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Modeling the Ex Ante Clinical Real Option Value in an Innovative Therapeutic Area: ALK-Positive Non-Small-Cell Lung Cancer

Author

Listed:
  • Woojung Lee

    (University of Washington)

  • William B. Wong

    (Genentech Inc.)

  • Stacey Kowal

    (Genentech Inc.)

  • Louis P. Garrison

    (University of Washington)

  • David L. Veenstra

    (University of Washington)

  • Meng Li

    (University of Texas MD Anderson Cancer Center)

Abstract

Objectives A drug that improves survival and/or disease progression can create real option value (ROV)—the additional health gain from future innovations enabled by a longer survival. ROV can be a relevant consideration for both clinical and payer decision-makers. We aimed to estimate the ex ante ROV for first-line (1L) alectinib in anaplastic lymphoma kinase (ALK)-positive non-small-cell lung cancer (NSCLC). Methods We developed a Markov model to estimate life-years (LYs) and quality-adjusted life-years (QALYs) gained with 1L alectinib versus 1L crizotinib due to potential future second-line (2L) drugs. Transition probabilities were derived from the phase 3 trial of 1L alectinib and phase 2 trial of 2L brigatinib. We identified drugs being studied in phase 2 and 3 trials in ALK-positive NSCLC at the time of alectinib’s 1L approval and projected the likelihood and timing of their arrival and their potential efficacy based on publicly available data. Results The discounted incremental LYs and QALYs for alectinib increased by 12.9% (95% CR − 2.96%, 34.82%; 1.25 vs. 1.11) and 11.2% (95% CR − 2.14%, 29.29%; 1.03 vs. 0.92), respectively, after accounting for ROV. The incremental ROV of alectinib was sensitive to the projected efficacy of future drugs, uptake level, and the hazard ratio of progression-free survival of alectinib (vs. crizotinib). Conclusions Ex ante ROV can be a significant value consideration in therapeutic areas with high levels of expected innovation. The potential efficacy of future drugs and incremental survival with alectinib at the projected time of arrival are important considerations in assessing ROV.

Suggested Citation

  • Woojung Lee & William B. Wong & Stacey Kowal & Louis P. Garrison & David L. Veenstra & Meng Li, 2022. "Modeling the Ex Ante Clinical Real Option Value in an Innovative Therapeutic Area: ALK-Positive Non-Small-Cell Lung Cancer," PharmacoEconomics, Springer, vol. 40(6), pages 623-631, June.
    • Handle: RePEc:spr:pharme:v:40:y:2022:i:6:d:10.1007_s40273-022-01147-5
    DOI: 10.1007/s40273-022-01147-5
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    References listed on IDEAS

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    1. Tomas J. Philipson & Gary Becker & Dana Goldman & Kevin M. Murphy, 2010. "Terminal Care and The Value of Life Near Its End," NBER Working Papers 15649, National Bureau of Economic Research, Inc.
    2. Tomas J. Philipson & Gary Becker & Dana Goldman & Kevin M. Murphy, 2010. "Terminal Care and The Value of Life Near Its End," NBER Working Papers 15649, National Bureau of Economic Research, Inc.
    3. Thornton Snider Julia & Romley John A. & Vogt William B. & Philipson Tomas J., 2012. "The Option Value of Innovation," Forum for Health Economics & Policy, De Gruyter, vol. 15(1), pages 1-19, April.
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