The Role of Value in the Health Care Economy

Submitted on 08/17/17

Journal of Clinical Pathways. 2017;3(6):22-24.

The term “value-based care” frequently comes up in discussions of clinical pathways and standards of care. But what does it actually mean? And who gets to define value, and for what patient population? Many parties are involved in conversations surrounding value, encompassing a wide variety of stakeholders that include patients, advocates, providers, administrators, and payers.

In order to better understand the role that value plays in clinical pathways, Journal of Clinical Pathways spoke with Alexander W Bastian, MBA, a member of the journal’s Editorial Advisory Board. Since 2016, Mr Bastian has been head of global value, access, and pricing at Incyte. Prior to joining Incyte, he served as vice president of GFK Bridgehead. Mr Bastian is also an advisor to the American Society of Clinical Oncology (ASCO) Value in Cancer Task Force, through which he has helped to develop metrics for measuring value in the oncology sphere.

What inspired you to work in the Value in Cancer Task Force and what is your role in your position?

The Value in Cancer Task Force set out to to something that had not been done before, at least not in the United States: to define the concept of value and its multiple means of expression in health care. This is something that I have been passionate about, and that reflects the work I do every day. Whenever I have the opportunity to work with people who are proactive and constructive on a topic I am passionate about, it is easy for me to join in on the initiative.

After spending many years living and working in Europe, I became acutely familiar with the differences between European and American decision-making strategies and value assessments. Value assessment in almost every European market has its own unique approaches, and sometimes there are differences of opinions. There are also consequences to these approaches, which can lead to unexpected circumstances that would not be desired by patients, physicians, and manufacturers in America: for example, sometimes patients in Europe do not receive new therapies for several years after they have become standard practice in the United States.

I serve as a strategic advisor to the Task Force. I helped the ASCO leadership committee facilitate some early dialogue and feedback sessions with patient advocates, pharmaceutical leaders, industry groups, and payers. It was important for us to hear directly from groups, and to engage early so that input could be gleaned during the development process. Later on, I helped to test the value framework developed by the Task Force, run case studies, and poke holes in it wherever we could find them. I was supported by a team of intelligent analysts and consults who assisted in this large task.

What do you see as the role of clinical pathways in health care moving forward?

Clinical pathways have been around for a long time. Before they were a concept in their own right, they were common practice in most hospitals and acute care settings. The protocol slowly morphed into the more rigid, multistep pathways that we recognize today. In some ways, the existence of clinical pathways acknowledges two things: that quality of outcomes should be evidence-based, and that variability can lead to worse outcomes and unnecessary costs. However, if there are data gaps—which is often the case in many areas, such as orphan diseases and rare cancers—it is sometimes unclear how we determine the best quality. If there are no comparative trials, how can we determine the best intervention in a given setting?

Clinical pathways are a way for payers to define decision-making to another entity. This may partially be due to impotence in their ability to restrict or block coverage, such as in oncology care. It also acknowledges the importance of shared decision-making and the role of the clinician’s voice in such decisions. Payers are often not concerned with which pathway is used, as long as you are willing to choose one.

Because the American system is a system of disparities, there will be tremendous utility to the implementation of pathways to stamp out poor quality at the bottom end and high costs at the top end. However, there is an art and a human element that must remain in place, and I think there are limits on what clinical pathways can achieve. The question is: what do you do after you have 90% of your patients on pathways, but the costs are still high?

What role will value-based care play as health care reform continues to evolve?

Value is always in the eye of the beholder. In the United States, we have a consumer-driven marketplace where competition reigns supreme. We also have a market that rewards power. Take, for example, a large company like Walmart. The power they wield has resulted in cheaper toilet paper, cereal, and laundry detergent for consumers. However, this has come at the expense of most of the suppliers who sell to companies like Walmart.

If you look at a company like Apple, you see that they have squeezed their suppliers as well, but they also wield power over the prices they can set for iPhones and iPads. These items have not become cheaper over time. This is how Apple has decided to use their power: They can do this because they have a monopoly over their technology.

In the same way, drug manufacturers have something that people want—innovation. And that innovation has an expiry date. Once patent protection is gone, the market is great at transitioning us over to cheaper generics. Insurance exists to socialize risk. We all pay to be covered for catastrophic crises that might occur. Our towns do not require everyone to buy a fire truck; the city buys a truck, through communal taxes, to ensure that a fire can be managed when the time arises. This is the same concept as health insurance. The coverage of many through regular payments should provide coverage for an equally catastrophic cancer or Alzheimer disease diagnosis.

Insurance is starting to move away from filling this role. By shifting more financial responsibility onto patients through cost-sharing or copays, they are pushing higher involvement in the immediate need. Patients are not choosing to be diagnosed with cancer or breaking a hip. Imagine what would happen if a city started asking people for coinsurance when a fire truck showed up at your house as it burned down. This is a failure in the model of socializing risk—to insure against the unseen.

Current health care reform efforts are focused primarily on equity, comprehensiveness, and source of coverage. They do not address value in the purest sense. The challenge will be how power is wielded. In most European systems, the framework for value is structured so that winners and losers are transparently decided based on rules that are clear and processes that are known. How might these decisions be made if governments negotiated? Would they pick winners and losers? Would these change with the ruling political party? My sense is that this would be unfair for patients, physicians, and manufacturers.

How has your experience working in the pharmaceutical companies shaped your view of value-based care?

My views have not really changed. I can only truly talk about value if you understand the various perspectives that might exist. These perspectives should be communicated transparently so that they can be seen through a critical eye. For example, how many different estimates have you come across for the amount of total health spending on drugs? I’ve seen the National Institutes of Health put out numbers around 10%, but I hear commercial payers state a number that is almost double that. There are some reports that are excellent to provide this context, but they are not an open book in terms of critical assessment.

One of the problems is that our fragmented system has so many perspectives to take into account. The commercial nature of contracts with fragmented groups also means that these dealings are private and not always transparent. Between the patient and the pharmaceutical company, many, many intermediaries touch the drug. Who takes a cut of the economics is sometimes hard to discern, but I would say that we are confident that what we provide is of value. New innovations, drugs, and solutions for patients in areas of high unmet need are all valued.

I can say that the pharmaceutical company’s viewpoint is rarely taken into account. Regulatory demands are not the same as what we would consider value. The regulator’s needs are to establish that a product works as intended and that it is safe. But they do not look at the relative or comparative efficacy, nor do they look at the costs associated with treatment. We do not design trials to show small benefit, but there are limits to the progress of science. The evolution of data over time may sparkle before it shines. Take trastuzumab, for example. When it was launched it was not known how important it would be for patients with human epidermal growth receptor 2–positive breast cancer. But as the drug continued to be researched, we now know today how much value it provides to patients. If we took that certainty of value to be a prerequisite at the time of introduction to the market, how many drugs would we not have today?

The mantra at our company is: “Follow the science!” I remind myself of it every time I see a negative article in the papers that bashes drug pricing. For every ounce of sweat that our scientists put into finding just one life-saving medication, there are countless hours, days, and years of trying and failing. The decisions made today will possibly—and I saw that with uncertainty that is ever present in our line of work—bear fruit years from today.