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In this series, we have been exploring the areas of values and value(see part 1 and part 2.) Here, Id like to further explore the concept of value and next time, well look at recent attempts to construct value frameworks.

We have said that value is in the eye of the beholder, and thus there are many different perceptions of value. One can clearly see the value battle in the area of health technology assessment. In my early days in the industry, it was sufficient to concentrate on areas of company therapy expertise, bring such products to market, register them and then make a healthy return. But now many healthcare systems are acting more like informed consumers,  saying they would rather have products that cater to unmet need and not just another me-too antihypertensive, for example.

The shift in paradigm was felt early in the UK when the Chairman of the National Institute for Health and Clinical Excellence (NICE), currently receiving enormous criticism within the US, said:

NICE may on occasion advise that certain new treatments would not be cost effective. There is no absolute right for new medicines to get onto the market; they have to compete with all the other forms of investment that the NHS has to make. I understand that it would be galling, after investing large sums of money in the development of new treatments, to find that the Institute does not endorse their use in the NHS.

This will not sit easily in a highly devolved, free-market system like that of the US.

As a GlaxoSmithKline shareholder, I also was taken by the following in their Annual 2009 report:

There are increasing pressures on companies to deliver products with demonstrable benefits over current treatments. No longer do we merely have to discover and develop products that help people do more, feel better and live longer. We now have to justify that our products represent the greatest value for healthcare providers.

There is also talk in the report about bringing a health outcome focus to R&D. In Europe, it is pointed out, that direct dialogue now exists between payer organizations and GSKs R&D teams aimed at improved (joint) understanding of the perceived benefit and value of new products. And in the UK there has been some interesting talk recently about agreed values between NICE and technology producers, where NICEs assessment has been that the cost per QALY has been too high. This has led to a growing number of risk share and patient access schemes. A recent report to NICE also examined the valuation of innovation.

There definitely does seem to be some movement here with regard to a shared understanding on value, although perhaps regulators and governments too need to walk the talk a little bit more. Nice words about supporting innovation are often used in one breath, and in the next price cuts imposed!  

It also is interesting to note that the International Society of Pharmacoeconomics and Outcomes Research (ISPOR) has of late become much more 'environmentally' focused and picked up on HTA and the value issue in a big way, where previously it was rather internally focused on health economics/outcomes.  The programs for the May 2009 US meeting this year and the upcoming European one are dominated with topics like developing consensus on QALYs, comparative effectiveness, patient reported outcome measures, value-based purchasing, value messages and uncertainty on value. 

So there now seems to be an inherent acceptance that a lack of any meaningful narrative in health economic materials for payers has restricted their usefulness and the industry should strive towards developing a new value equation. In the UK, the Industry Association (the APBI) has finally recognized the need to move with the times. They have articulated a new vision built around four new imperatives of Trust, Innovation, Value and Access. Their stated aim is to establish the UK as one of the worlds best environments for valuing and rewarding innovative medicines as cost-effective solutions for preventing and treating disease and they want to establish a broader, clearer definition of the full value of a medicine. But despite the attempts by the ABPI to reinvent itself and finally accept that NICE is here to stay, there still seems to be an underlying proposition that NICE is often wrong and that it should do more to come around to the industrys viewpoint.

Surely industrys efforts should be more about meeting half-way and  much better understanding customers values ...

Never before has the value of health technologies been put under such scrutiny. Realizing the real value of medicines in todays turbulent environment rests upon effectively determining, demonstrating and communicating the full value of medicines to both traditional and new stakeholders. That is the new challenge.

But perceptions of value constantly change, as the debate on the Obama healthcare reform package clearly shows. The industry innovated in the past as it saw fit and then tried to sell its products, but in a global economic downturn with increasing cost controls, it must now also be about affordability issues as well as meeting unmet health needs.  It will not just be about value for money, as payers also will want the prices charged for medicines to be a fair reflection of their worth, otherwise healthcare systems may simply decide that they do not want to make health expenditure decisions on a particular technology.

So companies will need to produce compelling evidence of the benefits their products deliver across the piste. And when it comes to demonstrating value, the burden will likely continue to remain on companies to prove the value of what they have developed or fail in the market place. Companies have finally come around and are clearly recognizing that demonstrating true value to payers is key to market access.

Read more

part 1

part 2

Fatima Moncrieff is a UK-based independent healthcare policy analyst and adviser. Her consultancy specializes in healthcare policy issues for both the pharmaceutical industry and the National Health Services, and aims to support organizations in steering the right strategic course through a rapidly changing and turbulent healthcare environment.