CADTH_2014_E1_Sharing_Risk_Between_Payer_and_Provider_by_Leasing_Health_Technologies__Christopher...

Sharing risk between payer and

provider by Leasing Health

Technologies Christopher McCabe PhD

University of Alberta

Overview

Background

Health care as an investment

Leasing health technologies

Worked example: Leasing Herceptin

Leasing, value based pricing and only in

research

Conclusions

Background

Decision choices widening

Health care as an investment

"In this world nothing can be said to be certain,

except death and taxes.” Benjamin Franklin, 1789

“Uncertainty as to the quality of the product is

perhaps more intense here than in any other

important commodity.” Kenneth Arrow (Nobel Laureate).

Welfare Economics of Medical Care. AER 1963

Reimbursement as an Investment

Leasing as a response to uncertainty

Leasing health care

Paying for health delivered

Calculating lease payment

Price associated with target cost

effectiveness threshold

Time horizon for duration of beneficial

effect

Number of monitoring periods during the

time horizon

Leasing Herceptin

When Herceptin was funded for Early

Breast Cancer in UK we had direct

evidence for 48% of parameters in the

decision model.

There was @ 35% chance Herceptin

displaced more health than it produced.

Long delay to break even as an

investment.

Net Benefit Probability Map: Herceptin: 19.5 years to break even point.

Range plus 0.97 QALYs per person to minus 0.28 QALYs per person

Price of Herceptin: £21,184

Duration of benefit (DFS) = 10 years

Annual Review

Interest rate = 3.5%

Lease payment: £2,118.4

Net Benefit Probability Map with Leasing: Break even point = 5 years. ICER =

£17,347, Net Benefit range at 50 years = plus 0.82 to minus 0.16

Leasing, value based pricing and only

in research Innovation by definition is highly uncertain

◦ Reduces the likelihood of unrestricted funding

◦ Increases the likelihood of Only in Research

Value based pricing innovation premium

proposed to remedy this „disadvantage‟.

◦ UK social research reports limited public

support for this; (Brazier et al.

http://www.eepru.org.uk/VBP%20survey%20research%20report.pdf)

Decision choices widening

TLRS

TLRS

Technology Leasing modifies the risk associated with innovative technologies ◦ Reducing value of delaying research

◦ Reducing the time to break even

◦ Increasing the probability of a positive reimbursement decision.

Provides greater rewards for technologies that perform better than expected.

For highly uncertain technologies; only in research may still be the efficient decision option.

Conclusion

Few conventional risk sharing schemes

have successfully protected limited health

care budgets from inefficient use.

Innovative payment schemes managing

risk at the patient level are required.

Technology leasing is one model for

sharing risk between innovator and health

system at the patient level.

Thank you.

@McCabeCJM

Questions