Cost-Effectiveness Applications
In dynamicpv: Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

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Introduction

This vignette outlines how to evaluate a cost-effectiveness model in a manner that allows for dynamic pricing and dynamic uptake. Let us consider in turn:

the decision problem we are modeling through a cost-effectiveness analysis
dynamic patient uptake
dynamic pricing

Methods and Assumptions

We wish to evaluate the cost-effectiveness, measured as incremental cost per QALY, of a new intervention compared to the standard of care (SoC). The model is a partitioned survival analysis typical in oncology with three health states: progression-free (PF), progressive disease (PD) and death, with additional assumptions as follows.

General assumptions

The time horizon is 20 years, a timestep is 1 week, discounting is at 3% per year, with an effective date of calculation is 2025-06-01.
For SoC, progression-free survival (PFS) is modeled as an exponential distribution with mean of 50 weeks; overall survival (OS) in weeks is modelled according to a lognormal distribution with mean and standard deviation on the log scale as 4 and 1 respectively.
The effect of the new intervention relative to the SoC is a hazard ratio of 0.5 on PFS and 0.6 on OS.
Health utility is 0.8 in the PF state and 0.6 in the PD state.
Drug acquisition costs are $400 and $1500 per week for SoC and the new intervention respectively, incurred throughout a patient’s time in the PF state (treat to progression).
Drug administration costs are $50 and $75 per week on treatment for SoC and the new intervention respectively.
Adverse events occur in 0.08% and 0.10% of SoC and new intervention patients per week respectively, while on treatment, at an average cost of $2000 per event.
Disease management costs are $80 per week in PF and $20 per week in PD.
Patients receive the treatment of interest (new or SoC) until progression. Subsequent treatment costs are $1200 and $300 per week per patient while in the PD state for SoC and new intervention patients respectively.

Dynamic pricing

Let us suppose the following assumptions concerning pricing:

Costs are assumed to increases in line with general inflation (2.5% per year), except for effects on drug acquisition costs due to LoEs.
The date of calculation is 2025-09-01.
The LoE for the SoC is assumed to occur first, at 2028-01-01, after which there is anticipated to be a 70% reduction in prices over one year.
The new intervention has an LoE occuring three years later, at 2031-01-01, after which there would be a 50% reduction in prices over one year.

Dynamic uptake

Let us suppose the following assumptions concerning patient uptake. The aim here is to estimate the incidence of patients for whom the decision problem applies, i.e. the patients who would receive the new intervention, were it made available. This will be a function of, but not the same as, disease incidence or prevalence. We assume:

Only newly incident patients with the cancer being modeled would be eligible for the new treatment. Existing/prevalent patients with the condition would not be eligible.
The disease incidence is 1 patient per week.
Among these patients, were the new intervention to be made available, uptake of the new intervention would be expected to rise linearly from 0% to 100% after 2 years.

In this way, uptake would be gradually increasing with time, accounting for disease epidemiology and the share of patients who receive the new intervention.

Implementation

Set-up

First we load the packages necessary for this vignette.

library(dplyr)
library(ggplot2)
library(lubridate)
library(flexsurv)
library(heemod)
library(tidyr)
library(dynamicpv)

We code the time constants, time horizon, discount rates and inflation rates first.

# Time constants
days_in_year <- 365.25
days_in_week <- 7
cycle_years <- days_in_week / days_in_year # Duration of a one week cycle in years

# Time horizon (years) and number of cycles
thoz <- 20
Ncycles <- ceiling(thoz/cycle_years)

# Real discounting
disc_year <- 0.03 # Per year
disc_cycle <- (1+disc_year)^(cycle_years) - 1 # Per cycle

# Price inflation
infl_year <- 0.025 # Per year
infl_cycle <- (1+infl_year)^(cycle_years) - 1 # Per cycle

# Nominal discounting
nomdisc_year <- (1+disc_year)*(1+infl_year) - 1
nomdisc_cycle <- (1+nomdisc_year)^(cycle_years) - 1 # Per cycle

Cost-effectiveness model

The cost-effectiveness model may then be coded in heemod as follows.

# State names
state_names = c(
  progression_free = "PF",
  progression = "PD",
  death = "Death"
  )

# PFS distribution for SoC with Exp() distribution and mean of 50 weeks
surv_pfs_soc <- heemod::define_surv_dist(
  distribution = "exp",
  rate = 1/50
)

# OS distribution for SoC with Lognorm() distribution, meanlog = 4.5, sdlog = 1
# This implies a mean of exp(4 + 0.5 * 1^2) = exp(4.5) = 90 weeks
surv_os_soc <- heemod::define_surv_dist(
  distribution = "lnorm",
  meanlog = 4,
  sdlog = 1
)

# PFS and OS distributions for new
surv_pfs_new <- heemod::apply_hr(surv_pfs_soc, hr=0.5)
surv_os_new <- heemod::apply_hr(surv_os_soc, hr=0.6)

# Define partitioned survival model, soc
psm_soc <- heemod::define_part_surv(
  pfs = surv_pfs_soc,
  os = surv_os_soc,
  terminal_state = FALSE,
  state_names = state_names
  )

# Define partitioned survival model, soc
psm_new <- heemod::define_part_surv(
  pfs = surv_pfs_new,
  os = surv_os_new,
  terminal_state = FALSE,
  state_names = state_names
  )

# Parameters
params <- heemod::define_parameters(
  # Discount rate
  disc = disc_cycle,
  # Disease management costs
  cman_pf = 80,
  cman_pd = 20,
  # Drug acquisition costs - the SoC regime only uses SoC drug, the New regime only uses New drug
  cdaq_soc = dispatch_strategy(
    soc = 400,
    new = 0
  ),
  cdaq_new = dispatch_strategy(
    soc = 0,
    new = 1500
  ),
  # Drug administration costs
  cadmin = dispatch_strategy(
    soc = 50,
    new = 75
  ),
  # Adverse event risks
  risk_ae = dispatch_strategy(
    soc = 0.08,
    new = 0.1
  ),
  # Adverse event average costs
  uc_ae = 2000,
  # Subsequent treatments
  csubs = dispatch_strategy(
    soc = 1200,
    new = 300
  ),
  # Health state utilities
  u_pf = 0.8,
  u_pd = 0.6,
)

# Define PF states
state_PF <- heemod::define_state(
  # Costs for the state
  cost_daq_soc = discount(cdaq_soc, disc_cycle),
  cost_daq_new = discount(cdaq_new, disc_cycle),
  cost_dadmin = discount(cadmin, disc_cycle),
  cost_dman = discount(cman_pf, disc_cycle),  
  cost_ae = risk_ae * uc_ae,
  cost_subs = 0,
  cost_total = cost_daq_soc + cost_daq_new + cost_dadmin + cost_dman + cost_ae + cost_subs,
  # Health utility, QALYs and life years
  pf_year = discount(cycle_years, disc_cycle),
  life_year = discount(cycle_years, disc_cycle),
  qaly = discount(cycle_years * u_pf, disc_cycle)
  )

# Define PD states
state_PD <- heemod::define_state(
  # Costs for the state
  cost_daq_soc = 0,
  cost_daq_new = 0,
  cost_dadmin = 0,
  cost_dman = discount(cman_pd, disc_cycle),  
  cost_ae = 0,
  cost_subs = discount(csubs, disc_cycle),
  cost_total = cost_daq_soc + cost_daq_new + cost_dadmin + cost_dman + cost_ae + cost_subs,
  # Health utility, QALYs and life years
  pf_year = 0,
  life_year = heemod::discount(cycle_years, disc_cycle),
  qaly = heemod::discount(cycle_years * u_pd, disc_cycle)
  )

# Define Death state
state_Death <- heemod::define_state(
  # Costs are zero
  cost_daq_soc = 0,
  cost_daq_new = 0,
  cost_dadmin = 0,
  cost_dman = 0,
  cost_ae = 0,
  cost_subs = 0,
  cost_total = cost_daq_soc + cost_daq_new + cost_dadmin + cost_dman + cost_ae + cost_subs,
  # Health outcomes are zero
  pf_year = 0,
  life_year = 0,
  qaly = 0,
)

# Define strategy for SoC
strat_soc <- heemod::define_strategy(
    transition = psm_soc,
    "PF" = state_PF,
    "PD" = state_PD,
    "Death" = state_Death
  )

# Define strategy for new
strat_new <- heemod::define_strategy(
  transition = psm_new,
  "PF" = state_PF,
  "PD" = state_PD,
  "Death" = state_Death
)

# Create heemod model
heemodel <- heemod::run_model(
  soc = strat_soc,
  new = strat_new,
  parameters = params,
  cycles = Ncycles,
  cost = cost_total,
  effect = qaly,
  init = c(1, 0, 0),
  method = "life-table"
)

Dynamic pricing

The dynamic pricing assumptions can be codified as follows.

# Dates
# Date of calculation = 1 September 2025
doc <- lubridate::ymd("20250901")
# Date of LOE for SoC = 1 January 2028
loe_soc_start <- lubridate::ymd("20280101")
# Maturation of SoC prices by LOE + 1 year, i.e. = 1 January 2029
loe_soc_end <- lubridate::ymd("20290101") 
# Date of LOE for new treatment = 1 January 2031
loe_new_start <- lubridate::ymd("20310101")
# Maturation of new treatment prices by LOE + 1 year, i.e. = 1 January 2032
loe_new_end <- lubridate::ymd("20320101") 

# Effect of LoEs on prices once mature
loe_effect_soc <- 0.7
loe_effect_new <- 0.5

# Calculation of weeks since DoC for LoEs and price maturities
wk_start_soc <- floor((loe_soc_start-doc) / lubridate::dweeks(1))
wk_end_soc <- floor((loe_soc_end-doc) / lubridate::dweeks(1))
wk_start_new <- floor((loe_new_start-doc) / lubridate::dweeks(1))
wk_end_new <- floor((loe_new_end-doc) / lubridate::dweeks(1))

# Price maturity times
wk_mature_soc <- wk_end_soc - wk_start_soc
wk_mature_new <- wk_end_new - wk_start_new

# Create a tibble of price indices of length 2T, then pull out columns as needed
# We only need of length T for now, but need of length 2T for future calculations later
pricetib <- tibble(
  model_time = 1:(2*Ncycles),
  model_year = model_time * cycle_years,
  static = 1,
  geninfl = (1 + infl_cycle)^(model_time - 1),
  loef_soc = pmin(pmax(model_time - wk_start_soc, 0), wk_mature_soc) / wk_mature_soc,
  loef_new = pmin(pmax(model_time - wk_start_new, 0), wk_mature_new) / wk_mature_new,
  dyn_soc = geninfl * (1 - loe_effect_soc * loef_soc),
  dyn_new = geninfl * (1 - loe_effect_new * loef_new)
)

# Price indices required for calculations
prices_oth <- pricetib$geninfl
prices_static <- pricetib$static
prices_dyn_soc <- pricetib$dyn_soc
prices_dyn_new <- pricetib$dyn_new

Dynamic uptake

The dynamic uptake assumptions can be codified as follows.

# Time for uptake to occur
uptake_years <- 2

# Uptake vector for non-dynamic uptake
uptake_single <- c(1, rep(0, Ncycles-1))

# Uptake vector for dynamic uptake
uptake_weeks <- round(uptake_years / cycle_years)
share_multi <- c((1:uptake_weeks)/uptake_weeks, rep(1, Ncycles-uptake_weeks))
uptake_multi <- rep(1, Ncycles) * share_multi

Results

Without dynamic pricing or dynamic uptake

The conventional cost-effectiveness model is static.

heemodel

Let's examine each payoff more closely. The next steps extract a payoff vector from the model object. The model/object contains several payoffs accumulated in each timestep, calculated as at time zero:

drug acquisition cost of the standard of care (cost_daq_soc),
drug acquisition cost of the new intervention (cost_daq_new),
cost of drug administration (cost_dadmin),
cost of disease management (cost_dman),
cost of treating adverse events (cost_ae),
cost of subsequent lines of treatment (cost_subs),
total cost (cost_total),
progression-free life years (pf_year),
life years (life_year), and
QALYs (qaly).

The dynamicpv::get_dynfields() function extracts these parameters from the heemod model object, and calculates 'rolled-up' values as at the start of each timestep rather than discounted to time zero. The rolled-up values are what dynamicpv::dynpv() requires.

# Pull out the payoffs of interest from oncpsm
payoffs <- get_dynfields(
    heemodel = heemodel,
    payoffs = c("cost_daq_new", "cost_daq_soc", "cost_total", "qaly", "life_year"),
    discount = "disc"
    ) |>
    mutate(
      model_years = model_time * cycle_years,
      # Derive costs other than drug acquisition, as at time zero
      cost_nondaq = cost_total - cost_daq_new - cost_daq_soc,
      # ... and at the start of each timestep
      cost_nondaq_rup = cost_total_rup - cost_daq_new_rup - cost_daq_soc_rup
    )

# Create and view dataset for SoC
hemout_soc <- payoffs |> filter(int=="soc")
head(hemout_soc)

# Create and view dataset for new intervention
hemout_new <- payoffs |> filter(int=="new")
head(hemout_new)

Scenario 1: No dynamic uptake or pricing

With non-dynamic uptake, we use uptakes=uptake_single=1. Drug acquisition costs are constant in real terms (prices=prices_static) and are discounted at the risk-free real rate (discrate=disc_cycle). Other costs rise in line with general price inflation (prices=prices_oth) and are discounted at nominal discount rates (discrate=nomdisc_cycle). QALYs are not affected by price inflation (prices=prices_static) and are discounted at the risk-free real rate (discrate=disc_cycle).

# SOC, costs other than drug acquisition
s1_soc_othcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_soc$cost_nondaq_rup,
    prices = prices_oth,
    discrate = nomdisc_cycle
    )

# SOC, drug acquisition costs
s1_soc_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_soc$cost_daq_soc_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# SOC, total costs
s1_soc_cost <- s1_soc_daqcost + s1_soc_othcost

# SOC, QALYs
s1_soc_qaly <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_soc$qaly_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# New intervention, costs other than drug acquisition
s1_new_othcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_new$cost_nondaq_rup,
    prices = prices_oth,
    discrate = nomdisc_cycle
    )

# New intervention, drug acquisition costs
s1_new_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_new$cost_daq_new_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# New intervention, total costs
s1_new_cost <- s1_new_daqcost + s1_new_othcost

# New intervention, QALYs
s1_new_qaly <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_new$qaly_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# Incremental cost
s1_icost <- s1_new_cost - s1_soc_cost

summary(s1_icost)

# Incremental QALY
s1_iqaly <- s1_new_qaly - s1_soc_qaly

summary(s1_iqaly)

# ICER
s1_icer <- total(s1_icost) / total(s1_iqaly)
s1_icer

These results show that the new intervention is associated with $r total(s1_icost) incremental costs relative to the standard of care (including $r total(s1_new_daqcost) of drug acquisition costs for the new intervention) and r total(s1_iqaly) incremental QALYs. The cumulative ICER (incremental cost per QALY) is $r s1_icer per QALY at the 20 year time horizon.

Scenario 2: Dynamic pricing, no dynamic uptake

The costs of drug acquisition in each arm differ in Scenario 2 through applying the relevant dynamic price index (prices_dyn_soc and prices_dyn_new), with discounting at nominal rates (discrate = nomdisc_cycle). Otherwise costs and QALYs are unchanged from Scenario 1.

# SOC, costs other than drug acquisition are unchanged
s2_soc_othcost <- s1_soc_othcost

# SoC, drug acquisition costs
s2_soc_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_soc$cost_daq_soc_rup,
    prices = prices_dyn_soc,
    discrate = nomdisc_cycle
    )

# SoC, total costs
s2_soc_cost <- s2_soc_daqcost + s2_soc_othcost

# SoC, QALYs are unchanged
s2_soc_qaly <- s1_soc_qaly

# New intervention, costs other than drug acquisition are unchanged
s2_new_othcost <- s1_new_othcost

# New intervention, drug acquisition costs
s2_new_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_single,
    payoffs = hemout_new$cost_daq_new_rup,
    prices = prices_dyn_new,
    discrate = nomdisc_cycle
    )

# New intervention, total costs
s2_new_cost <- s2_new_daqcost + s2_new_othcost

# New intervention, QALYs are unchanged
s2_new_qaly <- s1_new_qaly

# Incremental cost
s2_icost <- s2_new_cost - s2_soc_cost

summary(s2_icost)

# Incremental QALY
s2_iqaly <- s2_new_qaly - s2_soc_qaly

summary(s2_iqaly)

# ICER
s2_icer <- total(s2_icost) / total(s2_iqaly)
s2_icer

Under scenario 2, the new intervention has an incremental cost-effectiveness of $r s2_icer per QALY (incremental costs of $r total(s2_icost), incremental QALYs of r total(s2_iqaly)).

Scenario 3: Dynamic uptake, not dynamic pricing

The calculation for Scenario 3 is the same as for Scenario 1 except for dynamic uptake, which is handled by setting uptakes = uptake_multi.

# SOC, costs other than drug acquisition
s3_soc_othcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_soc$cost_nondaq_rup,
    prices = prices_oth,
    discrate = nomdisc_cycle
    )

# SoC, drug acquisition costs
s3_soc_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_soc$cost_daq_soc_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# SoC, total costs
s3_soc_cost <- s3_soc_daqcost + s3_soc_othcost

# SoC, QALYs
s3_soc_qaly <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_soc$qaly_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# New intervention, costs other than drug acquisition
s3_new_othcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_new$cost_nondaq_rup,
    prices = prices_oth,
    discrate = nomdisc_cycle
    )

# New intervention, drug acquisition costs
s3_new_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_new$cost_daq_new_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# New intervention, total costs
s3_new_cost <- s3_new_daqcost + s3_new_othcost

# New intervention, QALYs
s3_new_qaly <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_new$qaly_rup,
    prices = prices_static,
    discrate = disc_cycle
    )

# Incremental costs
s3_icost <- s3_new_cost - s3_soc_cost

summary(s3_icost)

# Incremental QALYs
s3_iqaly <- s3_new_qaly - s3_soc_qaly

summary(s3_iqaly)

# ICER
s3_icer <- total(s3_icost) / total(s3_iqaly)
s3_icer

Under scenario 3, the new intervention has an incremental cost-effectiveness of $r s3_icer per QALY (incremental costs of $r total(s3_icost), incremental QALYs of r total(s3_iqaly) from a cohort comprising r sum(uptake_multi) patients).

Scenario 4: Dynamic pricing and uptake

The costs of drug acquisition in each arm differ in Scenario 4 from Scenario 3 through applying the relevant dynamic price index (prices_dyn_soc and prices_dyn_new). Otherwise costs and QALYs are unchanged from Scenario 3.

# SOC, costs other than drug acquisition are unchanged
s4_soc_othcost <- s3_soc_othcost

# SoC, drug acquisition costs
s4_soc_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_soc$cost_daq_soc_rup,
    prices = prices_dyn_soc,
    discrate = nomdisc_cycle
    )

# SoC, total costs
s4_soc_cost <- s4_soc_daqcost + s4_soc_othcost

# SoC, QALYs are unchanged
s4_soc_qaly <- s3_soc_qaly

# New intervention, costs other than drug acquisition are unchanged
s4_new_othcost <- s3_new_othcost

# New intervention, drug acquisition costs
s4_new_daqcost <- dynamicpv::dynpv(
    uptakes = uptake_multi,
    payoffs = hemout_new$cost_daq_new_rup,
    prices = prices_dyn_new,
    discrate = nomdisc_cycle
    )

# New intervention, total costs
s4_new_cost <- s4_new_daqcost + s4_new_othcost

# New intervention, QALYs
s4_new_qaly <- s3_new_qaly

# Incremental costs
s4_icost <- s4_new_cost - s4_soc_cost

summary(s4_icost)

# Incremental QALYs
s4_iqaly <- s4_new_qaly - s4_soc_qaly

summary(s4_iqaly)

# ICER
s4_icer <- total(s4_icost) / total(s4_iqaly)
s4_icer

Under scenario 4, the new intervention has an incremental cost-effectiveness of $r s4_icer per QALY (incremental costs of $r total(s4_icost), incremental QALYs of r total(s4_iqaly) from a cohort comprising r sum(uptake_multi) patients).

Summary of results

Total costs and QALYs for each scenario are summarized in the table below. The results above are skewed by the fact that some scenarios represent more than one patient cohort. Presenting results per patient, allows easier comparison between the scenarios.

| | | Scenario 1 | Scenario 2 | Scenario 3 | Scenario 4 | |:---|:--|------------|------------|------------|------------| | Dynamic pricing? || No | Yes | No | Yes | | Dynamic uptake? || No | No | Yes | Yes | | Cohort size || 1 | 1 | r sum(uptake_multi) | r sum(uptake_multi) | | Total costs (cohort) | | |||| | | New intervention | r total(s1_new_cost) | r total(s2_new_cost) | r total(s3_new_cost) | r total(s4_new_cost) | | | Standard of care | r total(s1_soc_cost) | r total(s2_soc_cost) | r total(s3_soc_cost) | r total(s4_soc_cost) | | | Incremental | r total(s1_icost) | r total(s2_icost) | r total(s3_icost) | r total(s4_icost) | | Total costs (per patient) | | |||| | | New intervention | r total(s1_new_cost) | r total(s2_new_cost) | r total(s3_new_cost)/sum(uptake_multi) | r total(s4_new_cost)/sum(uptake_multi) | | | Standard of care | r total(s1_soc_cost) | r total(s2_soc_cost) | r total(s3_soc_cost)/sum(uptake_multi) | r total(s4_soc_cost)/sum(uptake_multi) | | | Incremental | r total(s1_icost) | r total(s2_icost) | r total(s3_icost)/sum(uptake_multi) | r total(s4_icost)/sum(uptake_multi) | | Total QALYs (cohort) | |||| | | New intervention | r total(s1_new_qaly) | r total(s2_new_qaly) | r total(s3_new_qaly) | r total(s4_new_qaly) | | | Standard of care | r total(s1_soc_qaly) | r total(s2_soc_qaly) | r total(s3_soc_qaly) | r total(s4_soc_qaly) | | | Incremental | r total(s1_iqaly) | r total(s2_iqaly) | r total(s3_iqaly) | r total(s4_iqaly) | | Total QALYs (per patient) | |||| | | New intervention | r total(s1_new_qaly) | r total(s2_new_qaly) | r total(s3_new_qaly)/sum(uptake_multi) | r total(s4_new_qaly)/sum(uptake_multi) | | | Standard of care | r total(s1_soc_qaly) | r total(s2_soc_qaly) | r total(s3_soc_qaly)/sum(uptake_multi) | r total(s4_soc_qaly)/sum(uptake_multi) | | | Incremental | r total(s1_iqaly) | r total(s2_iqaly) | r total(s3_iqaly)/sum(uptake_multi) | r total(s4_iqaly)/sum(uptake_multi) | | ICER | | r s1_icer | r s2_icer | r s3_icer | r s4_icer |

: Cost-effectiveness model results by scenario

Future single cohort ICER

The table above presents the cost-effectiveness results as of the date of calculation, r doc. However, it is interesting to explore how the ICER will change over time, given the expected evolution of prices. We use dynamicpv::futurepv() to calculate present values at future times. This function is a wrapper for dynamicpv::dynpv(). This is the single cohort ICER (no dynamic uptake) but with dynamic pricing, so corresponds with Scenario 2 from earlier.

First, we calculate the costs at each time of interest. Then we calculate the ICER, given the incremental QALYs we have already observed - and which are immune from pricing effects.

# Times at which to plot ICER
gtimes <- round((0:(2*thoz))/cycle_years/2)
# SOC drug acquisition costs
gc_soc_daq <- gtimes |>
    purrr::map_vec(\(l) mean(futurepv(
        tzero = l,
        payoffs = hemout_soc$cost_daq_soc_rup,
        prices = prices_dyn_soc,
        discrate = nomdisc_cycle
    ))
)
# SOC other costs
gc_soc_oth <- gtimes |>
    purrr::map_vec(\(l) mean(futurepv(
        tzero = l,
        payoffs = hemout_soc$cost_nondaq_rup,
        prices = prices_oth,
        discrate = nomdisc_cycle
    ))
)
# New drug acquisition costs
gc_new_daq <- gtimes |>
    purrr::map_vec(\(l) mean(futurepv(
        tzero = l,
        payoffs = hemout_new$cost_daq_new_rup,
        prices = prices_dyn_new,
        discrate = nomdisc_cycle
    ))
)
# New other costs
gc_new_oth <- gtimes |>
    purrr::map_vec(\(l) mean(futurepv(
        tzero = l,
        payoffs = hemout_new$cost_nondaq_rup,
        prices = prices_oth,
        discrate = nomdisc_cycle
    ))
)
# Combine in a tibble
ds <- tibble(
    # Time in weeks and years
    time_weeks = gtimes,
    time_years = time_weeks * cycle_years,
    # Evaluation date
    evaldate = doc + time_weeks * 7,
    # Price/inflation index
    pinfl = prices_oth[gtimes + 1],
    # Total costs for each intervention
    totcost_new = gc_new_daq + gc_new_oth,
    totcost_soc = gc_soc_daq + gc_soc_oth,
    # Scenario 1/2 QALYs
    qaly_soc = total(s1_soc_qaly),
    qaly_new = total(s1_new_qaly)
  ) |>
  mutate(
    # Incremental cost and QALYs
    icost = totcost_new-totcost_soc,
    iqaly = qaly_new-qaly_soc,
    # Nominal ICER, and real (inflation adjusted) ICER
    Nominal = icost/iqaly,
    Real = Nominal / pinfl
  ) |>
  # Pivot to long so can be used in a graphic
  pivot_longer(
    cols = c("Nominal", "Real"),
    names_to = "Type",
    values_to = "ICER"
  )

We should check at this point that the ICER we are starting at ($r ds$ICER[1]) matches the scenario 2 ICER from earlier ($r s2_icer).

The following plot shows the nominal ICER calculated at different times, given the pricing, LoE and other assumptions. The horizontal dotted line confirms that the initial ICER matches the value from Scenario 2. The vertical dashed lines mark the timings of the LoEs of first the standard of care, and then the new treatment.

# Plot real and nominal present value over time
ggplot(ds,
  aes(x = evaldate, y = ICER, color=Type)) +
  geom_line() +
  labs(x = "Evaluation date") +
  geom_hline(yintercept = ds$ICER[1], linetype='dotted') +
  geom_vline(xintercept = loe_new_start, linetype='dashed') +
  geom_vline(xintercept = loe_soc_start, linetype='dashed') +
  scale_y_continuous(
    labels = scales::comma,
    limits=c(0, 150000)
    )

Discussion

The findings for this example model are as follows:

The effect of assuming dynamic pricing rather than flat pricing over time is shown in the difference between results of scenarios 1 and 2. Scenario 1 assumed no increases in drug acquisition costs, but inflationary increases in other costs. Scenario 2 additionally assumed drug prices of the new intervention and SoC comparator would be eroded due to losses of exclusivity. This has a modest impact on costs per patient of the new intervention (reducing from $r total(s1_new_cost) to $r total(s2_new_cost)). Accordingly the ICER reduces from $r s1_icer to $r s2_icer per QALY.
The effect of modeling uptake dynamically rather than just the current cohort of patients is shown in the difference between results of scenarios 1 and 3. Dynamic modeling of uptake has the effect of weighting the costs and QALYs per patient in scenario 3 towards a later cohort of patients, where the accumulation of costs and QALYs over the time remaining in the payer's 20 year time horizon will be less. The incremental costs per patient reduced from $r total(s1_new_cost) in scenario 1 to $r total(s3_new_cost)/sum(uptake_multi) in scenario 3, whereas the incremental QALYs reduced from r total(s1_new_qaly) to r total(s3_new_qaly)/sum(uptake_multi) per patient. Overall, the ICER increased from $r s1_icer to $r s3_icer per QALY.
The effects of dynamic pricing and dynamic uptake are extremely synergistic. Scenario 4 illustrates the effects of both dynamic pricing and cohort modeling. The results per patient are identical to scenario 3, except that the cost per patient of the new intervention reduces from $r total(s3_new_cost)/sum(uptake_multi) to $r total(s4_new_cost)/sum(uptake_multi), due to the impact of dynamic pricing. The ICER in this case is reduced considerably to $r s4_icer per QALY.
As shown in the Figure, the ICER increases a little at first, as we approach the LoE of the standard of care comparator. After all, a cheaper comparator will increase the incremental cost of the new treatment. However, this is soon dwarfed by the effect of the LoE of the new treatment, which occurs later. This reduces the ICER significantly as the LoE approaches. Thereafter, the ICER is constant in real terms (but increasing with price inflation in nominal terms).

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dynamicpv
Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

Cost-Effectiveness Applications
In dynamicpv: Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

Introduction

Methods and Assumptions

General assumptions

Dynamic pricing

Dynamic uptake

Implementation

Set-up

Cost-effectiveness model

Dynamic pricing

Dynamic uptake

Results

Without dynamic pricing or dynamic uptake

Scenario 1: No dynamic uptake or pricing

Scenario 2: Dynamic pricing, no dynamic uptake

Scenario 3: Dynamic uptake, not dynamic pricing

Scenario 4: Dynamic pricing and uptake

Summary of results

Future single cohort ICER

Discussion

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dynamicpv Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

Cost-Effectiveness Applications In dynamicpv: Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

Introduction

Methods and Assumptions

General assumptions

Dynamic pricing

Dynamic uptake

Implementation

Set-up

Cost-effectiveness model

Dynamic pricing

Dynamic uptake

Results

Without dynamic pricing or dynamic uptake

Scenario 1: No dynamic uptake or pricing

Scenario 2: Dynamic pricing, no dynamic uptake

Scenario 3: Dynamic uptake, not dynamic pricing

Scenario 4: Dynamic pricing and uptake

Summary of results

Future single cohort ICER

Discussion

Try the dynamicpv package in your browser

R Package Documentation

Browse R Packages

We want your feedback!

dynamicpv
Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake

Cost-Effectiveness Applications
In dynamicpv: Evaluates Present Values and Health Economic Models with Dynamic Pricing and Uptake