VIP 'Call for Papers' Award Winners

“Incorporating Real Option Value in Valuing Innovation: A Way Forward”

Meng Li, ScM, PhD (Department of Health Services Research, University of Texas MD Anderson Cancer Center) and Louis P. Garrison, PhD (The CHOICE Institute, School of Pharmacy, University of Washington)

Abstract

Recently, considerable progress has been made in defining and measuring the real option value (ROV) of medical technologies. Questions remain, however, on how to estimate: (a) ROV outside of life-extending oncology interventions, (b) the impact of ROV on costs and cost-effectiveness, (c) potential interactions between ROV and other elements of value, and (d) the impact on pricing and coverage decisions. In this paper, we present a theoretical framework for ROV that clarifies how ROV is created, its types, and its estimation. Based on the theoretical framework, we develop a “minimal modeling” approach for estimating the size of ROV that does not require constructing a full, formal cost-effectiveness model that can be applied to all types of ROV across disease areas. We propose a qualitative approach to assessing the level of uncertainty in the ROV estimate. We examine the potential impact of ROV on the incremental cost-effectiveness ratio as well as on the potential interactions between ROV and the non-conventional elements of value, such as productivity, value of hope, and insurance value. Lastly, we develop and present a 15-item checklist for reporting ROV for inclusion in value assessment with the following five domains: types of ROV, size, level of uncertainty, interaction with other value elements, and impact on the ICER. As an illustration, we conduct and empirical exercise of ipilimumab for first-line treatment of metastatic melanoma using the minimal modeling approach and report the assessment using the checklist. The modeling approach developed in this paper simplifies and standardizes the estimation of ROV in value assessment. Systematically including and reporting ROV in value assessment will minimize bias and improve transparency, which will help improve the credibility of ROV research and acceptance by stakeholders. Finally, the checklist provides a useful framework for valuing ROV and, hence, innovation in pricing and coverage decisions.

Three Key Take-Aways

• ROV can be created through life extension, improved eligibility for future innovations upon survival, or both.
• The minimal modeling approach to estimating ROV does not require constructing a formal, full cost-effectiveness model, and evaluates the impact of uncertainty qualitatively.
• ROV may interact with the conventional value, the value of hope, productivity effects, and insurance value: the impact of ROV on cost-effectiveness can be evaluated via threshold analysis.

“The Value of Flexible Vaccine Manufacturing Capacity: Value Drivers, Estimation Methods, and Approaches to Value Recognition in Health Technology Assessment”

Fred McElwee (Office of Health Economics, London, United Kingdom) and Anthony T. Newall (School of Population Health, Faculty of Medicine, UNSW Sydney, Australia)

Abstract

The COVID-19 pandemic has highlighted the importance of rapid vaccine development but also the critical role of vaccine manufacturing capacity in a pandemic scenario. Expanding flexible vaccine manufacturing capacity (FVMC) for routine (non-pandemic) vaccines could facilitate more timely access to novel vaccines during future pandemics. Vaccine manufacturing capacity is ‘flexible’ in this context if it is built on a technology platform that allows rapid adaption to new infectious agents. The added value of routine vaccines produced using a flexible platform for pandemic preparedness is not currently recognised in conventional health technology assessment (HTA) methods.

We start by examining the current state of play of incentives for FVMC and exploring the relation between flexible and spare capacity. We then establish the key factors for estimating FVMC and draw from established frameworks to identify relevant value drivers including insurance value, real option value, and spillovers effects. The role of FVMC as a countermeasure against pandemic risks is deemed an additional value attribute that should be recognised.

Next, we address the significant gap in the vaccine-valuation literature between the conceptual understanding of the value of FVMC and the availability of accurate and reliable tools for its estimation to facilitate integration into HTA. Three practical approaches for estimating the value of FVMC are discussed: stated and revealed preference studies, macroeconomic modelling, and benefit-cost analysis.

Lastly, we review how value recognition of FVMC can be realised within the HTA process for routine vaccines manufactured on flexible platforms. We argue that while the value of FVMC is uncertain and further research is needed to help to better estimate it, the value of increased pandemic preparedness is likely to be too large to be ignored.

Three Key Take-Aways

• Expanding flexible vaccine manufacturing capacity (FVMC) for routine (non-pandemic) vaccines could facilitate more timely access to novel vaccines during future pandemics.
• Stated and revealed preference studies, macroeconomic modeling, and benefit cost-analysis are three promising methods to estimate the social value crated by FVMC.
• Consideration of this value within health technology assessment provides a potential long-term solution to help incentivise FVMC and increase pandemic preparedness.

“Estimating and Rewarding the Value of Healthcare Interventions Beyond the Healthcare Sector: A Conceptual Framework”

Askal Ayalew Ali (Florida Agricultural and Mechanical University), Amit Kulkarni (Otsuka Pharmaceutical Development Corporation Inc), Sandipan Bhattacharjee (Otsuka Pharmaceutical Development Corporation Inc), and Vakaramoko Diaby (Otsuka Pharmaceutical Development Corporation Inc)

Abstract

Evaluating healthcare interventions for their impacts beyond health outcomes can lead to increased human capital, higher incomes, increased tax revenue, and increased government spending, stimulating economic growth and maintaining population health. In this paper, we document instances where current health technology assessment practices fail to account for the impacts of innovation on broader society beyond the healthcare sector. We propose a novel conceptual framework, highlighting its three components and their contributions to capturing the economic and societal ripple effects of healthcare interventions. The manuscript also outlines a case study in which the framework is applied to the re-assessment of a previously evaluated digital health therapeutic for the Treatment of Opioid Use Disorder (OUD), demonstrating its practical application.

Three Key Take-Aways

• The traditional approach to health technology assessment (HTA) often overlooks the impacts of healthcare interventions on broader society beyond the healthcare sector.
• The proposed conceptual framework incorporates a conventional cost-effectiveness analysis, macroeconomics approaches, and a voting scheme to capture and evaluate the broader economic impacts of healthcare interventions.
• The application of the framework provides a comprehensive assessment of healthcare interventions, enabling policymakers to make more informed decisions regarding reimbursement and investment in healthcare innovation.