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New drugs should be judged on “willingness to pay” basis, says leading economist

BMJ 2010; 341 doi: http://dx.doi.org/10.1136/bmj.c3899 (Published 19 July 2010) Cite this as: BMJ 2010;341:c3899
  1. Jacqui Wise
  1. 1London

    A leading economist has argued that “willingness to pay” is the best way to judge whether a new drug should be funded.

    Peter Zweifel, professor of economics at the University of Zurich, said that the willingness to pay criterion—which assigns a value to health benefits by directly asking members of the public how much they would be prepared to pay to gain a benefit—is a better measure than quality adjusted life years (QALYs), the commonly used measure that combines an estimate of the life years gained from an intervention with a judgment on the quality of these life years.

    Speaking at a seminar at the independent Office of Health Economics in London, Professor Zweifel said, “I would argue that the real gold standard in economic terms is not cost effectiveness but cost-benefit.”

    He added: “The current focus on QALYs is very narrow. The outcome is valued, rather than how you reach that outcome.” Professor Zweifel said that QALYs focus exclusively on health outcomes and don’t include other aspects, such as how convenient a treatment is.

    Spending on pharmaceuticals is rising. In the United States, for example, spending on drugs as a share of total healthcare expenditure rose from 9% in 1996 to 13% in 2006. Consequently there is increasing focus on the cost effectiveness of new drugs. A number of institutions now analyse drugs’ cost effectiveness, such as the National Institute for Health and Clinical Excellence (NICE) in the United Kingdom and Germany’s Institute for Quality and Efficiency in Health Care (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWIG)).

    Professor Zweifel argued that it is not just the patient with the condition who should be asked whether they are willing to pay for a new drug, as they would invariably say yes even if the benefits were minimal, but also people without the condition. The calculation should then factor in a person’s likelihood of contracting the illness in their lifetime.

    Since 2007 new treatments in Germany must be shown to be cost effective to be paid for by the statutory health insurance organisation GKV (Gesetzlichen Krankenversicherung), which covers around 90% of the German population.

    Professor Zweifel and his colleague Michèle Sennhauser were asked by the drug company Novo Nordisk to carry out an economic study on its new, long acting analogue insulin detemir (marketed as Letemir) to support its application. The extra cost of the new drug over standard human insulin treatment was calculated at €226 (£190; $290) a year. The study involved 1100 participants, of whom 600 had no diabetes, 200 had type 1 diabetes, 150 had type 2 diabetes but did not need insulin, and 150 had type 2 diabetes that required insulin treatment.

    The study looked at a number of attributes of the long acting insulin analogue, such as reduction in risk of hypoglycaemia, lack of weight gain, the flexibility of injection time, and the preparation. The study then calculated a value for people’s willingness to pay for each of these attributes for the new product in comparison with human insulin.

    Surprisingly, said Professor Zweifel, the attributes that medical professionals would not have considered as important, such as the fact that the preparation was ready mixed and did not need to be swung before use, scored highly. Also scoring higher than expected was the slightly improved flexibility of injection time. “Those medically not important attributes do have importance to people,” he said.

    The study found that the amount that participants without diabetes as well as those with the disease were willing to pay for the new treatment exceeded its extra cost. Professor Zweifel concluded: “Inclusion of the new product in the GKV list of benefits can be said to be justified on cost-benefit grounds in this case.”

    Notes

    Cite this as: BMJ 2010;341:c3899

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