Investing in new medical technologies: A decision framework

Abstract

Purchasing and reimbursement decisions in healthcare systems with fi nite resources are increasingly infl uenced by formal health economic analysis. It is therefore sensible for a company considering the development of a new medical technology to assess its potential cost effectiveness as early as possible in the development cycle. This document describes a process by which an organisation can add rigour to decisions about which technologies to pursue, as well as creating a persuasive argument for outside investment. The process consists of a series of analyses that should be conducted before substantial investments are made. The stages of the algorithm are: strategic considerations, clinical problem defi nition, headroom analysis, return on investment analysis and further economic analysis. This paper concentrates on the clinical problem defi nition and headroom analysis aspects of the process. Two worked examples of calculating headroom for theoretical products in tissue engineering of urogenital tissue are given. The health gain in urethral tissue is unlikely to be suffi cient to justify the cost of a regenerative medicine solution, whereas bladder substitution after tumour resection has the potential to be cost effective providing marginal costs do not exceed £ 16,000. The framework discussed here provides a structure for investment decisions that can illuminate a situation, which may otherwise appear hard to fathom. A headroom analysis is primarily useful as a barrier to misguidedly investing in those devices, which can never be cost effective.

Evaluating policy and service interventions: framework to guide selection and interpretation of study end points

“…A simple "back of the envelope" calculation may be informative. 21 In the above example, it turned out that the costs (particularly opportunity costs of ward closure) were not commensurate with even the most optimistic expert estimates of benefit. 20 More often simple models will reveal an "inconvenient truth" that cost effective effects on patient level outcomes are plausible but too small to be easily detectable, as in the example of the hospital computer system above.…”

Headroom Beyond the Quality- Adjusted Life-Year: The Case of Complex Pediatric Neurology

“…As a tool to select those technologies that are most likely to provide value for money from a large pool of ideas, Cosh et al introduced the headroom method [5]. This method examines the potential of a new technology under optimistic assumptions.…”

“…The headroom method was introduced and is currently used on a quality-adjusted life year (QALY) basis [5][6][7].…”

Probability Elicitation to Inform Early Health Economic Evaluations of New Medical Technologies: A Case Study in Heart Failure Disease Management

“…There is usually, however, insufficient funding to further develop each of these concepts into concrete products that can be brought to the market. This forces producers of medical technology and other stakeholders, such as venture capitalists and funding agencies, to already decide early during the product development process which of these concepts to abandon and which of them to push forward for further development [1][2][3][4][5].…”