a la NICE
• A model of CEA-based reimbursement
• Incorporating additional value criteria
• Value based reimbursement
• Vertical and Horizontal Equity
• Conclusion

4. End of Life premium a la NICE
• The treatment is indicated for patients with a
short life expectancy; normally less than 24
months.
• There is sufficient evidence to indicate that
the treatment offers an extension to life,
normally of at least 3 months, compared to
current NHS treatment; and
• The treatment is licensed, or otherwise
indicated, for small patient populations.

5. When these criteria are met, the appraisal
committee is to consider:
“the magnitude of additional weight that would be
need to be assigned to QALY benefits in this patient
group for the cost effectiveness of the therapy to
fall within the current threshold range.”
NICE Guide to the Methods of Health Technology Appraisal (2013)

6. 0
Health care
expenditures
Health benefit
per $1,000
A model of CEA based reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Worse Than
Current
Better value
Worse value
Willingness to
Pay

7. 0
Budget
Willingness to Pay
New Willingness
to Pay
Health benefit
per $1,000
Health care
expenditures
A model of CEA based reimbursement

8. 0
Health benefit
per $1,000
Budget
Willingness to Pay
Net Benefit of
changing how
health care $$ are
spent
New Willingness
to Pay
Health care
expenditures
A model of CEA based reimbursement

9. Incorporating additional values

10. • Prevalence (rarity) of disease
• Severity (seriousness) of
disease
• Identifiability
• Is the disease life-threatening
or chronically debilitating?
• Evidence of treatment
efficacy/effectiveness
• Magnitude of treatment
benefit
• Safety profile of treatment
• Is treatment innovative?
• Societal impact of treatment
• Impact of treatment upon the
distribution of health
• Commercial considerations
• Legal considerations
• End-of-life
• Price (cost) of treatment
• Budget impact of treatment
• Cost-effectiveness of
treatment
• Availability of alternatives
• Feasibility of diagnosis
• Feasibility of providing
treatment
• Price (cost) of treatment
• Budget impact of
treatment
• Cost-effectiveness of
treatment
• Availability of alternatives
• Feasibility of diagnosis
• Feasibility of providing
treatment

11. Decision maker’s valuation of the orphan therapy
and each relevant comparator
Vi=hP1i,P2i,…,PJi,Q1i,Q2i,…,QKi
where i represents the treatment
Decision maker’s valuation of the opportunity cost of
the orphan therapy and each relevant comparator
Vi'=hP1i',P2i',…,PJi',Q1i',Q2i',…,QKi'
where i' represents the opportunity cost of treatment i
Potential decision-bearing factors
Cost-effectiveness Feasibility of Dx / Tx When making a coverage decision, the decision maker
compares its valuations of the orphan therapy, its
relevant comparators, and the opportunity cost of each
Value placed on any treatment by each stakeholder
Pji=fjv1,v2,…,vn
where i represents the treatment and j the stakeholder
Potential value-bearing factors (v1,v2,…,vn)
‘Opportunity cost’-determining factors
Cost of treatment Budget impact
Patient prefs Societal prefs
Value placed on any treatment by each value proposition
Qki=gkv1,v2,…,vn
where i represents the treatment and k the value proposition
Rule of rescue Equity principle
Disease-related Treatment-related
Population-related Socio-economic-related
Rights-based

12. Valued Effect
per $1,000
0
Health care
expenditures
Health benefit
per $1,000
Value based reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Better value
Worse value
Willingness to
Pay

13. Valued Effect
per $1,000
0
Health care
expenditures
Value based reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Better value
Worse value
Willingness to
Pay

14. Valued Effect
per $1,000
0
Health care
expenditures
Value based in reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Better value
Worse value
Willingness to
Pay

15. Valued Effect
per $1,000
0
Health care
expenditures
Value based reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Better value
Worse value
Willingness to
Pay

16. Valued Effect
per $1,000
0
Health care
expenditures
Value based reimbursement
Current treatments
covered by health care
system Budget
Treatments not covered
by the health care
system
Better value
Worse value
Willingness to
Pay
Willingness to
Pay

17. Equity
• Vertical
– Treating unequals Unequally
• Horizontal
– Treating equally Equally

18. Conclusion
• Current approaches to end of life premia
pursue vertical equity at the expense of
horizontal equity
• End-of-Life (and all other value premia):
HANDLE WITH CARE