• Biosimilars
  • Drug Development/R&D
  • All Topics
OHE OHE
Newsletter SignupSubscribe

News & Insights
  • News
  • Events
  • Insights
  • Bulletin
  • News
  • Events
  • Insights
  • Bulletin

News & Insights

  • News
  • Events
  • Insights
  • Bulletin
Newsletter SignupSubscribe
  • News
  • Events
  • Insights
  • Bulletin

Close
OHE OHE
  • Research & Publications
  • News & Insights
  • Education
  • Innovation Policy Prize
  • Events
  • About Us
  • OHE Experts
  • Contact Us
Newsletter SignupSubscribe

Research & Publications

All Publications

Filter by:
  • Antimicrobial Resistance (AMR)
  • Biosimilars
  • Cell and Gene Therapies
  • Chronic Diseases
  • Combination Therapies
  • COVID-19 Research
  • Digital Health
  • Drug Development/R&D
  • Emerging Markets
  • EQ-5D and PROMs
  • Health Care Systems
  • Health Data and Statistics
  • Health Technology Assessment
  • Precision Medicine
  • Real World Evidence
  • Use of Medicines
  • Value-Based Pricing
  • Vaccine Research
  • Economics of Innovation
  • Measuring and Valuing Outcomes
  • Policy, Organisation and Incentives in Health Systems
  • Value, Affordability and Decision Making

News & Insights

  • News
  • Events
  • Insights
  • Bulletin

Education

  • Education Hub
  • OHE Graduate School
  • EVIA Programme

Innovation Policy Prize

  • The Prize Fund
  • 2022 Prize Fund

Latest Research & Publications

Proposal for a General Outcome-based Value Attribution Framework for Combination Therapies

CombTher_Adobe_photoguns_portrait
Read more
© photoguns
  • Digital Health

Navigating the Landscape of Digital Health – United Kingdom

Healthcare_Adobe_elenabsl
Read more

2021 OHE Annual Report to the Charity Commission

charityreport_lina-trochez-unsplash_landscape
Read more
© Lina Trochez/Unsplash

Supporting the Era of Green Pharmaceuticals in the UK

Sustainability_AdobeStock_270582392_landscape
Read more

Quality of life and wellbeing in individuals with experience of fertility problems and assisted reproductive techniques

Quality of life assisted reproduction Cover
Read more
  • Cell and Gene Therapies
  • Value, Affordability, and…

Health Technology Assessment of Gene Therapies: Are Our Methods Fit for Purpose?

gene_therapies_national-cancer-institute-unsplash_landscape
Read more
© NCI/Unsplash
  • Drug Development/R&D
  • Economics of Innovation
  • Health Policy and Regulation

Limitations of CBO’s Simulation Model of New Drug Development as a Tool for Policymakers

CBO-US_mayer-tawfik-K4Ckc0AxgDI-unsplash_landscape
Read more
© Mayer Tawfik/Unsplash
  • Measuring and Valuing Outcomes

When Generic Measures Fail to Reflect What Matters to Patients: Three Case Studies

PROMS_unsplash_National Cancer Institute_landscape
Read more
© NCI/Unsplash
Close
OHE
  • All Publications

    Filter by:
    • Antimicrobial Resistance (AMR)
    • Biosimilars
    • Cell and Gene Therapies
    • Chronic Diseases
    • Combination Therapies
    • COVID-19 Research
    • Digital Health
    • Drug Development/R&D
    • Emerging Markets
    • EQ-5D and PROMs
    • Health Care Systems
    • Health Data and Statistics
    • Health Technology Assessment
    • Precision Medicine
    • Real World Evidence
    • Use of Medicines
    • Value-Based Pricing
    • Vaccine Research
    • Economics of Innovation
    • Measuring and Valuing Outcomes
    • Policy, Organisation and Incentives in Health Systems
    • Value, Affordability and Decision Making
    • News
    • Events
    • Insights
    • Bulletin
    • Education Hub
    • OHE Graduate School
    • EVIA Programme
    • The Prize Fund
    • 2022 Prize Fund
  • Events
  • About Us
  • OHE Experts
  • Contact Us
Newsletter SignupSubscribe
Back
  • News
11 min read 17th July 2019

Assessing the Life-cycle Value of Second-generation Antipsychotics in Sweden and the UK

This research by a team of OHE and IHE researchers estimates the value added by second generation antipsychotics over their life-cycle in the UK and Sweden. It concludes that considering the entire life-cycle, the value added by SGAs to the…

Share:
  •  Twitter
  •  LinkedIn
  •  Facebook
  • has-icon Email

This research by a team of OHE and IHE researchers estimates the value added by second generation antipsychotics over their life-cycle in the UK and Sweden. It concludes that considering the entire life-cycle, the value added by SGAs to the system is higher than the expected value estimated at launch. P&R decisions should consider the value added by medicines over the long-run.

The value to society of pharmaceutical innovation depends on the long-term health and related benefits, net of additional costs .  Research to generate accurate estimates of this long-term value is important (Lakdawalla et al., 2017; Puig-Junoy, 2018). It can inform a crucial question for policy makers:  how much should society pay for new medicines, in order to reward and incentivise innovation? 
 
Countries, governments and/or health authorities often use either Therapeutic Added Value or Cost Effectiveness (CE) Analysis to inform decisions about whether to adopt new medicines at launch. Such analysis is usually based on short-term clinical trial outcomes with assumptions about longer term effects.  It is also usually indication-based and so does not reflect any value that the appraised drug may add to society through other possible formulations or indications. It also does not take account of the additional gains to the health care system that may accrue from lower prices when the product goes off-patent, or whilst still on-patent, when new competitors of the same class enter the market.
 
The present work aims to assess the life-cycle value of innovative medicines using the example of Second-Generation Antipsychotics (SGA). Assessing the entire life-cycle of SGA, the study explores how much additional value has been delivered through additional approved indications for SGAs, generic competition or new and clinically superior formulations launched. It uses risperidone as representative of the SGA class, comparing it to haloperidol – its counterpart from the First-Generation Antipsychotics class (FGA). This research estimates the life-cycle cost-effectiveness of the SGA class against FGA class in incremental terms. It also estimates the absolute social value added, measured by the sum of the consumer and producer surpluses. Study results aim to quantify the nature of value added by pharmaceutical innovation over the long-run to support future research as to whether and how access decisions can be informed by these life cycle effects.
 
The research estimates the number of patients with schizophrenia who were treated with risperidone in Sweden and the UK, 1994-2017, based on data of usage and volume sales. We collected data from the literature on the effectiveness (QALYs per patient per year) and direct (health services) and indirect (productivity) costs (per year € 2017) of risperidone (SGA) and haloperidol (FGA). Using a comparator from the inferior class, we proxied the incremental value added by the new class of innovative medicines. Next, we modelled the life-cycle uptake of risperidone to estimate the life-cycle incremental cost (i.e., direct, indirect and medicine costs), incremental QALYs and Net monetary Benefit (NMB) of risperidone. We also assessed the life-cycle distribution of the social surplus between the payer (consumer surplus) and the innovator (producer surplus). 
 
UK results show that for during the life-cycle, the NMB for the health system significantly increased in response to two events: (i) the launch of Risperidone Long-Acting Injectable (RLAI); and (ii) generic entry. The ICER was negative (dominant) for the whole period, and savings generated per unit of incremental health gain significantly increased with both the launch of RLAI and generic entry. For Sweden, results show a similar pattern to the UK, albeit with smaller shares of social captured by producer. This is explained by Sweden’s higher willingness to pay for health, reflected in a Swedish cost-effectiveness threshold which is almost three times higher than in the UK. 
 
This joint research by the Office of Health Economics (OHE) in the UK and the Institute for Health Economics (IHE) in Sweden shows that health systems and societies in general (consumers) were able to appropriate most of the life-cycle value (surplus) generated. The value added by the SGA significantly increased with the launch of RLAI and even more with the entry of generic competition, as the evolution of the absolute surplus distribution, as well as the incremental results for NMB and the life cycle ICER show. This suggests that the life-cycle value added by SGAs to the system was higher than the value that would have been estimated using cost-effectiveness analysis at launch. The latter does not consider generic entry, and the launch of new and more effective presentations and indications. 
 
Consequently, we suggest that pricing and reimbursement decisions should consider how to recognise the dynamic nature of pharmaceutical markets and the full life cycle of value added by innovative medicines. This presents a challenge of estimation, but also of assessing the appropriate share of social value that should go to the producer and to the health system.
 
Download the full report here.
 
Citation
 
Berdud, M., Wallin-Bernhardsson, N., Zamora, B., Lindgren, P., and Towse, A. (2019). Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in Sweden and the UK: The Case of Risperidone. OHE Research Paper 19/xx, London: Office of Health Economics. Available at: https://www.ohe.org/publications/case-risperidone-assessing-life-cycle-value-second-generation-antipsychotics-sweden-and
 
Related research
 
Berdud, M., Garau, M., Neri, M., O’Neill, P., Sampson, C. and Towse, A. (2018). R&D, Competition and Diffusion of Innovation in EU: the case of Hepatitis C. OHE Research Paper 18/06, London: Office of Health Economics. Available at: https://www.ohe.org/publications/rd-competition-and-diffusion-innovation-eu-case-hepatitis-c
 
Cole, A., Towse, A. & Zamora, B., 2019. Indication-Based Pricing (IBP) Discussion Paper. OHE Briefing, London: Office of Health Economics. Available at: https://www.ohe.org/publications/indication-based-pricing-ibp-discussion-paper-should-drug-prices-differ-indication
 
Lakdawalla, D., MacEwan, J.P., Dubois, R., Westrich, K., Berdud, M. and Towse, A., 2017. What do pharmaceuticals really cost in the long run? The American Journal of Managed Care, 23(8), pp.488–493.
 
Lindgren, P. and Jönsson, B., 2012. Cost–effectiveness of statins revisited: lessons learned about the value of innovation. The European Journal of Health Economics, 13(4), pp.445–450.
 
Puig-Junoy, J., 2018. The long run average price of pharmaceuticals in a cost-effectiveness framework. [University webpage] Pilleconomics. Available at: https://jaumepuigjunoy.cat/ca/the-long-run-average-price-of-pharmaceuticals-in-a-cost-effectiveness-framework/. [Accessed 09 Jul. 2019]
 
 
  • Health Technology Assessment…
  • Economics of Innovation
  • Innovation

Related News

Prize event
  • News
  • January 2023

Professor Aidan Hollis wins first £40,000 OHE Policy Innovation Prize

Read more
  • News
  • December 2020

Should We ‘Drop Dead’ from Health State Valuation?

Read more
  • News
  • October 2020

Opportunities to Increase Efficiency in Healthcare

Read more
  • News
  • September 2020

Cornerstones of ‘Fair’ Drug Coverage

Read more
footer_ohe_logo

Leading intellectual authority on global health economics

Sign Up for the OHE News Bulletin

Newsletter SignupStart Sign Up

Research & Publications

News & Insights

Innovation Policy Prize

Education

Events

About Us

OHE Experts

Contact Us

Sign Up for the OHE News Bulletin

Newsletter SignupStart Sign Up

The Office of Health Economics (OHE) is a company limited by guarantee registered in England and Wales (registered number 09848965) and its registered office is at 2nd Floor Goldings House, Hay’s Galleria, 2 Hay’s Lane, London, SE1 2HB.

Terms & Conditions

Privacy Policy

Cookies Policy

© 2023 Website Design

An error has occurred, please try again later.An error has occurred, please try again later.

We are using cookies to give you the best experience on our website.

You can find out more about which cookies we are using or switch them off in settings.

 Twitter
 Facebook
 LinkedIn
 Copy
 Email
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

3rd Party Cookies

This website uses Google Analytics to collect anonymous information such as the number of visitors to the site, and the most popular pages.

Keeping this cookie enabled helps us to improve our website.

Please enable Strictly Necessary Cookies first so that we can save your preferences!