The individual needs of patients should be paramount in healthcare treatment decisions. Ideally these decisions are made via shared decision-making between doctors and patients based on each patient’s specific conditions, background, medical history, values and preferences. Yet insurance coverage decisions that determine the set of available treatments and their costs often operate differently, being based on population-wide averages. As a result, insurance terms tend to favor treatments that are beneficial or cost-effective for the typical patient. When a patient’s needs differ from the statistical norm, their treatment options offered under insurance may be neither beneficial nor cost-effective for them, and they may be denied the care they need. This not only harms individuals but also wastes healthcare resources and undermines the overall efficiency of the healthcare system, as researchers at Johnson & Johnson and their collaborators explain in a new publication in the journal Pharmacoeconomics.
The dangers of poorer outcomes and higher costs with a treatment valuation approach that focuses on average-level data highlights the critical importance of accounting for heterogeneity – the difference in health and cost outcomes that are systematically linked to patient-level characteristics. Examples of heterogeneity drivers include patient-specific factors such as gene expression, treatment response, disease prognosis, quality of life and preferences. Features of healthcare systems can also impact health and cost outcomes systematically, and in the decentralized multi-centric U.S. healthcare system, variability in insurance terms impacts treatment choices and outcomes.
The following example of a lung cancer screening program illustrates the potential impact of ignoring heterogeneity. The study estimated the value of screening both ex-smokers and current smokers or just current smokers. The incremental cost-effectiveness ratio (i.e., value for money) of screening was $81,000 per person on average for ex- and current smokers, but this obscured substantial differences by subgroup. The incremental cost-effectiveness ratio for current smokers was about half this figure—$43,000, which soared to $615,000 for former smokers. Researchers or policymakers using only pooled averages can miss important differences.
Johnson & Johnson researchers and their collaborators looked at the issue of heterogeneity and found that comparative economic analyses often fail to account for patients who don’t resemble the “average,” which may lead to care denials. This means that treatments may be incorrectly deemed cost- ineffective for certain patients when they could offer substantial benefits.
These types of flawed assessments serve to effectively limit the sets of treatment options to be considered in shared decision-making between patients and doctors, resulting in patients being unfairly denied coverage for life-changing treatments simply because they don’t fit the mold of a hypothetical “typical” patient. Researchers should address heterogeneity comprehensively in comparative economic analyses, tailoring studies to specific treatments, populations, and healthcare ecosystems. The paper provides a conceptual framework to assist researchers in addressing heterogeneity in the U.S. and catalogues a comprehensive set of empirical methods. Given the potential for economic analysis to influence treatment choices, the authors advocate for full transparency in reporting.
Policymakers and regulators should resist calls to elevate value assessments that focus on average values and do not account for key drivers of heterogeneity. We need a system that supports clinically-nuanced patient-centric access to medicines so that each individual person can easily obtain the therapy that they and their doctor consider to be best. This is why we believe that respect for individual patient values must be center stage in any solution and any value assessment.
This research was funded by Johnson & Johnson Innovative Medicine and conducted in collaboration with Michael Willis and Andreas Nilsson, employees of the Swedish Institute for Health Economics. For full details on the study design, methods and limitations, see: Willis MS, Nilsson A, Neslusan CA. A review of heterogeneity in comparative economic analysis, with specific considerations for the decentralized US setting and patient-centered care. PharmacoEconomics. Published online March 8, 2025. 2025;43:601–616. doi: https://doi.org/10.1007/s40273-025-01478-z