Clinicians: Beware the Claim of Cost-Effectiveness

Brad Spellberg, MD


February 28, 2017

Concerns With Cost-Efficacy Analyses: A Clinical View

A common scenario: adding to the formulary. A clinician practicing in a hospital network wants to submit a request to add two new medications to the formulary. In this example, the two medications are the heart failure drug sacubitril/valsartan, and oritavancin, a new antibiotic to treat methicillin-resistant Staphylococcus aureus infection. Both of these drugs were found to be cost-effective in peer-reviewed publications.[1,2]

The clinician needs to justify the additions to the pharmacy and therapeutics committee to convince them to make the medications available for prescription. She provides the committee with the medical literature demonstrating that the new medications are cost-effective, as part of the justification.

Will such justification work? What should clinicians know about cost-efficacy analyses and their relationship to clinical decision-making?

A recent editorial in the Annals of Internal Medicine[1] wondered why more physicians don't prescribe sacubitril/valsartan despite evidence of its efficacy and cost-effectiveness. How should estimates of cost-efficacy drive our clinical decision-making? Can clinicians apply this learning to other drugs and technologies as well?

One immediate potential problem with cost-efficacy analyses is that the comparator regimen used in the analysis may not be what you would have used instead of the new agent. For example, when considering oritavancin to treat cellulitis, the cost-efficacy analysis looked at the situation in which patients are given a dose of oritavancin in the emergency department (ED) and discharged home, compared with being admitted to the hospital for intravenous vancomycin.

However, admission to the hospital for intravenous vancomycin is not the only alternative to a dose of oritavancin in the ED. What about sending the patient home on generic, oral clindamycin, trimethoprim/sulfamethoxazole, or linezolid? In this case, the hospital admission is still prevented, but a much cheaper alternative medication regimen is used (tens of dollars for oral generic antibiotics vs thousands of dollars for oritavancin).

More fundamentally, clinicians need to understand what cost-efficacy analyses mean in order to apply their findings to clinical practice. An intervention is deemed cost-effective if the additional implementation cost meets some generally accepted national benchmark, such as cost per quality-adjusted life-years (QALYs) saved, or incremental cost-effectiveness ratios (ICERs).[3,4]

A standard benchmark used by Medicare (and the UK's National Institute for Health and Care Excellence) is that an intervention is deemed cost-effective if it costs less than $50,000 (or £30,000) per QALY saved.[5,6] Providers may be approached by representatives of new technologies, armed with peer-reviewed publications reassuring them that the technologies are cost-effective based on this metric.


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