RA TV: How do we determine what a drug is worth?
RA TV
Scientific members of the RA Capital team lead periodic, public, interactive, webinar-style discussions on Zoom. Learn more here.
November 3, 2021
Our roundup of Covid news this month from RA’s TechAtlas team featured a discussion about the FDA’s EUA for Pfizer’s low-dose Covid vaccine in children.
Hot topics include: How did the FDA model out the risk of myocarditis in a (relatively) small trial? What is the calculus between vaccinating kids for kids’ sake versus getting the entire population to herd immunity? And how will kids tolerate the shot? (Spoiler alert - they’re not going to spontaneously combust, and can probably handle it just as well or better than whiney adults.)
The team also touched on mixing-and-matching Covid vaccines for adult boosters, including some recent data out of the UK and Spain.
The Right Price
So what should those Covid vaccines cost? Josh Cohen, the deputy director of the Center for Evaluation of Value and Risk in Health (CEVR) at Tufts Medical Center and co-author of the recently published book The Right Price: A Value Based Prescription for Drug Costs, joined RA’s Peter Kolchinsky to discuss how we value drugs - and everything else in our lives (like toasters, cars, or houses).
“Price is the air traffic control of the economy,” says Cohen. “It tells resources where to go. It tells people what they want to spend their resources on.” For drugs, he says, we assign prices based on how we value their benefits. And the math that goes into quantifying that value should be based on what we care about when we consider our health.
Some of those factors are obvious: How long will I live? What will be my quality of life? “But that’s not the only thing that we get when we take various therapies,” says Cohen. There is a second set of considerations that add to drugs’ value. We’re beginning to better understand these societal benefits. If we leave them out of the value calculation, we’re sending the wrong signals about value.
“We should be trying to get the math as right as we can,” says Cohen. “And if we leave something out because it’s too uncertain, or too hard to calculate, we’re implicitly saying that value is zero. And we know that’s wrong.”
The bottom line, says Cohen, is if the math is done correctly, we’re sending industry the right signals about how much we’re willing to pay to solve our various health problems. We won’t undervalue or overvalue those solutions. “But if we understate value, or if we use value-based analysis as a bargaining tool rather than as a truth-seeking exercise, then we’re going to end up losing out on innovation that would have made us better off.”