Adrian Towse, Emeritus Director and Visiting Senior Research Fellow at OHE looks back at his journey and impact in health economics research.
This week, Adrian Towse, Emeritus Director and Visiting Senior Research Fellow at OHE, received the Avedis Donabedian Outcomes Research Lifetime Achievement Award from ISPOR—The Professional Society for Health Economics and Outcomes Research.
This award recognises individuals who have made outstanding, life-long contributions to improving health outcomes through research, leadership, and impact in the field of health economics and outcomes research.
Adrian’s work has influenced health policy and economic thinking worldwide – from value-based pricing to innovation incentives and equitable access to care. He also led OHE for over 25 years, shaping our voice and impact globally.
The following is a brief reflection from Adrian on his journey into health economics, and lessons learned after decades of impactful research in the HEOR landscape, both in the UK and abroad.
Q. How did your journey into health economics begin?
My first love in economics was Industrial Organisation (IO) and I spent a lot of my 20s and 30s working in consultancy for the UK government and regulators on competition and regulation, notably the organisation of a competitive privatised electricity market.
My first projects in health care were: for the European Commission writing a blueprint to set up the European Medicines Evaluation Agency (now the EMA) under the supervision of Fernand Sauer who became its first Head (no wonder he was so interested in the detail!); the UK Government on competition in the generics market; and then for industry on the impact on innovation of supplementary patent certificates, which were (of course) introduced by the EU.
In the context of the UK Thatcher government’s purchaser-provider split, (separating hospitals as legal entities from the regional government purchasers of health care) we moved from viewing health as just a subcategory of “public economics” to using IO to think about competition and regulation of what we then called the NHS Internal Market,, looking at introducing patient choice and competition into the NHS through ‘quasi-markets’. We could draw on US literature where an IO approach was the norm. Key UK economists working on this were Dame Carol Propper, Professor Jim Malcolmson and Sir Julian LeGrand, all of whom served on OHE Committees as advisors at various times. It also gave me the opportunity to serve as a Non-Executive Director for 10 years of my local hospital, now called the Oxford University Hospitals NHS Trust, one of the UK’s largest research and teaching hospital groups.
When I first came across the QALY it reawakened my interest in welfare economics (and the discovery of extra welfarism, although I leave open the question as to whether welfare economics is a special case of extra-welfarism as Donabedian winner Tony Culyer would argue, or the reverse is the case as Donabedian winner Chuck Phelps has recently argued in a VIH article).
I realise we can see QALYs as a pragmatic tool, but I have always wanted to be comfortable with the underlying theory and I have reflected that in my writing. We need a theoretical framework when we consider broadening frameworks of value. Otherwise, we end up with an ad hoc collection of elements of value with a great risk of double counting and of ignoring opportunity cost.
The final link up point for me, between HTA and IO, is the realisation that for many health economists technologies fall out of the sky, and the task is what to do with them (if anything) when they land? I have always been of the view that health systems get the technologies they deserve. How a purchaser prices and uses a technology is key to how many more technologies are produced. Pay for value and you will get value. Pay for something else and you will get something else.
Hence my motivation in writing and arguing for value-based pricing as a means of putting the static and dynamic pieces together, albeit in a second-best world where we need to protect IP to get any private R&D, and pricing at marginal cost is not an option.
Q. You led OHE for over 2 decades. You also held the position of President of ISPOR for some of that time – what did your time there look like?
I became the leader of OHE in 1993, and served as its leader for 25 years, building the profile, output and quality of the organisation. A turning point was becoming a registered not-for-profit charity (with a consulting subsidiary) and achieving Independent Research Organisation status. I must thank then Deputy Director Jon Sussex and his successor Paula Lorgelly for that.
I think there were 5 people at OHE when I joined, and thanks in no small part to my amazing successors CEO Graham Cookson and Deputy CEO Lotte Steuten there are now more than 40 and OHE is internationally recognised as one of the top health policy research groups in the world. I am very proud of playing a part in that. I am also very proud of the OHE team past and present, many of our alumni have gone on to even greater things – not least my recruit as OHE’s first Research Director Nance Devlin as Chair of the EuroQol Board and ViH Editor.
To keep me occupied, I am also a Visiting Fellow at the global Washington DC-based think-tank the Center for Global Development and served until recently as a Visiting Professor in Practice at the London School of Economics. I have previously been a Visiting Professor at the University of York, and a Senior Visiting Fellow at the Health Economics Research Centre, University of Oxford. It has been a pleasure to be involved with all of those institutions.
I was first on the ISPOR Board in the early 2000s but didn’t have time to consider running for President until 2014.
Founding Director Marilyn Dix Smith, who had built ISPOR, retired and I managed, with Past-President Dan Malone, the transition from to her successor Nancy Berg. I remained post-presidency for several years to support Nancy Berg as a special advisor to the ISPOR Board, chairing the Governance Committee during the formalisation of ISPOR’s oversight of its Chapters, and the reorganisation of the Committee structure. I also served on its Finance and Audit Committees and now serve on ISPOR’s Health Science Policy Council.
I have been a regular presenter for more than two decades at meetings of ISPOR in North America and Europe, as well as at HTAi and iHEA meetings. Supporting the institutions that move health economics forward is important and also provides a showcase for OHE’s work.
Q. Would you be able to speak about some of your research and its impacts?
My research has covered major areas of HEOR, notably:
Differential pricing based on value to increase patient access, demonstrating it is neither efficient nor ethical forlow-income populations to pay the same prices for pharmaceuticals as high-income populations. A key to this is theuse of confidential discounts which have been much criticised. I have set out the case against price transparency for on-patent pharmaceuticals notably with Patricia Danzon and with Kalipso Chalkidou, arguing it reduces access forpatients in low-income countries. Acceptance of confidential discounts has been crucial to the implementation of differential pricing increasing utilisation of on-patent drugs at prices reflecting local value-for-money considerations.
I then applied this same conceptual approach to the need for indication-based pricing for the same drug, and to the use of a monotherapy in a combination, which is a new use for the drug with a different value.
The UK NHS has this year published an updated Commercial Framework for New Medicines which accepts the case for indication-specific pricing in circumstances where a “uniform price across all indications, could make it commercially unviable for companies to launch new indications”
I recently co-authored a series of papers proposing a solution to value attribution for combination therapies. Most payers are expecting companies to agree value-attribution between them. I argued with Andy Briggs and Lotte Steuten that the bargaining power of the owner of the existing monotherapy means this will not work without HTA bodies intervening to set out agreed principles of value attribution combined with differential pricing of the backbone in combination use.
The theoretical and practical case for the use of “risk-sharing” or conditional reimbursement, combined with regulatory / HTA interaction, to enable patient access to new drugs whilst a value-based price is established. Much of this work has been with Lou Garrison and it links to work on the economics of precision medicine, including the challenges of rewarding “curative” therapies, work which also highlighted the need for value-based pricing of diagnostics to enable payers and patients to fully benefit from targeted treatments.
Following the 2007 UK Office of Fair-Trading Report on the Pharmaceutical Price Regulation Scheme (PPRS), I advised the UK industry association (ABPI) on the development of the provisions on Patient Access Schemes, the first formal incorporation of risk-sharing schemes into payer/ HTA processes anywherein the world, working with the UK Department of Health (DHSC) and NICE. These were included in the 2009PPRS and maintained and enhanced in each subsequent 5-year pricing agreement between the industryand the UK government, including the recent 2023 VPAS. I co-authored (with Martin Buxton and Mark Sculpher) a key paper setting out how the UK Cancer Drugs Fund (CDF) could be reformed to become a form of conditional access scheme whilst additional evidence was collected on relative effectiveness and cost-effectiveness. The revised CDF, implemented in April 2016, reflects this proposal and continues today, having recently been extended (in 2023) with the introduction of an Innovative Medicines Fund, applying the“risk sharing” approach of the CDF to selected non-oncology drugs. The UK CDF remains the “poster child” for jurisdictions seeking to implement conditional coverage / reimbursement schemes.
Risk sharing is the future! We have more early access and uncertainty about performance and value for money. Recently I co-authored a paper with Liz Fenwick arguing that taking into account differing opinions ofunderlying performance between payers / HTA bodies and innovators (as opposed to negotiating posture)significantly increased the potential value of risk-sharing arrangements to increase patient access. This makes them a preferable route to access in 9 out of 12 scenarios where payers were not inclined to provide access at the price sought, providing that the costs of evidence generation and administration were met by theinnovators and not the payers.
Incentives for new drugs to tackle the global problem of antimicrobial resistance (AMR), identifying the value elements not captured in current HTA and how to incorporate these externalities into the assessment of value, as well as calculating the returns to investment from new drugs.
I began work in this area 15 years ago, identifying the reasons for the market failures leading to the lack of new antibiotics, and modelling the size of the “pull incentives” needed plus the need for decoupling sales volume from revenues. OHE modelling work on the cost of developing an antibiotic was used to support the UK Government’s landmark 2016 O’Neill Commission Report. More recently, I led OHE’s work that identified the additional elements of value that were key to an HTA assessment of the value of a new antibiotic to society which have become widely known by the acronym STEDI (Spectrum, Transmission, Enablement, Diversity, and Insurance).
This work led to the UK government commissioning EEPRU to estimate these elements of value and to the UK Government’s 2022 introduction of a pull incentive in the form of a delinked value-based AMR scheme: the model that other G7 jurisdictions are seeking to emulate.
More recent work has estimated likely returns on investment from putting these pull incentives in place andhow these can be made to work in the EU where I argue there is a need to emulate some of the processesput in place for the purchase of COVID vaccines. This modelling work with CGD’s Rachel Bonnifield has been adopted and updated by the Alliance for Reducing Microbial Resistance to support EU policy making.
My objective is to provide a compelling policy rationale for pull incentives that, on the one hand, can bejustified in terms of value-based pricing by health systems and, on the other hand, are likely to stimulatethe necessary R&D.
Efficient R&D incentives to tackle neglected global health issues and diseases, advocating for portfolio-based Product Development Partnerships, which have transformed pipelines, and for the Advance Market Commitment (AMC) “pull incentive”.
I was commissioned with Hannah Kettler by the 2005 WHO Commission on Intellectual Property and Health (CIPIH)to write a paper setting out the evidence on “push” and “pull” incentives and followed this up with arguments for an Advance Market Commitment using the example of the Meningococcal C vaccine purchase by the UK Department ofHealth writing the Briefing Paper for UK DIFD with Nobel Prize winner Michael Kremer. The UK funded the GAVI-ledAdvance Market Commitment (AMC) for pneumococcal vaccine which was established in 2007 and I sat on the Expert Group convened by the World Bank and GAVI, which recommended the pneumococcal vaccine as the candidate. This GAVI-led pneumococcal vaccine AMC has saved an estimated 700,000 lives. I subsequently advocated (with OHE and CGD colleagues) for the use of AMC variants to tackle drug-resistant tuberculosis and to pay for vaccines against Covid-19, anticipating the Gavi COVAX scheme.
Broader elements of value I have written extensively about the need to recognise broader elements of value but within a framework that recognises opportunity cost and avoids double-counting and was, along with Mike Drummond, one of the two non-US member of the ISPOR Special Task Force on US Value Assessment Frameworks.
Q. Do you have any lessons learned you’d like to share, given your decades of research and influence in HEOR?
There are two common themes to my strands of work which I would like others to build on.
Firstly, the need to combine IO and HTA. New technologies don’t drop from the sky, payers and governments need to use the right incentives to get the innovation they want which involves understanding value and handling uncertainty appropriately.
Second, whilst high income countries drive most innovation, we need to make sure it is available at lower prices to low-income countries, and also that the global community is willing to make commitments (via pull incentives) to pay for drugs that primarily address diseases in poorer countries in order to incentivise innovation to get these needed products.
Finally, two tips that have helped me.
- Always find good co-authors! As well as the wonderful OHE team past and present, I am particularly grateful to Patricia Danzon, Wharton School, Lou Garrison, UW, Mike Drummond, York, Steve Pearson, ICER now at the Peterson Center, Kalipso Chalkidou, Center for Global Development, now at the Global Fund, Hannah Kettler, Gates Foundation, now at GAVI and Liz Fenwick, Open Health
- Never give up! I didn’t publish my first paper until I was nearly 40. I am always reminded of the tip Carol Propper gave – if you get a rejection (or a refusal to listen) try somewhere else. Always keep going!
