Policies, Pressures and Practice Patterns:
Applying Real-World Evidence to Improve Health Outcomes

May 11, 2021

Before a medicine can be prescribed to a patient, clinical trials must be conducted, and study outcomes scrutinized by the US Food & Drug Administration (FDA). While this FDA approval allows a medication to be prescribed to a patient, public and private health insurance payers (payers) then decide whether the medication will be reimbursed.  

The payers’ reimbursement decision theoretically does not deny patient access to the medication, as the patient could purchase the FDA-approved, physician-prescribed medication out-of-pocket. From a practical perspective, however, patients often cannot afford the out-of-pocket costs for the medication. When given a less expensive alternative medication, the patient must fail to respond and then appeal to the payers to get the originally prescribed medication. Already overtaxed physicians must then advocate for their patients, spending valuable time submitting clinical justification, supported by peer-reviewed publications, to payers so that their patient can receive vital medications. 

Calculating the costs 

Real-world evidence has been used to determine the value of a medication through Quality Adjusted Life-Years (QALY) and other calculations. These calculations attempt to prevent the administration of futile care, especially among patients with unrealistic hopes for a remarkable response or cure. Futile care is the most costly of all treatments, incurring personal and economic burdens. During the precious remaining days of a patient’s life, toxicities of the disease and futile therapy can result in hospitalization causing separation from friends and family.  

From a socioeconomic perspective, 25% of Medicare’s annual spending is used by 5% of patients during the last 12 months of life. Increased healthcare costs and resource utilization is frequently attributed to the off-label use of cancer drugs, especially as a later line of therapy, that often has limited impact on survival and/or quality of life. In the Swiss health system, Herbrand and colleagues found a 20% rate of off-label use of cancer drugs. Off-label prescriptions were reimbursed 67% of the time when supporting trials showed overall survival benefit. In these cases, off-label use involved first-or-second line cancer treatment and sometimes represented a new standard of care. When no supporting evidence for improved overall or progression-free survival was provided, 65% of reimbursement requests were still approved. In Canada, 75% of cancer drugs receive a positive recommendation of which 92.3% receive conditional approval. Positive recommendations were more likely among drugs whose use was supported by peer-reviewed phase 3 randomized clinical trials. Substantial support was also based on the European Society for Medical Oncology (ESMO)-Magnitude of Clinical Benefit Scale (MCBS) score. The most common primary endpoints associated with successful submissions for reimbursement were progression-free survival and overall survival.  

Optimizing clinical endpoints and outcomes

A median survival outcome, however, does not fully consider other meaningful clinical endpoints that demonstrate a response to therapy.  Especially among patients with advanced disease, Einav and colleagues concluded that the palliation of symptoms is a more clinically relevant endpoint than survival.  Calculations of clinical benefit must reflect the goal of therapy and the rationale for the prescription of a medication.  Physicians are responsible for and they must monitor the results of each diagnostic study and each therapeutic intervention, even alternative medications that they did not originally prescribe.  

The tension that exists with denied reimbursement is the opportunity cost of delaying a prescribed medication versus administering an alternative drug that fails to improve survival, reduce disease morbidity and/or the quality of life.  As an example, among 382,574 type 2 diabetic patients aged 58 to 66 years, McCoy and colleagues found that Medicare Advantage beneficiaries were less likely than commercially-insured patients to be treated with newer and more effective medications. In clinical trials, effectiveness was defined as lowering glucose levels with low rates of hypoglycemia, and improvement in cardiovascular and renal disease outcomes. The observed disparities were greatest among lower-income patients.  In conflict with clinical practice guidelines, Medicare Advantage patients, including those with underlying cardiovascular and renal disease, were less likely to be treated with glucagonlike peptide-1 receptor agonists (GLP-1RA), sodium-glucose cotransporter-2 inhibitors (SGLT2i), and dipeptidyl peptidase-4 inhibitors (DPP-4i).  

Optimization of clinical outcomes, however, often reduces healthcare resource utilization and costs. Compared to individuals with an indeterminate etiology for their seizures, Wijnen and colleagues reported that patients diagnosed and successfully treated for epilepsy in the Netherlands had better clinical and quality of life outcomes than those in whom the diagnosis was not confirmed. These improved outcomes decreased total average healthcare costs by 33%. Productivity costs, designated as the cost to employers due to the patient’s absence from work, decreased by 68% per 3 months.  With 12-month follow-up, the total annual healthcare costs to manage patients diagnosed with epilepsy proved to be 8% lower and productivity costs were 19% lower.  

Decisions and opportunity costs

These examples, ranging from oncology to diabetes to epilepsy, demonstrate the opportunity costs of therapeutic decisions in every medical specialty. Opportunity costs involve both ends of the clinical spectrum. Ineffective therapy, resulting from futile care or denied medication reimbursement, incurs a profound opportunity cost.  Futile care imposes unnecessary patient toxicity and societal healthcare resource utilization and costs. Opportunity costs, resulting from a delayed initiation of effective therapy, can include potential morbidity from and/or the progression of disease, and additional clinical oversight and costs while monitoring an ineffective alternative medication.  Futile care and permanent morbidity from an ineffective alternative drug are the most costly therapeutic failures.

Insight into the health consequences of delaying effective diagnostic interventions and therapy can be extrapolated by the outcomes during the COVID-19 pandemic. Due to the cancellation of routine clinical procedures during the pandemic, a high frequency of forgone care occurred among all patient sectors, but even greater barriers to care occurred with underserved populations based on race/ethnicity, socioeconomic status, age, and health status. 

While claims data captures costs related to therapeutics and healthcare resource utilization, caregiver burden is not calculated.  As the patient’s ability to fulfill activities of daily living declines, caregiver lost productivity costs increase. While claims data may capture home health services, the lost income of caregivers, who sacrifice employment and future career development to assist the patient, is never captured.  

The goal of any therapy should be to resolve symptoms, and treat the disorder by preventing disease progression. While initial evaluations of healthcare costs and quality of life are currently applied, the clinical consequences and related costs of denying drug reimbursement have not been fully determined. More robust assessment of the potential clinical harm from the delay of initiating effective therapy should be considered. A more comprehensive analysis is needed of the economic impact caused by ineffective therapies that may result in added healthcare resource utilization and costs. There is also an economic impact on the patient in requiring additional clinical assessments and assistance.  Finally, the economic impact on caregivers must be considered. The societal economic impact is beyond healthcare resource utilization and cost. The societal impact also includes the economic burdens assumed by the patient and caregivers whose employment and career development may be compromised.

Currently cost, survival outcomes, and quality of life determine therapeutic value. This approach mixes individual outcomes with the socioeconomic value determined by health policy.  Theoretically, the health policy threshold for cost effectiveness under a QALY calculation could be lowered, further restricting access to care.  Should this occur, many current drugs would no longer meet QALY threshold of being cost effective. Additionally, current calculations do not consider the total clinical and economic impact of a therapy on the patient and caregivers who contribute to the economy. 


Anderson KE, McGinty EE, Presskreischer R, et. al. Reports of forgone medical care among US adults during the initial phase of the COVID-19 Pandemic. JAMA Network Open. 2021;4(1):e2034882. doi:10.1001/jamanetworkopen.2020.34882

Dean EB, Johnson P, Bond AM.  Physician, practice, and patient characteristics associated with biosimilar use in Medicare recipients.  JAMA Network Open.  2021;4(1):e2034776.  doi:10.1001/jamanetworkopen.2020.34776

Einav L, Finkelstein A, Mullainathan S, et. al.  Predictive modeling of U.S. health care spending in late life.  Science. 2018;360:1462-1465.

Garrido MM, Prigerson HG, Bao Y, et. al. Chemotherapy use in the months before death and estimated costs of care in the last week of life. J Pain Symptom Management. 2016;51:875-881.

Herbrand AK, Schmitt AM, Briel M, et. al.  Association of supporting trial evidence and reimbursement for off-label use of cancer drugs. JAMA Network Open.  2021;4(3):e210380.  doi:10.1001/jamanetworkopen.2021.0380

McCoy RG, Van Houten HK, Deng Y, et. al.  Comparison of diabetes medications used by adults with commercial insurance vs Medicare Advantage, 2016 to 2019.  JAMA Network Open. 2021;4(2):e2035792.  doi:10.1001/jamanetworkopen.2020.35792

Meyers DE, Jenei K, Chisamore TM, et. al. Evaluation of the clinical benefit of cancer drugs submitted for reimbursement recommendation decisions in Canada.  JAMA Intern Med. doi: 10.1001/jamainternmed.2020.8588

Wijnen BFM, Schat SL, de Kinderen RJA, et. al. Burden of disease of people with epilepsy during an optimized diagnostic trajectory: costs and quality of life.  Epilepsy Research. 2018;146:87-93.

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