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Striking a balance

Balancing commerce and science is a tough challenge facing health economists, says John Fanshawe, co-principal of specialist healthcare communications company, Medaxial...

Should the role of the health economist be an academic and scientific one, as suggested by the 'outcome research' title adopted by many company departments, or is the job essentially to support product sales as an extension of the commercial and marketing departments?

The answer is important, not just for the emotional wellbeing and career prospects of health economists, but because clarifying their job description is critical to the work they do and the people they seek to influence. Few would argue about the growing importance of health economics.

In the developed world, healthcare systems are in crisis because of rising costs, rising demand and inadequate funding. In this context, health economics has a vital role to play in informing decision making, offering an intellectual framework within which to make decisions about resource allocation. This is valuable when you are faced with dilemmas such as whether to give funding priority to extending the lives of terminally ill patients with third-line chemotherapy, or to offer IVF treatment for infertile couples. Decision-making is complex and influenced by a wide range of factors; health economics can inform the process but it cannot make the decisions.

An uneven focus
Health economics is critically important to the pharmaceutical and medical devices industries. The price that can be charged for a product, and the extent to which the payer supports its use, is fundamental to commercial success and the wider economic health of the enterprise. For the past decade, the central role of the in-house health economist has been to support pricing and reimbursement through the use of complex models, weighty submissions to payers and the publication of economic analyses. The strong theoretical component in these activities has made it relatively easy for health economists to straddle the worlds of commerce and academia, but there are signs that this balancing act is becoming more difficult.

A central issue is audience. Until recently health economic communications have been aimed at a nation's health technology assessment (HTA) agency or its equivalent, such as the National Institute for Health and Clinical Excellence (NICE) in the UK. These bodies are mandated to assess the cost-effectiveness of new medical technologies.

As they employ people with professional qualifications in health economics, complex models and weighty dossiers have been an excellent way of communicating with them. However, there has been a growing realisation within pharma companies that HTA agencies and similar top-level decision makers are only one of many audiences for health economics messages. In most healthcare systems there are other stakeholders who make decisions as to whether a particular product should be used. They include pharmacists, insurance plan managers, members of formulary committees, clinicians, clinical directors, hospital managers, public health officials and employers, to name only a few.

Even in a monolithic system such as the UK's NHS, a positive decision from NICE does not mean a product will actually be used in eligible patients at a local level. Local decision makers have budgets to balance and targets to meet, regardless of whether or not a new technology has been judged by others to be cost-effective. Value- based decisions - whether the use of an expensive drug should be restricted, or whether disposable equipment should be used in hospital operating theatres - are being made continually throughout healthcare systems.

Decision makers
Marketing departments were quick to realise that they had to reach people making value-related decisions about their products. After all, there is little point in spending millions of euros on marketing your product if, elsewhere in the system, someone has decided that prescriptions for it will not be honoured because the product is deemed to be too expensive. Most major pharma companies have set up specialised salesforces tasked with reaching these decision makers. Health economists are generally required to support these salesforces through the development of messages and materials, and this has contributed to the gradual commercialisation of their role.

In many cases, funding has migrated as well. Once, health economics units had budgets of their own; now these are often controlled by commercial or marketing departments. Some economists relish the challenge of a commercial environment, but others are uneasy about the apparent erosion of their academic independence and scientific status. A major challenge in this cost-conscious era has been the development of materials to communicate health economic messages to a disparate audience of non-health economists. It is technically possible to add a user-friendly 'front-end' to a complex model originally intended for HTA agencies but this approach is not adequate.

The model may rely on economic concepts that are difficult for the audience to understand - such as probabilistic sensitivity analysis, or the discounting of costs and benefits. The front-end will probably hide inputs and calculations, creating out-of-context 'black box' results that are difficult to accept. The perspec- tive may not be relevant either - a model encompassing the healthcare system as a whole may be of little interest to someone whose job is to balance a budget locally. The results of the model may be expressed in terms that are alien and unhelpful; eg, very few decision makers below HTA agency/health ministry level are likely to be interested in the incremental cost per QALY (Quality Adjusted Life Year) gained.

It is vital to address the audience in terms of its own agenda and preoccupations. The basic components in the value argument - for example, establishing unmet medical need, presenting clinical data showing product benefits and estimating the cost implications of its use - will be the same as for HTA agencies. The language and land- scape, however, will be very different. The value story may be framed in terms of targets or guidelines that are important to the audience. It is vital that clinical arguments are presented with clarity and impact, giving decision makers a clear idea of what they are getting for their money. The economic case should be made in a straightforward, meaningful manner. Usually this will be in terms of budget impact but cost-effectiveness arguments are possible if the measurement of benefits is practical and relevant - for example, the cost per event avoided, rather than the cost per QALY.

Future role
What does this mean for health economists working in pharma? The good news is that the importance of their role within this industry seems certain to grow. In an era of modest product pipelines and escalating regulatory demands, there will be increasing pressure to obtain premium prices for new products. At the same time, the need for healthcare systems to control costs will grow.

The ageing populations of industrialised nations will simultaneously reduce govern- ment tax revenues and increase demand for healthcare. Not only will a greater quantity of healthcare be required, there will also be an added demand for better treatments for diseases associated with ageing, such as macular degeneration, osteoarthritis and cancer. It will fall to health economists to justify the cost of these new treatments and to ensure the continuing prosperity and success of the organisations that employ them. The creeping commercialisation of the health economist's role is probably irre- versible and marketing departments will continue to call the tune.

Value arguments will need to be more sophisticated and effective, and are increasingly likely to be tested with focus groups to ensure optimal return on investment. Product value may have to be communicated not only to HTA agencies and other decision makers in healthcare, but additionally to external influencers such as patient groups, employers, politicians and the media. The cost, quality and availability of healthcare is already a topic for public debate and this is set to intensify as the impact of the ageing population is felt more keenly. Pharma companies will have to justify their prices, not just to decision makers in healthcare, but to society.

3rd May 2007


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