Estimating Differential Value and Relative Worth:
The Total Value-In-Use Path (Continued)
Section C - Total value-in-use
The total value-in-use path involves estimating the full values-in-use for each of the two drugs, then subtracting one from the other to estimate the difference between them. A product's total value-in-use is made up of all the benefits the product provides the customer less all the costs (except for its price) tied to the product's acquisition and use.
To estimate the full values-in-use for standard heparin and Lowparin, we need to estimate three different sets of follow-on costs. These are:
- the costs to a hospital that result from not using an anticoagulant in conjunction with abdominal surgery;
- the costs that follow from using standard heparin; and
- the costs that follow from using Lowparin.
By comparing how Lowparin and standard heparin reduce these follow-on costs, we will be able to estimate Lowparin's differential value and relative worth vis-A-vis standard heparin.
Follow-on costs associated with not using an anticoagulant
Let's start with section C1. In this section we estimates the follow-on costs per abdominal surgery associated with not using an anticoagulant. To get that, we multiply the "no anticoagulant" incidence rates for clotting and bleeding by the expected cost for each of those two adverse events. That gives us the expected followon costs per surgery for each type of problem. The sum of the two - $1,559 - is the expected cost per surgery of a patient's falling prey to either blood clots or major bleeding. We will use this number in estimating the total values-in-use for standard heparin and Lowparin.
Follow-on costs associated with standard heparin
In section C2, we estimate the follow-on costs associated with the use of standard heparin. The initial computations are similar to those in section C 1. Only the rates at which the problems occur are different. As you can see, these estimates add up to $665. That is the expected cost per surgery associated with the occurrence of either of the two adverse events.
Value-in-use of standard heparin
If we subtract that $665 from the $1,559 that was the expected follow-on cost from using no anticoagulant, we get $894. That is the direct savings to a hospital from using standard heparin vs. not using an anticoagulant. This $894 is the benefit part of standard heparin's value-in-use. There are, however, also a couple of costs associated with the use of standard heparin that also need to be factored into its value-in-use. There is the cost of doing the injections themselves: $2 per injection for an average of 4 injections, or $8. And there is the $50 cost of monitoring the patient's blood over the course of treatment to insure that it stays within certain parameters. To get standard heparin's total value-in-use, we need to subtract the $8 and the $50 from its $894 benefit. That gives us a net total-value-in use for standard heparin of $836.
Purchase inducement for standard heparin
Finally, we want to estimate the level of purchase inducement that, at its current price, standard heparin offers a typical hospital for use with abdominal surgery. We estimate that purchase inducement by subtracting heparin's price from the total value-in-use it offers. The price for standard heparin is $3 per dose. We multiply that by 4 doses, the average course of treatment. That gives us $12. Subtract that $12 from heparin's $836 value-in-use, and we get $824. That $824 is our estimate of a typical hospital's payoff from buying and using standard heparin in conjunction with abdominal surgery rather than doing without an anticoagulant. $824 is the average contribution to a hospital's bottom line that occurs each time that hospital uses standard heparin in conjunction with abdominal surgery rather than not using an anticoagulant at all.
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