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Reconsidering the Economic Value of Therapies for Multiple Sclerosis in the United States: Who Derives Benefit from Medical Technology?

45 Pages Posted: 24 May 2016  

Tiffany Shih

Precision Health Economics

Craig Wakeford

Biogen Idec, Inc.

Dennis Meletiche

Biogen Idec, Inc.

Jesse Sussell

Precision Health Economics

Adrienne Chung

Independent

Yanmei Liu

Precision Health Economics

Jin Joo Shim

Precision Health Economics

Darius N. Lakdawalla

University of Southern California - Schaeffer Center for Health Policy and Economics; RAND Corporation; National Bureau of Economic Research (NBER)

Date Written: May 23, 2016

Abstract

Aims: (1) To illustrate a more comprehensive view of value associated with medicines treating highly severe illness. (2) To apply these insights to estimate the costs and benefits of three treatments for Multiple Sclerosis (MS): Avonex, Tysabri, and Tecfidera. Materials and Methods: Retrospective study spanning 2002-2013. We use economic theory to derive the value of therapy to those with and without MS, under the alternative assumptions that therapies were fully insured or paid for out of pocket. Models were parameterized through secondary data analysis and targeted literature review. Estimates of individual value were aggregated to the societal level using therapy-specific treatment prevalence rates. Aggregate consumer value was compared to manufacturer revenue. Results: In the baseline model, Avonex, Tysabri, and Tecfidera generated $46.2BN of total value to consumers, almost one-third of which accrued to those without MS. Total value to consumers was double manufacturer revenue. Results were qualitatively robust to the use of alternate epidemiological and economic parameters. We find that value to the healthy is positively related to disease severity, and that value to both the sick and the healthy are larger when costs are shared via health insurance. Conclusions: Theory predicts that treatments for severe disease provide “peace of mind” value to the healthy. Avonex, Tysabri, and Tecfidera have generated significant social value, a large majority of which accrues to consumers. Future economic valuations of medical technology should consider both the potential value to the healthy and the effects of insurance.

Keywords: Multiple Sclerosis, social value, insurance value, risk aversion

JEL Classification: D6, D8, I1

Suggested Citation

Shih, Tiffany and Wakeford, Craig and Meletiche, Dennis and Sussell, Jesse and Chung, Adrienne and Liu, Yanmei and Shim, Jin Joo and Lakdawalla, Darius N., Reconsidering the Economic Value of Therapies for Multiple Sclerosis in the United States: Who Derives Benefit from Medical Technology? (May 23, 2016). Available at SSRN: https://ssrn.com/abstract=2783415 or http://dx.doi.org/10.2139/ssrn.2783415

Tiffany Shih (Contact Author)

Precision Health Economics ( email )

11100 Santa Monica Blvd, Ste 500
Los Angeles, CA 90025

Craig Wakeford

Biogen Idec, Inc. ( email )

United States

Dennis Meletiche

Biogen Idec, Inc. ( email )

United States

Jesse Sussell

Precision Health Economics ( email )

11100 Santa Monica Blvd, Ste 500
Los Angeles, CA 90025

Adrienne Chung

Independent ( email )

No Address Available

Yanmei Liu

Precision Health Economics ( email )

11100 Santa Monica Blvd, Ste 500
Los Angeles, CA 90025

Jin Joo Shim

Precision Health Economics ( email )

11100 Santa Monica Blvd, Ste 500
Los Angeles, CA 90025

Darius N. Lakdawalla

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

RAND Corporation ( email )

P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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