As we debate who should pay for health care and how, it is critical to make clear what we expect to get for those payments: high-quality, cost-effective care that improves patient outcomesâ€”in other words, value.
The time has come for a robust national conversation about the cost of health care in the United States. As activity around the 2020 presidential primaries heats up, each new candidate brings their own take on how to rein in the rise in US health care expenditures. That dialogue is necessary and vital to generating ideas and solutions that could benefit our country in the long run. At the same time, the dialogue is simplistic and the conversation too narrow, focusing on the list price of a handful of innovative medicines.
The American health care system is incredibly complex, made up of countless interrelated entities that research, regulate, deliver, evaluate, and supply the industry as we know it today. As we debate who should pay for health care and how, it is critical to make clear what we expect to get for those payments: high-quality, cost-effective care that improves patient outcomes—in other words, value. Although it may be difficult to define value, it’s not impossible.
Recent research results from the National Pharmaceutical Council (NPC) and RTI Health Solutions1 demonstrate that biopharmaceuticals provide substantial health care benefits at modest cost. The findings also suggest that cost is much more than just what is paid for a medication.
The authors wanted to assess what value looked like over time. Specifically, they sought to determine, when considering disease prevalence and inflation, whether the cost of treating top conditions associated with disability and mortality became costlier over time and, if so, whether those increased costs were commensurate with improved patient outcomes and well-being.
To answer those questions, the authors examined whether spending on the top causes of death and disability was a good investment by estimating changes in both cost and burden of disease (morbidity and mortality) from 1995 to 2015, adjusting for changes in prevalence and inflation. The diseases studied included ischemic heart disease; cancer of the trachea, bronchus, or lung; breast cancer; HIV/AIDS; cerebrovascular disease; chronic obstructive pulmonary disease; and diabetes.
Using data on spending and outcomes for each condition, condition-specific cost effectiveness ratios were calculated by dividing the per-person difference in costs by the per-person difference in a measure of death and disability (disability-adjusted life years). The researchers found that, for 6 of the 7 conditions, increased health spending led to improved patient outcomes, measured as reduction in death and disability (the exception was COPD). For persons living with HIV/AIDS, the per-person change was a 9-year improvement.
In other words, investments made 20 years ago in fighting the worst diseases of the day have paid off.
The evaluation of costs on a per-person basis (adjusting for inflation) revealed that for lung cancer, ischemic heart disease, cerebrovascular disease and HIV, per- person total costs—such as physician and hospital visits and out-of-pocket costs—declined over the study period while patient outcomes improved.
The authors also found that increased prevalence and inflation accounted for the majority of cost growth over the 20-year period. For all 7 conditions, the estimated number of patients living with each condition rose. These are natural results of our aging population and living longer with these conditions. As life expectancy increases, chronic conditions and the costs of treating them go up. Naturally, this is of great concern and an appropriate topic of our national conversation; however, focusing on the list prices of a few novel medications leaves much out of that conversation. This study shows that increases in spending when adjusted for inflation and prevalence were small or nonexistent for some conditions; in other words, costs remained essentially the same. The reductions in disease burden—reduced morbidity and mortality—show that spending on care for these conditions had value.
Two other studies reinforce these findings. Cutler et al found that spending growth in Medicare declined from 1999 to 2012. Taking a closer look into the causes of the slowdown, the authors found that a large part was attributable to medications controlling cardiovascular risk factors.1 Findings from another study developed by NPC and RTI showed that biopharmaceutical products drove most of the improvements in health outcomes, post diagnosis.2 Taken together, these results provide powerful evidence that challenges the conventional wisdom that all health care spending is out of control. By showing that additional spending for certain diseases was both cost-effective and created high value, the findings demonstrate that policies aimed at addressing rising health care spending should include a disease-specific approach that targets areas in which increased spending is not associated with greater benefit.
1. Wamble D, Ciarametaro M, Houghton K, Ajmera M, Dubois R. What’s been the bang for the buck? cost-effectiveness of health care spending across selected conditions in the U.S.” Health Aff (Millwood). 2019;38(1):68-75. doi: 10.1377/hlthaff.2018.05158.
2. Cutler DM, Ghosh K, Messer KL, Raghunathan TE, Stewart ST, Rosen AB. Explaining the slowdown in medical spending growth among the elderly, 1999-2012. Health Aff (Millwood). 2019;38(2)222-229. doi:.
3. Wamble DE, Ciarametaro M, Dubois R. The effect of medical technology innovations on patient outcomes, 1990-2015: results of a physician survey. J Manag Care Spec Pharm. 2019;25(1):66-71. doi: 10.18553/jmcp.2018.18083.