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Powering the healthcare system – when should infrastructure investment take priority over new drugs?

Healthcare is under substantial economic strain: with estimates that healthcare spending in OECD countries could increase to 6% of GDP by 20501. Reimbursement decisions for high-cost drugs are often the subject of public and political debate while less media attention is given to the funding of the overall healthcare infrastructure. However, is it in patients’ best interest to strengthen the overall structure of the healthcare system instead of funding a new therapy?

Health system strengthening (HSS) involves overall healthcare system improvement via means such as enhancing the quality of existing structures or by creating new delivery platforms such as community treatment centres. Investing in HSS allows for a wide range of health services to be delivered more efficiently, as opposed to investments into one therapy which only benefits some patients.

HSS can have long-reaching effects on overall population health by enhancing the efficiency with which other interventions are delivered. However, this effect is indirect and therefore difficult to quantify. By comparison, health economic models for pharmaceuticals and some medical devices are usually based on data from controlled trials: providing more robust estimates of the direct costs associated with new technology. This makes it easier for payers to measure the benefits and risks associated with investments.

With limited budgets, payers are left with a dilemma: should available resources be spent on new therapies, for which the outcomes are well defined, or on strengthening the overall healthcare system despite patient benefits being more intangible?

Morton2 and colleagues recently developed a mathematical model that measured the economic benefits associated with specific interventions as well as with HSS. The model was applied to a hypothetical scenario where a benefactor had to decide which of nine HIV prevention projects to fund. For each project, information on the cost of implementation, the clinical outcomes and the incremental cost-effectiveness was provided. The projects were then ranked in descending order of cost-effectiveness. As such, the logical approach would be to fund them in descending order until the budget was exhausted. However, to add another dimension to the problem, the benefactor was also given the choice of investing some of the funds in HSS. The underlying assumption was that HSS would increase the effectiveness of each of the individual HIV prevention projects. For example, staff education to decrease the stigma associated with HIV would result in HIV prevention projects being delivered more effectively. Interestingly the model found that the optimal approach was to fund HSS up to a critical threshold and then allocate the remaining funds to the top-ranking prevention projects — despite this meaning fewer prevention projects were funded.

One of the interesting aspects of these research findings is the ability to quantify the effects of HSS. This opens the possibility of enabling future payers to measure the indirect effects of HSS investments and compare these to the outcomes that can be achieved if only investing in single technologies. As HSS models develop and payers become more familiar with them, they could, in addition to aiding payers’ internal budget allocation decisions, also allow for more informed manufacturer-payer discussions. For example, it is possible that HSS models could be used substantiate value propositions by MedTech companies or by measuring the value of innovative patient access schemes where the benefits of the scheme transcend the delivery of one single drug.

Ultimately, access to better methods for measuring the impact of HSS will allow payers to make informed funding decisions and improve patient outcomes. As stated by WHO3, “the power of existing interventions is not matched by the power of health systems to deliver them.”.

If you would like to learn more about how we can assist in payer discussions, call us on: +44 (0) 20 3750 9833 or email us at: discover@validinsight.com

References

[1] Organisation for Economic Co-operation and Development. 2010. Available at: https://www.oecd.org/eco/growth/46508904.pdf [Accessed 9 August 2018]

[2] Morton, A et al. J Health Econ, 2016; 49:97-108.

[3] World Health Organization. 2017. Available at: http://www.who.int/healthsystems/strategy/everybodys_business.pdf [Accessed 6 July 2018].

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Ellen Murphy

Ellen Murphy is a Consultant at Valid Insight. Her experience includes a variety of market access projects ranging from evidence generation to pricing and strategy, all the way to development of data tools used by pharma clients in discussions with payers.

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