Demonstrating the economic value of a new device
Proof of concept cost utility modelling, incorporating a pricing scenario
Our client identified that for many products delivered through a patient-administered device, the efficacy of the treatment was dependent not only on the pharmaceutical product being delivered but on the effectiveness of the delivery mechanism. At that time, recent developments had seen a focus on the design of the delivery device (such as insulin pens or asthma inhalers), in order to ensure ease of use and correct utilisation by patients.
Our client had developed a novel delivery device for asthma which was easier to use and decreased the number of errors made by patients when taking their medication. Along with improved compliance, this was believed to lead to improvements in health outcomes. The key challenge for the client was to demonstrate the benefit of a decreased number of user errors through improved health outcomes and lower costs for healthcare systems.
The overall aim of this project was to demonstrate the economic value of our client’s new device in order to support early pricing decisions and future successful reimbursement negotiations in Europe.
We developed an interactive and flexible cost utility model, in line with ISPOR guidelines and journal requirements, which allowed users to change the input values.
To demonstrate the impact of reducing the likelihood of inhaler errors, the model linked the probability of errors for each device with the relative risk (RR) of patients moving to the uncontrolled asthma state. The odds ratios (ORs) of moving to the controlled state, provided by the client, were transformed to RRs using the methodology from Zhang et al. (1998).
These RRs were applied to the base case transition probabilities (as shown in the illustrative table). The impact of the handling error was reflected in the Markov traces for each device to show expected effectiveness.
In addition to the standard cost utility results (i.e. incremental cost effectiveness ratio), this model calculated the maximum monthly price chargeable for the device based on its effectiveness compared to a selected competitor, over a user-selected time horizon and willingness-to-pay threshold.
The model demonstrated the total cost effectiveness impact of reducing the risk of inhaler errors. We were also able to identify the maximum justifiable price per month (the premium price against competitors), while still meeting the NICE cost per quality-adjusted life year threshold. Compared to competing products, the new device resulted in:
- Fewer asthma exacerbations per year
- Improved cost effectiveness (lower total costs, higher total quality-adjusted life years)
Value to the client
The resulting model was the first cost utility model that considered the impact of avoiding errors in the usage of inhaler devices. The maximum justifiable price feature provided further evidence for our client to utilise in pricing negotiation with payers.