When Future Change Matters: Modeling Future Price and Diffusion in Health Technology Assessments of Medical Devices

Abstract

Background: Health technology assessments (HTAs) that take account of future price changes have been examined in the literature, but the important issue of price reductions that are generated by the reimbursement decision has been ignored.

Objectives: To explore the impact of future price reductions caused by increasing uptake on HTAs and decision making for medical devices.

Methods: We demonstrate the use of a two-stage modeling approach to derive estimates of technology price as a consequence of changes in technology uptake over future periods on the basis of existing theory and supported by empirical studies. We explore the impact on cost-effectiveness and expected value of information analysis in an illustrative example on the basis of a technology in development for preterm birth screening.

Results: The application of our approach to the case study technology generates smaller incremental cost-effectiveness ratios compared with the commonly used single cohort approach. The extent of this reduction in the incremental cost-effectiveness ratio depends on the magnitude of the modeled price reduction, the speed of diffusion, and the length of the assumed technology life horizon. Results of value of information analysis are affected through changes in the expected net benefit calculation, the addition of uncertain parameters, and the diffusion-adjusted estimate of the affected patient population.

Conclusions: Because modeling future changes in price and uptake has the potential to affect HTA outcomes, modeling techniques that can address such changes should be considered for medical devices that may otherwise be rejected.

Keywords: cost-benefit analysis; diffusion of innovation; drug costs; value of information.