Open AccessQuality-Adjusted Cost Of Care: A Meaningful Way To Measure Growth In Innovation Cost Versus The Value Of Health Gains
Author(s) -
Darius N. Lakdawalla,
Jason Shafrin,
Claudio Lucarelli,
Sean Nicholson,
Zeba M. Khan,
Tomas Philipson
Publication year - 2015
Publication title -
health affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.837
H-Index - 178
eISSN - 2694-233X
pISSN - 0278-2715
DOI - 10.1377/hlthaff.2014.0639
Subject(s) - health care , quality (philosophy) , cost effectiveness , value (mathematics) , health care cost , quality costs , cost–benefit analysis , actuarial science , medicine , business , economics , cost control , risk analysis (engineering) , economic growth , statistics , philosophy , mathematics , epistemology , ecology , biology
Technology drives both health care spending and health improvement. Yet policy makers rarely see measures of cost growth that account for both effects. To fill this gap, we present the quality-adjusted cost of care, which illustrates cost growth net of growth in the value of health improvements, measured as survival gains multiplied by the value of survival. We applied the quality-adjusted cost of care to two cases. For colorectal cancer, drug cost per patient increased by $34,493 between 1998 and 2005 as a result of new drug launches, but value from offsetting health improvements netted a modest $1,377 increase in quality-adjusted cost of care. For multiple myeloma, new therapies increased treatment cost by $72,937 between 2004 and 2009, but offsetting health benefits lowered overall quality-adjusted cost of care by $67,863. However, patients with multiple myeloma on established first-line therapies saw costs rise without corresponding benefits. All three examples document rapid cost growth, but they provide starkly different answers to the question of whether society got what it paid for.