John Schneider, PhD and Hailey Crawford
June 15, 2021
The Biden Administration has indicated an intent to explore the creation of a government-operated health technology assessment (HTA) agency to engage in some form of review of biopharmaceuticals and other medical technologies.[1, 2] While there has been and continues to be considerable debate over what such a US HTA agency might look like,[1-5] were it to be implemented it may resemble at least in part the HTA agencies of Europe, such as the UK’s National Institute for Clinical Excellence (NICE) and Germany’s Institute for Quality and Efficiency in Health Care (IQWiG). It may also resemble in part the U.S.’s Institute for Clinical and Economic Review (ICER), which operates essentially like an HTA but in a non-governmental advisory capacity.
In this report, we briefly explore the implications of a US HTA for medical device manufacturers. Although it is currently difficult to determine the likelihood of the passage of HTA enabling legislation in the US in the remaining years of the Biden Administration, we suggest that increased reliance on economic evidence by commercial payers, government payers, and hospital and health system purchasers is inevitable. Thus, the time is right for health technology makers to prepare for an increased level of economic scrutiny more aggressively in the years to come.
Again, HTA is already undertaken in the US, and has been for many years, albeit in a fragmented, decentralized way. While there have been occasional calls for more aggressive assessment of health technology in the US over the past four decades,[6-8] there is mounting evidence that in recent years US payers, mostly commercial payers but also government payers, are increasingly relying on economic evidence in coverage decisions.[9-15]. For example, one survey of payers showed that 90% of payers believe that comparative cost-effectiveness analysis between treatment alternatives would be extremely or very impactful when guiding healthcare decision making.[16]
The same has been true for hospital and health system purchasers, which for many medical device makers constitute the primary target market. These organizations increasingly rely on value assessment committees (VACs) and supply chain management departments to serve as de facto HTA agencies within the organization, providing recommendations on technology adoption decisions.[17] In a survey of US VAC and supply chain members, 63% of respondents strongly agreed that purchasing decisions are driven by whether the product represents “good value for the cost.”[18]
Briefly, in theory the basic goals of most HTAs are four-fold: (1) measure, assess and report the clinical effectiveness of novel drugs and devices; (2) ensure that patients receive access to clinically effective treatments; (3) ensure that the costs of such treatments are (more or less) aligned with clinical value; and (4) maintain incentives for manufacturers to continue to innovate and bring new high-value treatments to market. Of course, HTA agencies generally cannot perfectly balance these four objectives; thus, the effectiveness of the HTA mission has generally been viewed from the perspective of optimization and tradeoffs.[3-5, 14, 15, 19-30]
The most readily available HTA models are the UK’s NICE and the US’s ICER. There are some other potentially useful predicates, such as Germany’s IQWiG and the US’s Agency for Healthcare Research and Quality (AHRQ). However, NICE is generally considered more rigorous and more transparent than IQWiG,[31-33] and AHRQ does not employ a regular HTA agenda, instead conducting comparative effectiveness reviews only in an ad hoc manner.
The UK’s National Health Service (NHS) relies on NICE to conduct appraisals of health technologies available to its beneficiaries. Technology appraisals consist of one of three types: (1) single technology appraisal (STA), which covers a single technology for a single indication and is the most common; (2) fast-track appraisal (FTA), which also covers a single technology for a single indication but with a shorter process time to speed up access to the most cost-effective new treatments; and (3) multiple technology appraisal (MTA), which typically cover more than one technology, or one technology for more than one indication.[34] NICE uses a cost-effectiveness “willingness to pay” (WTP) threshold of roughly $35,000 per quality-adjusted life year (QALY), meaning that if incremental cost-effectiveness ratio (ICER) associated with the new technology is at or below this WTP threshold, the technology will generally be considered cost effective and will be recommended for coverage.[35] A higher threshold is applied to health care interventions considered “highly specialized,” such as treatments for rare diseases.
In the U.S., the Institute for Clinical and Economic Review (which, as we indicated above, is unfortunately also referred to as “ICER”) is an independent U.S.-focused non-profit organization that conducts value assessments of health technologies, including pharmaceuticals and medical devices. The US’s ICER is somewhat like NICE in its approach to technology appraisal. Value is determined based on clinical effectiveness as well as long-term economic value and short-term affordability within the U.S. healthcare system.[12] Clinical effectiveness is established through a systematic review of clinical evidence presented in peer-reviewed publications, and cost-effectiveness and budget impact models are then constructed to estimate the economic value, affordability, and comparable value-based price benchmarks of the technology. There are three important differences between NICE and ICER. First, ICER functions only in an advisory capacity; no US payer is obligated to use its appraisals. Second, ICER does not undertake any studies of allocative efficiency; that is, it does not explicitly consider the opportunity costs of paying for one technology versus another (though implicitly cost-effectiveness analysis does this). Third, ICER has not adopted an explicit WTP threshold below which technologies are considered cost effective. In the U.S., based on technologies currently covered by payers, the implicit WTP per QALY threshold ranges from about $50,000 to $150,000 and more.[12, 36-38]
One recent study found that more than half (53%) of payers agreed (and another 40% strongly agreed) that there was a need for an independent HTA body in the US.[39] However, given its long history of resisting legislative attempts at forming an effective HTA agency, and its recent history of coming close to overturning the Affordable Care Act (ACA), it is unlikely that a US HTA would take the form of a rigorous and systematic HTA, akin to the UK’s NICE. Instead, a US HTA is likely to look somewhat more like ICER, which most US payers are familiar with and already to some extent rely upon when making coverage decisions. For example, according to a survey of 100 payer representatives, 46% indicated that they intended to use ICER reports as part of their evaluation process and 59% indicated that they had used ICER reports in the past.[40] In another survey of payers, more than three-quarters (77%) of respondents expected ICER to become more influential in the near future.[39]
The main implication of the “threat” of an emerging HTA body in the US for medical device makers (and biopharmaceutical makers as well) is that, regardless of the form that it takes, its arrival will signal an overall increase in reliance on economic evidence for payer coverage decisions. Moreover, there will likely be spillovers to hospital and health system purchasers, who will certainly consider HTA appraisals alongside the evidence they currently use in making purchasing decisions. Depending on the scope and rigorousness of a US HTA, it is possible that some proportion of the existing ad hoc assessments employed by payers and purchasers will be “crowded out,” resulting in an overall greater reliance on HTA agency appraisals.
But the overarching implication is that the need to provide strong clinical and economic evidence will only grow. If the Biden Administration does not succeed in creating a US HTA, all indicators point to an intensifying of private-sector efforts in conducting HTA-like assessments to fill the void. On the other hand, if the Administration does succeed in creating an HTA entity, this will result in even greater economic scrutiny of novel health interventions in the US.
Thus, it is more important than ever for medical device makers to begin planning for economic evidence generation early in the commercialization process. This includes, for example, the following: (1) assuring that clinical study protocols include the collection of data elements that can support economic studies; (2) building in-house conceptual models or “early” models of economic value, based on simple cost-benefit or cost-offset calculations; (3) in some cases, considering the value of more rigorous economic models, like cost effectiveness analyses; and (4) building cost-impact and budget-impact models that show the net economic effects of the intervention to purchasers (in the case of hospitals and health systems) and payer (in the case of coverage decisions). Armed with these types of economic evidence, medical device makers can be better prepared to bring their products to market in a more resource-conscious environment.
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