Cost-Effectiveness of Health Care Spending for Certain Conditions

By January 21, 2019 Commentary

Spoiler alert, this study was sponsored by a drug company trade association.  I am a little surprised Health Affairs published it with no comment.  It is worth determining if our health spending delivers value in terms of outcomes.  A review of cost-effectiveness of spending for the treatment of certain conditions is carried in Health Affairs.   (HA Study)   Surprise, surprise, most of the conditions studied are largely treated with drugs.  The conditions were ischemic heart disease, lung cancer, breast cancer, HIV, cerebrovascular disease, COPD and diabetes.  The authors purported to look at the relationship between the costs of treatment and disease outcomes after diagnosis.  They used the period from 1996 to 2015 and used CDC and MEPS data.  They wanted to see if disability adjusted life-years changed as treatment changed.  There is subjectivity in DALY calculations and using MEPS data for treatment costs means you are relying on patient reports.  The basic analysis was the change in cost for getting an incremental increase in improvement in DALYs.

For all seven conditions more people had the disease in 2015 than in 1996.  Total spending to treat each condition also increased significantly over the period.  But per person spending actually decreased on a constant dollar basis for lung cancer, ischemic heart disease, cerebrovascular disease and HIV.  The other three conditions had modest increases in per person cost.  The change in per person DALY was variable, with greater improvement (i.e., fewer DALYs) for HIV, lung cancer, heart disease and breast cancer; lesser improvement for diabetes and cerebrovascular disease and a slight decline for COPD.  I am a little dubious at the spending numbers for some of these diseases, as it seems low.  The net effect is that it appears that spending was more cost-effective, measured by DALYs, than it might actually have been.  You can define cost-effectiveness in a lot of ways.  I don’t know what the best way is.  One thing I do know is that if treatment costs less, it is more likely to be cost-effective.  So the drug manufacturers could do a lot to demonstrate and improve the cost-effectiveness of their products if they just got more reasonable in their pricing.  And a lot of the benefit shown in this study comes from conditions where the primary drug treatments now have multiple generic alternatives, with much lower prices.

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