Life Sciences

NAMs: Making your value case on the road

Medicare & Reimbursement Advisor Weekly, May 27, 2009

Healthcare formulary decision-makers will increasingly review whether they can divide populations into effectiveness subgroups to test pharmaceutical interventions. Our survey in December 2007 of our pharmacy and medical formulary decision-makers suggested increased interest in models being used by groups such as the United Kingdom’s National Institute for Health and Clinical Excellence (NICE) (

If you want to claim that your product is cost-effective, be sure to justify the choice of your outcomes claim for product performance compared to performance claims for comparison products. To do so:

  • Identify key results of your competitors’ clinical papers
  • Summarize the key results and present pooled summaries
  • Match these against your own product

U.S. managed care may begin to rely more heavily on probabilistic sensitivity analysis to evaluate claims that products are cost-effective. If several products in your class and those of your competitors’ fall into the more costly benefit category—and clinical differentiation is minimal—plans will want to know how probable it is that product A is more cost-effective compared to products B, C, and D, or product E in another therapeutic class.

Manufacturers are wise to model their own claims using this approach. This will allow you to test various pricing scenarios. Groups such as NICE mandate this type of analysis, and it is recommended in numerous reimbursement guidelines globally. This analysis will become a standard in cost-effectiveness claims because it gives healthcare decision-makers a way to deal with uncertainty and rank therapy interventions in terms of their willingness to pay.

Ask your plan customers the following:

  • Do you use probabilistic sensitivity analysis to evaluate cost-effectiveness?
  • Are you considering using it?
  • How can I help you evaluate cost- effectiveness for our product?
  • What is your threshold in evaluating these claims? (A threshold is equal to the amount that the plan is willing to pay for additional benefits using your product on formulary.)

Plans will increasingly rank products when they invest more money in a therapeutic class. Plans will select products for formulary based on how much the product costs per quality-adjusted life year. So plans are asking, “If we move to therapy B, how much do we truly gain?”

Editor’s note: Adapted interview with Dr. Paul Langley of Maimon Research, LLC.