ISPOR 2018 Pt. 1: What is Pharmacoeconomics?
This is the first of two posts about a global pharmacoeconomics (defined below) conference held in late May, 2018. Each post focuses on a particular topic of importance to the conference. This post overviews ISPOR—the sponsoring organization—and the intent and nature of the conference. In doing so, we’ll overview what pharmacoeconomics does and why it’s important. We’ll offer some definitions of terms, high-level overview of key conference themes, and a preview of the next episode.
Published on
January 11, 2019
Opening ceremony at ISPOR 2018 Baltimore

The International Society for Pharmacoeconomic Outcomes Research (ISPOR) held its annual global meeting May 19-23 on Baltimore’s Inner Harbor. The conference convenes an international constituency of students, health economists, drug & device manufacturers, researchers, contract research organizations (CROs--companies that take on some or all of the non-clinical work of conducting clinical trials) and outcomes analysts. In addition to the big global meeting held in the USA, regional meetings are held in Europe, Asia, and South America. Through its Special Interest Groups, ISPOR offers a way for people involved in topics such as personalized medicine, medication adherence, health technology assessment, oncology and statistical methods (and more):

A view across Baltimore’s Inner Harbor (1)

Appropriately, ISPOR’s tagline is “improving health decisions.”

It’s impossible to attend all sessions;frequently there are multiples running concurrently ranging from plenaries (big-picture topics and perspectives in front of big audiences) to short oral presentations, issue-focused panels, workshops, educational symposia and hundreds of ‘poster presentations’ presenting research on 8x4 foot posters, inviting small-group interactions with the researcher. Preceding the conference is two days of intensive educational sessions on a variety of topics in health economics and analytics.

But what is “pharmacoeconomics?” The narrow definition: The sub-discipline of health economics that compares the value of pharmaceuticals. Satisfied now? There are several problems with this definition. First, pharmacoeconomics today includes valuing medical devices and brushes up more closely with the rest of health economics, which looks at valuing medical therapies in general. Second, what’s “value?” Roughly, it’s cost per meaningful outcome, which begs a range of questions such as: from whose perspective, what is “cost,” what’s an outcome, and how is “meaningful” determined?

Let’s say two people are shopping for a car. The might differ in how they value (seek out and are willing to pay for) newness, make, power, safety features, handling, fuel type and efficiency, environmental impact, and so on. The importance of these criteria depends on how the car will be used as well as personal preference. How do the values of a Tesla Model S and a Porsche 911 compare? What if you’re on a very limited budget? Perspective, use cases, total budget and alternative uses for the money all figure in—as they do in health economic analyses.

Very expensive treatments are entering the market. Take, for example, Novartis’ KymriahⓇ. It seems to confer a substantial benefit (or sometimes cure) for patients with acute lymphoblastic leukemia, which is fatal if not treated. Kymriah works by modifying receptors on the immune system’s T-cells so that they recognize the leukemic cells as foreign and destroy them like in Pac-Man. The manufacturer’s price was originally set at $475,000 and recently reduced to $373,000; however, there are additional costs for doctors, facility, testing, other related treatments (including of any adverse events) and travel to centers approved to administer the treatment. Is the cost worth the price? By whose standards, and how would you even go about getting to an answer? Do we have to take into account alternative uses of the money (would the money be better spent on something else)? Assuming you think yes (or even maybe), how would you compare the value gained from alternative uses and how would you inform economic decision-makers?

Inside the Baltimore Convention Center, where ISPOR is held

Questions like these are daily stuff in pharmacoeconomics and were woven throughout the sessions at ISPOR. Alternative viewpoints were discussed in panels, in Q&A sessions, and in the hallways. A great opportunity at ISPOR conferences and Special Interest Groups is to recognize that different countries think about issues of value quite differently. For example, many would say that ‘overall value to society’ is much less a criterion in the USA than in many other countries (where the insurance market and therefore the healthcare budget is managed by a central authority). It’s as if those countries think of the healthcare budget as a fixed-size pie that must be distributed (‘pie-enlargement’ is not a possibility in a given budget year) as fairly as possible.

In the UK, for example, the slices are distributed by first calculating the value of each proposed treatment as cost per quality-adjusted life year (QALY), a reasonably standardized measure (3). This yields a common metric that decision-makers can use to help inform whether a treatment will be paid for. For example, the UK’s National Institute for Clinical Excellence (NICE)--charged with valuing medical technology--sets a fairly stringent threshold of £20,000 per QALY  as being favorable value and above £30,000 as unfavorable. While other factors may figure into a coverage decision, the overall intent is “Let’s purchase the maximum number of QALYs for our population for the fixed amount of money we have to spend.” (4)

Pharmacoeconomics and health economics force us to think critically about what we value from various perspectives--rendering priorities and decision-making more informed and (hopefully!) more transparent.

Big conference themes:

  • Measuring “value” to various stakeholders
  • Valuing precision medicine
  • Insuring value (value-based payment arrangements and contracts)
  • Health economics outcomes research (HEOR): Core competencies and analytic methods
  • Measuring and improving value around the globe
  • The role of patient preferences in diagnosis and treatment
  • The voice of the patient: The importance of (and methodology for) collecting experience and outcomes data from the patient and their caregivers (central to assessing outcomes in pragmatic clinical studies)
  • Making medicines available and affordable

That’s a small bite of a very large (and tasty) meal. Next up: Measuring “value” to various stakeholders as an essential preparation for value-based payment arrangements.

Please join the discussion below or contact us directly HERE.


  1. Photographs in the ISPOR series were taken by the author and are not copyrighted.
  2. We’d like to reassure our HEOR (health economics outcomes research) and other knowledgeable readers that we recognize our treatment of pharmacoeconomics is simplified. The subject is deep and highly nuanced—and has its share of controversies. It is also endlessly fascinating and its practitioners daily must come to grips with the intersection of science, mathematics, the way we perceive and interpret the world, policy, economics, and the social fabric. My gratitude for the many great thinkers and generous teachers I’ve met over the years is boundless. If you have any counterpoints or would like to expound upon anything from these writings, please let us know HERE.
  3. For example, if a treatment extends life by 2 years with a quality-of-life of 0.8 (on a scale where zero is death and 1.0 is vibrant health), the treatment would be said to result in 1.6 QALYs. If the treatment doesn’t extend life at all (life expectancy is still expected to be 2 years with or without the treatment) but improves its quality by 0.2 points, that treatment would be said to result in 0.4 QALYs. The big idea is that using QALYs allows economic decision makers to compare treatments using a standardized yardstick and to facilitate decisions about whether to pay for competing or completely new treatments. Needless to say, there is controversy about how, exactly, quality of life should be measured!
  4. For a very recent discussion (oriented towards US physicians) on QALYs, see Neumann PJ, Cohen JT. QALYs in 2018--Advantage and Concerns. JAMA 2018; Online First May 24, 2018 at
ISPOR 2018 Pt. 1: What is Pharmacoeconomics?