How do you measure the value of new drugs? An organization known as the Institute for Clinical and Economic Review relies almost exclusively on Quality-Adjusted Life Years (QALY)-based framework. While that is a good start, many new treatments may have impacts beyond directly on health including on educational outcomes, productivity, caregiver burden. Further, society is risk averse and values having treatments available in the case that they do become sick (“insurance value”). Limiting value assessment to only QALY-based models, “…risks mispricing innovative health therapies and disincentivizing investments in research and development.”
That is the key argument in my Letter to the Editor in the Wall Street Journal that was published last week. Do read the whole letter.