Medicines: The true value

Medicines do so much more than help the patient that's treated today. Considering a drug's societal value shows we may value them a lot more than we had thought.

Turns out, when you do broader math, medicines are worth a lot more than some give them credit for.

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Medicines don't just help those who take them today.

  • They improve the quality of life of caregivers, letting everyone be more productive, and they reassure all of us when we're healthy because we know a medicine exists if we need it (risk reduction).
  • Ultimately, medicines will become generic, inexpensive treatments that continue to benefit society and an increasing number of patients (population growth). At the same time, cheap generic medicines combat rising healthcare costs (dynamic net health system costs).
  • They save patients and caregivers from the financial and mental burden associated with hospital visits (direct non-medical costs). Effective medicines also preserve limited resources and capacity that may help other patients (community spillover).
  • A medicine can bridge a patient through to the day when a cure is invented (real option value).
  • Even seemingly small benefits can have an outsized impact on the lives of patients depending on disease severity.
  • A medicine can also have unintended benefits or inspire ideas for how to develop other medicines (scientific spillover).

Some health economists often overlook these elements of value.

Right now, many health economists rely on outdated "cost-effectiveness analysis" (CEA) to assess a drug's value and whether it's worth its price. By ignoring all the petals of the "value flower" or only including a few, CEAs underestimate the value of a medicine to society. These over-simplified analyses argue that, at their price, some medicines weren't worth inventing. Insurers then use this bad math to deny coverage and charge high co-pays, even for life-saving treatments prescribed by a physician.

When valuable new medicines are undervalued, we get fewer of them, and society ends up worse off.

Let's not undervalue new medicines.


Getting the math right when measuring the value of new medicines

Instead of doing conventional CEA, we can do better math, called generalized cost-effectiveness analysis (GCEA), which asks a broader set of questions that more fully capture the value of a medicine. For example:

What will the savings be when this drug goes generic?

Will this drug ease the burden on caregivers?

Does this drug benefit healthy people by lowering everyone's risk?

In calculating whether a medicine may be worth its price, generalized math includes at least some of the elements of value that conventional CEA ignores, often showing that medicines are much more "worth it" than simple CEA may suggest.

And when the math show that a drug is well worth its price to society, we should ask insurance to make it properly affordable to the patients who need it--that's NPLB's mission.

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