The need for a comprehensive approach for assessing the value of diagnostic information

  • Posted on 27.10.2015

The need for a comprehensive approach for assessing the value of diagnostic information


Lou Garrison

Professor, Departments of Pharmacy and Global Health, University of Washington, Seattle


Public and private healthcare payers around the world face substantial and evolving challenges in making good decisions on behalf of their ultimate clients—their beneficiaries or subscribers, i.e., people who are at risk of becoming patients. As agents for these potential patients, payers and providers must make prudent clinical and economic recommendations on how to obtain value for money when allocating the scarce funds they manage to obtain better health for their clients.

One of the major challenges payers and providers face today is assessing the value of rapidly evolving medical technology.  I use the word “evolution” here because they must choose the winners in a complex and competitive environment where some new technologies will succeed and others will fail – indeed, this is “survival of the fittest”.  However, how do we, or more importantly, how should we determine which technologies are the fittest? Or, in other words, the most “fit-for-purpose”?

Economists have long recognized the unique nature of the market for medical products and services.  Back in 1963, American economist and Nobel laureate Kenneth Arrow published a landmark paper in which he identified the pervasiveness of uncertainty as one of the key characteristics of this market. How does the healthcare market address this uncertainty? The short answer is: by providing information or goods that reduce uncertainty.  For example, regulatory agencies exist to certify the quality of medical technologies.  Professional licensing aims to guarantee the competence of medical providers.  Insurance schemes are regulated to define benefit packages and fair competition among them.

Medical innovation introduces new competitors on the healthcare market, and by definition, there is very limited information available when a medical technology is launched regarding what could be its ultimate value in a healthcare system.  How do we deal with this uncertainty? One of the key tools or processes used in many jurisdictions around the world to deal with this is Health technology Assessment (HTA). 

HTA can be defined operationally as the structured analysis of healthcare technologies (including medicines, vaccines, medical devices, diagnostics, healthcare procedures, and health systems) performed for the purpose of providing input into policy decisions on access to health technologies.  These assessments aim to determine whether new technologies are fit-for-purpose and thus whether patients should have access to them.  Clearly, the criteria that they apply to determine value are critical for determining which products will survive and reach patients.

Many health economists would argue that the criteria that EU and other countries have been applying to compare medicines, including their impact on length and quality of life, are critical ones to consider for all medical technologies. They would also agree, however, that they do not fully reflect all the dimensions of the value provided by medical technologies. 

In particular, in a market saturated with uncertainty, the provision of information or services to reduce that uncertainty is valuable in itself.  Most notably, health insurance itself reduces the uncertainty about annual medical spending for those covered in insurance schemes. 

Diagnostics also reduce uncertainty. Diagnostic information can clearly be very valuable to patients by directing them to the care pathway that is likely to be most beneficial for them.  Diagnostic information can also empower patients to make more informed and conscious choices on their own health and care.   In this context, HTA for medical technology – and more specifically for diagnostics – can be useful at different times over the life cycle of a product, from helping make early portfolio and pre-launch product development decisions to conducting updated assessments of real world effectiveness and value of a product that has been in the market for a certain period of time.

To be prudent buyers for their beneficiaries, healthcare payers need to develop HTA tools and measures that can take a more comprehensive approach to assess the value of diagnostic information. This would help ensure that valuable diagnostic technologies reach patients at the right time and in a financially sustainable way.  

Interested in this topic? Join the  European MedTech Forum which will be held on 2-4 December 2015. The session “Let’s make diagnostic information shine! Tools to demonstrate and communicate value to payers and patients” will take place on 3rd December. For more information and registration, please click here.


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