Hello, my name is Lou Garrison.

I'm a professor in the Departments of Pharmacy, Global Health

and Health Services at the University of Washington. It's a pleasure to have this opportunity to
talk withyou as a part of the course organized by Professor Joseph Babigumira. Joseph is a
colleague of mine at the University and was a former student of mine, actually. So it's real
pleasure to be a part of a course that he's organized. Professor Babigumira and I have done
workshops together over the years and worked on courses, so I'm real pleased to be a part of
this presentation and discussion. Just in terms of my background, I worked for 13 years at Non-
profit Policy Research after finishing my PhD in economics and specializing in health economics
worked at Project Hope which got into doing international work at the time and Jamaica and
Poland on health services issues. Then I went to work for 12 years in the pharmaceutical
industry. I worked for Roche pharmaceuticals where I was the head of health economics and
pricing in Switzerland at the end of that. And then 11 years ago I came to the University of
Washington where I've been a professor and we have a PhD program and masters programs
and students from around the world including Professor Babigumira. So it’s a pleasure to have
this opportunity to talk with you.
In week 9 we cover three topics. The first part is an introduction to Health Technology
Assessment (HTA) including a discussion of the principles, some historical background and the
objectives. In part 2 we discuss the HTA in low and middle income countries and some work
that we've done around trying to understand the evolution of HTA in these settings. And then
in part 3, I'll discuss some of the economics of drug development, how that relates to incentives
for innovation and some definitions of value in healthcare.
Before defining health technology, it is useful to think more broadly about what is technology. I
think we would all agree with this definition that technology is the application of scientific or
other organized knowledge including any tool, technique, product, process, method,
organization or system to practical tasks. So technology is not just a tool or technique, it is
actually extends to the broader level of an organization or system issues but again with an
emphasis on sort of operationally doing things practically.

Now when we turn to health healthcare technology, most people probably think of drugs and
devices but it's actually much a longer list. So it's got medicines, we think of diagnostic tests
including indicators and reagents, devices (CT scanners and down to everyday devices like
crutches), and maybe equipment and supplies would fall into to that, surgical procedures,
medical procedures are kind of technology, support systems including nursing and pharmacy
that support care delivery, organizational questions around the decentralized versus centralized
how managerial systems and then all of these. When we talking about healthcare, they're used
in a variety of ways and many times these types of technologies are used for things like
prevention, screening, diagnosis, treatment and rehabilitation. So we're thinking of technology
and healthcare technology quite broadly in this context.
Of course with this broad definition of technology one can think of Technology Assessment
quite broadly. It's not necessarily just about healthcare technology. We can also assess
automobile technology. We can assess environmental technology and so on. In fact, in the US
in the 1980s there was an office of Technology Assessment that looked at
health care applications but also look broadly at all kinds of technology. But for our
purposes here we're going to focus on health care technology. As I'm sure you would
understand this that the field has developed and it's become a field to aid policy makers in
making decisions about health care technology adoption and diffusion so the goal
is to provide information to policymakers and other decision-makers to inform their decisions
about adoption and diffusion of healthcare technology.

So when we say policy makers we actually mean a wide range of decision makers
from high-level government decision makers deciding about types of insurance
to offer and the structure of the delivery system, to clinical policymakers who are deciding what
treatment guidelines to specify for particular technologies or medicines. So they're thinking
about adopting that into the healthcare system, but also controlling its use and diffusion
throughout the system. As you can imagine and based on everything that's been discussed at
this point in terms of systematically looking at evidence and making decisions, the hope is that
by making these decisions more rational, the decision-making will be more efficient and even
more fair and will be less subjective so that we can measure things and make the system meet
our objectives more broadly.

Now we know that the reality is that the decisions that most of these levels are subject to bias
and an emotion and so on and are not necessarily based only on evidence. Certainly individual
experience can bias decisions, emotions can bias decisions and so on. You're probably aware
that there's a field of behavioral economics that looks into sort of systematic biases that we
make. We're not very good about thinking about probabilities and we make systematic
mistakes and so to guard against that it's important to have a more systematic process that will
aid in decision-making.
Health technology assessment has been defined in many ways, though I think there's a
common core to the definitions that's captured in this first bullet. We used this definition that
it's a structured analysis of healthcare technologies performed for the purpose of providing
input into regulatory coverage / formulary and reimbursement policy decisions. So breaking
that definition down the structured analysis means going through a systematic review
of the evidence, specifying the objectives of the analysis the scope of the analysis and going
through step by step to look at the outcomes both clinical and economic. Now when we say
regulatory we're talking about decisions made by national regulatory agencies such as the FDA
and the EMA in Europe and so they're basically making a benefit-risk determination, with the
benefits of allowing a technology on the market outweigh the risk. Recognizing that at that
point there's usually very limited evidence in the case of medicines, one or two randomized
trials.

The coverage or formulary decision is the decision made by insurance bodies either public or
private. Coverage means are they going to include it in the benefits package that's available to
members of the health plan or the National Health System. Formulary speaks specifically to
medicines, will it be included on the available medicines list, a positive list or what you might
call an essential medicines list in some cases, but it's really just that I guess. You could argue
that the formulary could include essential medicines and less essential medicines. But certainly
that's the same idea of a list of what's available.

Then systems face the question of if something's available, how much are they going to
reimburse, what percentage of its going to be covered. If it's percentage then we talk about co-
insurance. So there is the patient paying a ten percent then that would be a co insurance, that
they were paying three dollars that would be a co-payment. So decisions are made about
reimbursement policy. In the US we have a tiering system for medicine, so that a tier 1
medicine would have greater coverage or might be provided without any co-payment or
coinsurance. Whereas a tier 4 might have a substantial co-insurance. Not all systems work that
way. We have also emphasized the process aspects of technology and it is important to
recognize that HTA is itself a health technology. It's a process for making certain kinds of
resource allocation decisions and countries vary in the sophistication and development of this.

While most countries have this national regulatory agency, the majority of countries do not yet
have a health technology agencies specifically and the decisions are made more or less ad hoc
and with other institutions. So as health systems evolve, we'll talk about this in the next
Section, it's important to sort of see how a health Technology Assessment can evolve in that
context.
In thinking about health Technology Assessment specifically, we have found it useful to
think about two different levels: what we call the micro level and the macro level. The micro
level focuses on drugs and devices that are considered incremental to the healthcare system.
So you can imagine the existing health care system and then saying should I add this new
medicine to the national formulary to make it available to patients. That's a micro level HCA
and for which we would like to see a sort of a cost-effectiveness analysis including an
incremental cost-effectiveness ratio. That's what we mean by micro level.

Macro level is the broader level at the health system level. Now within the micro level, we can
also identify what we call clinical practice guidelines which is really the way in which individual
technologies are combined with in the delivery system to manage patients. You may be aware
that the term standard practice guideline is widely used and the WHO has developed standard
work to develop standard treatment guidelines in certain areas and many countries develop
standard treatment guidelines to assist physicians. Obviously to figure out where the
technology fits into that we're really talking about what would be an efficient use of that
technology within the flow of existing clinical pathway so we consider that a micro level HTA
question.

When we turn to macro level HTA, we're talking about the broader architecture or framework
of the health system in general including issues such as the types of facilities (hospitals, clinics
and so on), the health workforce (nurses, doctors, pharmacists and so on) and then also
healthcare financing structures (is there a public insurance market, is a private insurance
market allowed, do we have managed care organizations and so on). Those are macro level
decisions.
There's also an important term you should hear called priority setting that's used and
it is related to Health Technology Assessment and its operating at a higher level. Looking at
things like the burden of disease in a country and the workforce constraints, and then trying to
figure out are we going to devote our resources to dealing with obesity or hypertension or
cardiac disease and so on. So setting those priorities can then influence the information that we
get from micro level HTA. It's important to recognize that there are both of those. Macro level
HTA is what might traditionally be called Health Services Research. And most
of the time we'll be talking about micro level HTA here. But it's important to keep in mind that
these are related and obviously the design of the health system is going to affect how micro
level a decisions affect the system or the adoption of technologies that are considered in micro
level HTA.
You probably thought about the issue of why the use of technology assessment varies by
country and by different types of technology. Certainly it's not just focused on health care.
There was an agency started in the United States in the 1980s called the office of Technology
Assessment that considered not just health care technologies, but environmental, automotive,
you name it. It was really to look quite broadly. Now just an interesting sidelight, that that
agency got into political trouble for making some difficult decisions and then was eventually
eliminated. So we'll come back to this point on the importance of the need for some
independence and Technology Assessment.

But basically we're all aware that countries vary substantially in the resources they have to
devote to healthcare ranging from five percent of gross domestic product in some countries to
eighteen percent or so of GDP in the United States. As countries incomes rise and they devote
more resources to healthcare, they have more of an incentive to really manage those resources
efficiently and more wherewithal to do that, but they're also more subject to the influence of
technological change which occurs both for economic reasons and just for scientific reasons.
New technologies are coming on board and we need to make decisions about what to
include.

Health care policy makers were less consent just to leave that leave the decision to the
regulatory agency in terms of benefit/risk and then look at the overall cost. And as Professor
Babigumira has emphasized, we've had to make more and more decisions about value for
money. The benefit in relation to the cost. So that sort of spurred the the interest in doing
Health Technology Assessment.
It's important to recognize that not all technological change is good or perceived technological
change. And I want to talk about a few examples where it did not work. It was overused or
unsafe. Then we had to make adjustments. So technology assessment is also useful for
identifying those situations.
A good example of a technology that later was proved to be to have harm rather than benefit
was gastric freezing for peptic ulcers which was developed by a surgeon in the 1960s. And in
1963 some 15,000 procedures were performed, but it was observed that there were many
deaths. By 1964, a randomized controlled trial showed that there was no benefit and the
potential for harm so the technology was abandoned. And as I'm sure you're aware, we are still
dealing with peptic ulcers and gastrointestinal reflux disease and so on. So still a lot of
technological change since the sixties and we're still dealing with the problem. We haven't
come up with a cure, but this is an example of a technology that was widely used, in fact
probably prematurely. It would have been better to the randomized trial before 15,000
procedures were performed. But the assessment showed that it did not have a good benefit
harm balance without even considering the cost.

Another example of a technology that at least required with some modification in use was CT
scanning. In the 70s it was a new technology. It was very exciting for radiologists to use this. It
was most likely overused. They wanted to see the images, the patients were curious and so on.
After later review, it was determined that much of this use was inappropriate and being used in
situations where there was a very little benefit.

Now just a sidebar on the term ‘inappropriate’. There is an economic interpretation of this,
which would be a situation where the marginal benefit is less than the marginal cost, the
underlying principle of the incremental cost-effectiveness ratio. I always think it's useful to
recognize that if we eliminate an appropriate procedure we would save on that marginal cost.,
but we would also lose the more original benefit. So there could still be that it’s not efficient,
the marginal benefit is less than the marginal cost, but there is some benefit. So I think it’s
important to recognize that some benefit would be lost, along with the cost savings from
eliminating inappropriate technologies.
Very interesting example and highly cited is lung volume reduction surgery in the
1990s. It was developed by a surgeon to treat end-stage lung disease. In the late 90s some
3,000 procedures were performed and reimbursed. And at that point there had not been a
randomized trial, or even probably good observational data. So in 2003 the US Medicare system
supported a large randomized controlled trial. They found no benefit in the randomized trial
with exception for a small subgroup of patients. But in general, there was a lot of harm for a lot
of patients. Furthermore, cost effectiveness analyses performed by one of our colleagues here
at the University of Washington Dr. Scott Ramsey and colleagues showed that it was not cost-
effective. So this is an example that the use of the procedure fell off dramatically after that
Information. So it was an example, of a kind of a positive example, of where doing what we call
a comparative effectiveness research led to a change in practice. In fact, this actually fell under
the concept of coverage with evidence development, so the procedure was covered for the
patients participating in the trial. It was paid for, but then the US Medicare system after getting
the trial evidence decided not to cover it and would no longer be covered after that point. But it
was an example that's cited of coverage with evidence development.
In a very thoughtful piece by two of the really founders of the field of Health Technology
Assessment David Banta and Brian Luce. They basically point out that the need for this arose
because we realized that relying strictly on health professionals to make sure that the benefits
and risks were considered, that societal precious resource medical resources were being used
sufficiently. It was really insufficient to rely on them alone as a strategy for ensuring
appropriate use. Again, many studies in many countries show tremendous variations across
geographic regions and across subgroups of the population. So technologies aren't necessarily
being from applied fairly and efficiently if we rely solely on judgments of health professionals.

Furthermore, health professionals are very busy. They're highly trained, but they live in an
environment where technological change is extremely rapid, not just in medicine. Computers,
biotechnology, nanotechnology are all affecting medicine. So keeping up
with that is a challenge. They basically argued that our capacity to innovate and develop these
technologies is running faster than our ability to assess them and to make rational decisions
about their use, so we're making suboptimal decisions. This leads to inefficiencies, things that
have marginal or no effectiveness, and often harm to patients.

This was their argument for why we need technology assessment. And again, they were critical
in the in the development of the field of Technology Assessment. There were
founders and really visionaries.
This next slide is based on a paper that I thought was really insightful and path-breaking by
three leading health policy analysts: Ezekiel Emanuel, Victor Fuchs and Alan Garber and they
laid this out here back in 2007, and talking about the US in particular, that there's a need for a
national level technology outcomes assessment process to help guide decisions about health
care resource allocation. Now in the next couple of slides after this we'll talk about some
principles that would go into developing a health technology agency or process, but I thought
that these are some higher-level principles that I thought this article brings out better.

They talked about the importance of administrative independence to try to minimize the
influence of the politics on a health technology agency to be independent. You need some core
of dedicated funding so that the so the politicians can cannot just cut off funding on a whim
because they don't like a particular decision. It's important that the resources are sufficient to
do objective and timely research. Use reliable methods, and that the results are disseminated
systematically throughout the literature and to healthcare decision makers. It's important to
have a governance and organizational structure that lend it legitimacy to a health
technology agency. So again I'll talk about some other aspects of the process in the next couple
of slides but I think it's important to keep in mind that getting these aspects right will have a
lot to do with the survivability and credibility of a Health Technology Assessment Agency.
The next three slides present an article headed up by Mike Drummond, but you can see a
distinguished list of co investigators from the field of pharmacoeconomics. Looking at in
defining key principles for the improved conduct of HTA for resource allocation decision. So I
want to run through these principles with you. This is really a seminal article that has been very
influential.
The first principle of the 15 is that the goal and scope of the HTA should be explicit and relevant
to its use. So you need to define exactly what, in the case of an individual technology, what
indications are considered. What patient subsets are considered and so on. That needs to be
explicit and relevant to the use of the technology.

Ideally HTA should be unbiased and transparent in terms of the process and the presentation of
the results. It should consider all relevant technologies that are comparators to the technology
under consideration but primarily this the current standard of care should be that the base of
the comparison. There are many technologies to consider as we discussed and there
needs to be a clear system for horizon scanning and setting priorities for which technologies to
evaluate. You're probably aware that there are relatively few new medicines each year. Usually
less than 30 that are that are considered innovative and being considered by the Food and Drug
Administration. Whereas we have thousands of modifications and in the device area, so setting
priorities is a challenge.

They should consider appropriate methods, and there’s certainly some debate about this
though practitioners of health economics have advocated the use of the incremental cost-
effectiveness ratio, at least as part of a broader evaluation but there are there are other kinds
of methods that are used. Should consider all the evidence, a wide range of evidence and
outcomes, not just focus on short-term clinical outcomes or focus on the trial data. Should
ideally look at observational data. A societal perspective should be considered and by that
people mean various things but certainly the first thing that comes to mind is we're not just
looking at medical care resource use. People's time is involved in using the health care
system. If they die then their output is lost it to the society more broadly. So certainly you can
take a broader societal perspective. These assessments are always based on incomplete
evidence some more systematic than others so it's important to characterize the uncertainty,
the distribution around their parameters in the model. So these are the first eight
of the 15 principles. I think they're relatively obvious when you see them but it's good to have
them laid out systematically.
The last seven principles on the list of 15. Number nine: HTA should consider and address issues
of generalizability and transferability. So what that's basically saying is countries can learn from
one another and especially when it comes to clinical data. Clinical data can cross borders. We
don't actually expect humans to be biologically similar. Across countries their healthcare
systems and costs and reimbursement systems can be very different, but still some
information, if systems are similar, can be looked at across borders. So that's what
generalizability and transferability is about.

Now the next one is very important. And I think if we look at successful HT agencies--number
ten here--it's important that they have a deliberative process that engages all key stakeholder
groups. This is really I think something that people have come to appreciate over the last 15
years as these processes have rolled out around the world. The people doing the--number 11--
the people doing the assessments must look for all the data, not just data from trial but all the
relevant data.

Implementation is obviously important and it needs to be monitored. If an HT agency is doing a

good job they need to be able to monitor things. HTA needs to be timely. Obviously it's
something as efficient and beneficial to patients and access is delayed, then some people are
going to be worse off because they didn't have access in a timely fashion. As part of the
implementation, it's important that the decisions and the findings be communicated to the
various stakeholders and decision-makers. So that would be part of a good process. Just the
whole process itself should be transparent at a high level and clearly defined so that
people see how the information is being used to make decisions. These were 15
principles that some the leaders of our field laid out for what would make for a good HTA
process. And I think if you couple this with the information from the Emmanuel at al. article,
you'll get the idea that support these things there have to be some administrative
independence.
I would like to end this session with just a final word about some broader considerations. First I
think it's important to recognize that the information generated by HTA processes in various
countries is a global public good. By that we mean a public good is a good that we can all
consumed without using it up. Other people can use it and obviously it can be used globally and
the important point is countries can benefit from looking at what other systems are doing in
terms of making decisions. For example, it's well known that the Taiwanese HTA process looks
at the HTAs from NICE in the UK, from CADTH in Canada and from a PBAC in Australia. So you
know you can benefit from looking across borders. Of course, as was mentioned just previously
there's sometimes limited generalizability and transferability, but nonetheless we're seeing
especially the clinical side the clinical outcomes that other systems are projecting.

Again more broadly at the macro level if we think of HTA as a process, then different countries
can also learn from each other's experiences about the processes and the best ways to engage
stakeholder input and so on. So in implementing and evolving HTA in different countries it's
important to look at process lessons from other countries.
Thanks very much for your attention. I look forward to the next to part two.