How much can a saved year of life cost? New study aims to stimulate debate

2.2 million francs. This is how much a single infusion of Switzerland’s most expensive drug, Zolgensma from Novartis, costs. Gene therapy aims to cure babies with spinal muscular atrophy (SMA), a deadly hereditary disease in which first the nerve cells in the spinal cord atrophy and then the muscles. Worldwide, it affects about 1 in 6,000 newborns.

Pharmaceutical companies are increasingly marketing gene and cell therapies for rare autoimmune diseases such as SMA or certain cancers. In 2021, about half of the new active ingredients approved in Switzerland were anticancer and immunosuppressant drugs. In 2019 and 2020, this share was 36 percent and 47 percent, respectively.

New, innovative medicines enable major advances in the treatment of serious diseases. At the same time, they are a driver of rising healthcare costs. According to an analysis by health insurance company Curafutura, the top 20 best-selling drugs covered by statutory health insurance account for one-fifth of annual drug costs of CHF 8 billion.

“When are new medicines too expensive?” is the title of a recently published study by the liberal think tank Avenir Suisse. In the 70-page document, several proposals are made on how fast access to innovative medicines in Switzerland can be guaranteed without the premiums rising too high.

One proposal is particularly explosive: the price of a medicine should depend, among other things, on the value that society attaches to a healthy year of life gained. For the cost-benefit calculation, the authors of the study cite a unit of measure that has become established in health economics: quality-adjusted life years, or Qaly for short. A Qaly of 1 represents 1 year of full health, while a Qaly of 0 represents death.

In concrete terms, pharmaceutical companies now have to indicate during the clinical trial of a new drug how much extra Qaly their preparation yields compared to a therapy standard set by the federal government. If there is no therapy yet, the added value compared to a placebo treatment is determined.

At the same time, politicians must determine how much money the population is willing to pay for an extra healthy year of life. This amount would be multiplied by the number of Qalys. An upper limit would then be imposed on the price, up to which the therapy is still considered beneficial and is therefore reimbursed from the basic insurance.

England is the only country in Europe that has a similar system. In this country, the Federal Office of Public Health (BAG) currently determines the price of medicines on the basis of two criteria: a comparison with medicines for the same disease that are already reimbursed in Switzerland and a comparison of prices abroad.

The latter practice is controversial because the price actually paid for expensive drugs is kept secret in most countries. Instead, artificially inflated “shop window prices” serve as a reference. The head of the study at Avenir Suisse, Jérôme Cosandey, says: “We need to be able to quantify the benefit. Otherwise it is pure power play between BAG and the pharmaceutical industry. »

The study offers some approaches to how to calculate the value of a year of life saved. It is noted that the federal government already annually determines the value of a life saved in terms of road safety. The amount currently stands at 6.9 million Swiss francs and determines how much money is invested in the construction of life rafts in a tunnel, for example.

So far, such a concept does not exist in the health sector. Even federal court has never generally established how much a healthy year of life is worth. However, confronted with the cost-benefit assessment of a certain drug, the Supreme Court came to the conclusion in 2010 that therapy costs of up to CHF 100,000 per Qaly are reasonable in the basic insurance.

A representative survey from 2018 also found that the Swiss population would be willing to pay around CHF 200,000 for an additional year of life for end-of-life treatment.

Leaving aside the question of amount, the Avenir Suisse study argues that “the pharmaceutical industry cannot be the sole beneficiary of the value of a Qaly”. The GP or the family environment are just as important for the success of the therapy. As a result, according to Avenir Suisse, the entire monetary value of Qaly should not flow into the drug price, but should be shared fairly between pharmaceutical companies and society. A “pragmatic distribution key” of 50:50 is proposed.

Interest group Interpharma denounces that the extra social benefit of innovative therapies is insufficiently reflected in the Qaly concept. For example, the faster return to work would not be taken into account. When asked, Board member Markus Ziegler indicated that there were also practical problems with measuring Qaly – especially with the choice of comparative therapy. Clinical testing of new drugs would typically take longer than a decade. During this time, the established standard of therapy has often changed again.

According to Ziegler, so-called pay-for-performance models may be opportune to regulate the pricing of expensive drugs more uniformly. This means that the medication is only paid if the treated patient has the expected effect. Another possibility would be that medicines could also be paid in installments over several years, says the pharmaceutical representative.

Andreas Schiesser of Curafutura finds politically defined thresholds for the price of a drug in basic insurance “quite desirable”. Pharmaceutical companies are operating more and more profit-driven, says Schiesser. “Medicine prices overboard.”

According to the insurance agent, the fact that the question of the value of a healthy year of life has hardly been discussed in politics is because politicians are afraid to expose themselves. “The subject is as sensitive and emotional as the closure of a hospital,” he says. It is clear that the quality of life cannot be measured with the Qaly alone, but that the method still needs to be refined.

Daniel Tapernoux is an advisory physician to the Patient Organization Foundation and a member of the Federal Medicines Commission, which advises the FOPH. He also welcomes the strength of Qaly’s approach with reservations. “The proposal would be exciting if the pharmaceutical industry committed to supply at the estimated price,” says Tapernoux.

At the moment, the opposite is the case: because pharmaceutical companies charge too high prices, they block negotiations. However, according to Tapernoux, a Qaly-based cost-benefit analysis should not only consider the innovative drug segment, but as many medical therapies as possible.

Particularly for very cheap medicines, the price may even have to be increased to guarantee security of supply. At the same time, a price cap poses the danger of dual medicine, especially if the industry is then unwilling to supply at a lower price. A social debate about the value of life and the related ethical aspects is long overdue.