On September 25, the Institute for Clinical and Economic Review (ICER) published an updated Value Assessment Framework describing the organization’s approach to health technology assessments (HTAs). In a departure from prior thinking on HTAs and cost-effectiveness analysis (CEA), ICER has proposed piloting the Generalized Risk-Adjusted Cost-Effectiveness (GRACE) framework in an effort to capture patient preferences related to disease severity. Proposed in 2020, GRACE is based on the understanding that health produces happiness with diminishing returns and that seemingly equivalent improvements in quality of life (QoL) should hold greater weight in more severe conditions than in less severe conditions. Decision thresholds, therefore, may vary by disease state. This framing aligns with traditional economic thinking on diminishing returns and allows decision thresholds to account for health equity considerations in HTAs.

Methodological Gaps Addressed by GRACE

Current CEA practices, including those adopted by ICER, do not allow monetary decision thresholds to vary by disease, leaving HTAs with uncertainty about when exceptions to traditional thresholds should be made, such as in the case of rare diseases or end-of-life care. This uncertainty leaves decision making to the discretion of HTA bodies. Critics of traditional CEA argue that HTA bodies often fail to use these discretionary powers and therefore discriminate against severely ill and disabled individuals.

GRACE introduces the concept of diminishing returns to health so that individuals with severe illness will be recognized as benefiting from greater incremental value of therapy. An equal increase in QoL is considered to hold more weight among individuals with severe conditions than among those with milder diseases, and decision thresholds are therefore increased accordingly for more severe states. GRACE also incorporates the assumption that those with more severe conditions are more willing to trade remaining life expectancy for increased quality of life. Furthermore, GRACE accounts for the effects of uncertain health outcomes through inclusion of risk aversion of health.

In response to growing interest from international HTA programs in capturing risk aversion and severity, in 2021 the GRACE developers proposed updates to the framework to ease implementation. These updates included simplifying the methods for estimating life expectancy versus QoL trade-offs, updating methods for estimating risk preference, and expanding the risk preferences included, along with a step-by-step guide for implementation.

ICER is the first HTA agency internationally to implement the GRACE framework. This change is expected to bring significant changes to the scope and outputs of ICER’s assessments, embedding the impact of illness severity on QoL into value assessment outcomes in order to guide reimbursement decisions for the first time. Numerous questions remain, however, regarding feasibility of data input collection and weighting of these inputs within a CEA, among others.

Estimating New Parameters

GRACE introduces new modeling parameters that are intended to expand from traditional CEA modeling to account for disease severity and disability through the incorporation of the impacts of diminishing returns to health and the increasing willingness to pay as QoL decreases, based on an index of illness severity.

GRACE requires estimation of a new parameter for relative risk aversion in health, allowing initial untreated health status to influence willingness to pay for health gains. This has not been previously estimated directly, though methods exist that could support estimation, which would need to be applied globally across treatments and therapeutic areas to support broader application of GRACE.

Severity of illness is estimated in burden of illness literature and does not require new specialized estimation. New criticisms may arise in the comparability of these estimates across studies and therapeutic areas when CEA uses these estimates to adjust the value of health gains based on initial health state.

Conclusion

ICER’s approach to piloting GRACE remains to be seen, and several questions are outstanding, including whether a new evidence base needs to be established for estimating new parameters before evidence is generated that may be leveraged by decision makers. While this new method does account for patient risk aversion in health consumption and preferentially treats health gains for disability and severe illness, concerns exist about the methods used to compare burden across illnesses and how risk aversion is measured and varies for patients of different health states with different diseases characteristics.

ICER’s Value Assessment Framework does not provide insight into how the organization intends to address these questions but notes that it will engage with its Health Economics Council, Methods Advisory Group, and international HTA bodies to test the feasibility and impact of shifting to this new CEA approach.

Navigating the Evolving US HTA Landscape

ICER has indicated that it may issue an interim update formalizing the systematic use of this framework. Avalere’s expertise in value assessment and HTA can help pharmaceutical manufacturers, advocacy groups, patients, and other stakeholders proactively develop position statements, analyze the impact of ICER’s proposed new method, and develop preparation and response strategies including health economic modeling in the event of an HTA review.

To learn how Avalere can support you with analysis, strategy development, and response planning, connect with us.