Box 2.1. Value in health care

“Paying for value” is one of the most overused tropes in health care today. It is also the least well understood, because its meaning is manipulated by each stakeholder (Chandra and Goldman, 2015).

The terms “value” and “value-based” (payment, pricing, reimbursement) blossomed in health care analyses and policy in the 2000s. In a broad sense, a “value-based” health care system is a system whose activities are oriented, organised or funded so as to maximise benefits for patients and/or the society for a given amount of resources invested (or to minimise costs for a given amount of benefits). It is difficult to disagree with this general proposition as an overarching goal for policy makers. However, patients, health care providers, payers, the biomedical industry, policy makers, and the public, pursue a range of objectives that tease out the inherent tensions in this broad definition. The definition of value therefore depends very much on 1) how “benefits” are defined and measured and 2) the perspective adopted: the patient, the health care system, or society.

In economic evaluation, which is often part of health technology assessment that informs coverage decisions, three approaches are used to examine the value of new technologies (Hurley, 2000, Drummond et al., 2005):

• In the extra-welfarist approach, the objective of the health system is to maximize health outcomes from a constrained health care budget. Health improvements (e.g. life year gained) are the only outcome taken into account. Health improvements may be weighted by “health states preference scores” (or utility derived from different states of health) in aggregate measures such as “quality-adjusted life years” The most common economic evaluation methods (cost-effectiveness and cost-utility analysis) are based on this approach, and are mainly used to make decisions (funding, reimbursement and pricing) on new technologies. They compute a ratio of incremental costs to incremental benefits of using the new technologies, compared to existing alternatives. A new technology is considered to generate value when a) it is cost-saving or when b) its cost per QALY is below a pre-defined threshold (Culyer, 2016). How this threshold should be defined is the subject of ongoing debate.

• In the welfarist approach, the best way to measure the outcome of a “programme” (technology) is the amount individuals are willing to pay for it. If willingness to pay (WTP) is higher than costs, the programme (technology) should be implemented or the service supplied. This approach is often used for the evaluation of public investment projects (in cost-benefit analysis) or to measure the impact of environmental nuisances (e.g. pollution). Different methods can be used to assess consumers’ WTP and derive a figure, such as the Value of the Statistical Life, which is then used to monetize the societal impact of the object of enquiry (OECD, 2012). This approach is not commonly used in economic evaluation of health care interventions. Yet, it has often been deployed in economic studies evaluating the societal value of technological progress retrospectively (e.g. Murphy and Topel, 2006), and more recently to estimate the societal value of using new hepatitis C medicines (Van Nuys et al., 2015). In the latter case, the model used allows going beyond the incremental costs (and savings) and health gains for an individual patient and measuring the impact of reduced transmission of the virus.

• An intermediary position rejects the WTP as a relevant measure of outcomes but suggests adopting a broader social perspective – not limited to health system and budget – and considering a wider range of costs and consequences. This is referred to as the “decision-maker” approach (Drummond et al., 2005).

The extra-welfarist approach, although commonly used, is often criticised for its theoretical, methodological and ethical shortcomings. One of the main arguments concerns the fact that it may not adequately reflect public preferences. By design, QALYs are of equal value regardless of the recipient (“a QALY is a QALY is a QALY”). In practice, this means that a QALY gained has the same value, whatever the condition or the personal characteristics of the population treated: age, sex, severity of disease, level of deprivation, or other characteristics. For instance, a QALY gained at 8 years is given the same weight than a QALY gained at 88 years. Decision makers, who are unlikely to be indifferent to these criteria, account for them – most often implicitly. For instance, accepting to pay for orphan or oncology medicines or implement programmes which do not meet cost-utility thresholds (see Chapter 3 of this publication). New approaches to assessing the value of health care interventions are being proposed and trialled, including multi-criteria analysis (Angelis and Kanavos, 2014). Such methods allow an explicit consideration of stakeholder and public preferences in trade-offs.

Another approach, popularised by Porter (2010) aims to promote value in the provision of health care services, through competition between providers. “Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent” (Porter, 2010). The key difference with the extra-welfarist approach resides in the outcomes measurement method. Extra-welfarism applies a unifying measure (e.g. QALY), while the managerial approach assess outcomes using a combination of traditional metrics (e.g. survival), as well as condition-specific patient-reported measures (e.g. incontinence), the (dis)utility of the care process or treatment (e.g. e diagnostic errors, ineffective care, treatment-related discomfort, complications, adverse effects); the sustainability of health or recovery and the nature of...