Option value of cancer treatments2018-02-16T16:21:34+00:00

Option value of cancer treatments

“In a therapeutic area with rapid innovation, a manufacturer was interested in more fully quantifying the value of an oncology treatment.”

Challenge

The high costs of new cancer treatments have generated pushback from many different stakeholder groups, but the survival improvements they provide to patients may be valuable. In a therapeutic area with rapid innovation, a manufacturer was interested in more fully quantifying the value of an treatment by capturing the value it provides by enabling treated patients to reap the benefits of future therapeutic advances.

Response

PHE built a model using SEER registry data and published clinical trials to quantify the value of a cancer treatment that enables a patient to survive to the next major therapeutic advance, potentially compounding their survival gains. We refer to this additional benefit as the “option value” of a treatment.

Results

The results of the study found that the conventional value of cancer treatment nivolumab was between 4.5 to 7.5 months for different tumor types. When the value of surviving to the next therapeutic innovation was included, this increased the total expected survival gains by an additional 0.5 to 1.2 months, representing an additional benefit of between 5% and 18% of the conventional valuations.

Impact

This study, published in the American Journal of Managed Care, provides important justification for taking a long-term perspective in assessing the value of treatments in a field with rapid therapeutic innovation.  Looking only at the direct benefits of a treatment may underestimate the total value it provides patients if the survival benefit it confers allows patients to see a future innovation that improves their outcomes further. The PHE study encourages the consideration of this “option value” in economic assessments and suggests an opportunity to improve pricing and reimbursement strategies through outcomes-based agreements that consider the cumulative value generated to patients through future innovation.

Looking only at the direct benefits of a treatment may underestimate the total value it provides patients if the survival benefit it confers allows patients to see a future innovation.

Precision Medicine Group is an integrated team of experts in fields from advanced lab sciences to translational informatics and regulatory affairs, payer insights to marketing communications. Together, we help our pharmaceutical and life-sciences clients conquer product development and commercialization challenges in a rapidly evolving environment.

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