ccelerating scientific discoveries are reshaping our understanding of diseases and driving therapeutic innovation. A more comprehensive and unbiased assessment of the societal value of these advances is needed to ensure more informed healthcare decision-making.

Why Does it Matter?

For decades, healthcare decision makers around the globe have applied cost-effectiveness analyses (CEAs) to assess the societal value of innovative treatments. The extent to which CEAs influence healthcare decisions varies across countries and regions. In the UK and Canada, CEAs are required as part of formalized health technology assessment (HTA) approaches—conducted by the National Institute for Health and Care Excellence (NICE) and Canada’s Drug Agency (CDA-AMC), respectively—to inform coverage, reimbursement, and pricing decisions for innovative treatments. In contrast, the US historically features a market-based system and has not employed a single, centralized HTA. Currently, public payers such as the Centers for Medicare and Medicaid Services (CMS) do not mandate CEAs. However, recent policy changes—particularly the passage of the Inflation Reduction Act (IRA), which allows CMS to conduct price negotiations with industry—along with the growing influence of the Institute for Clinical and Economic Review (ICER), have intensified the debate of the emerging role of value assessment in the US healthcare landscape. Furthermore, some private payers have started to reference such assessments to inform negotiations with innovators.

Yet, CEAs featured in HTAs today often take a narrower perspective, focusing primarily on clinical and direct healthcare costs and leaving out key factors that might significantly affect societal outcomes and stakeholder decisions. This narrow scope ignores important dimensions of value, such as the burden of diseases on caregivers, the dynamic nature of pricing (e.g., price drops after patent expiration), or the broader societal productivity gains from effective treatments. As a result, these traditional CEAs tend to underestimate the true societal value of innovative medicines, resulting in decisions that might restrict patient access and disincentivize future innovation.

Recognizing these limitations, a range of updated value assessment frameworks has been proposed, including the ISPOR “Value Flower” (2018) and recommendations from the Second Panel on Cost-Effectiveness in Health and Medicine (2016). Despite these advancements, the adoption of novel value elements in these frameworks in CEAs remains inconsistent. There is a pressing need to integrate a more comprehensive set of value elements from the societal perspective into value assessment to more accurately reflect the true societal value of innovative health technologies.

Introducing the Generalized Cost-Effectiveness Analysis (GCEA) Methodology

Built on decades of methodological progress, the generalized cost-effectiveness analysis (GCEA) methodology, proposed by a group of 12 leading health economists and modelers, offers a structured method to incorporate key value elements and drivers that are omitted or incompletely captured in traditional CEAs.

In a recently published best-practice guide detailing the GCEA approach, the economists’ working group identified a total of 15 novel value elements across four domains (Figure 1) that modelers and value assessors should consider to quantitatively assess the value of innovative therapies.

Figure 1: GCEA Value Flower.

Note: While the GCEA Value Flower draws on the ISPOR Value Flower (2018), the definitions and naming of specific value elements may differ between the two frameworks. Refer to the publications for additional details.

The uncertainty domain includes three elements (outcome uncertainty, disease risk reduction, value of knowing) that recognize the value associated with the uncertainty of a patient’s future health outcomes due to the uncertainty in treatment effectiveness and the probability of being diagnosed with a disease.

The dynamics domain captures five value elements that account for how value estimates change over time: dynamic net health systems costs, dynamic disease prevalence, real option value, scientific spillover, and societal discount rate.

The beneficiary domain goes beyond patients and considers other stakeholders in the healthcare system. It includes three value elements (equity, family and caregiver spillover, and patient-centered health improvements) that examine how a treatment’s value might vary depending on to whom the benefits accrue.

Lastly, four value elements were included in the additional domain: community spillover, productivity, adherence, and direct nonmedical costs.

Collectively, these 15 elements form the basis for a more holistic, unbiased, patient-centered methodology to assess the societal value of innovative therapies.

The published best practice guide not only outlines how each element can be methodologically integrated into economic models but also provides real-world examples to show how they might be estimated and operationalized. Depending on the specific disease and treatment being considered, not all value elements will be equally relevant or feasible to incorporate in every assessment. Recognizing these considerations, the authors encourage value assessors to consider all value elements and recommend transparent reporting on which elements are included and why others are omitted.

What Does This Mean for Different Stakeholders?

Health economists and modelers are responsible for developing the models to inform value assessments. The GCEA methodology provides an updated framework for them to produce more robust and comprehensive estimates of value. Through learning and applying the methodology in actual assessments, economists and modelers can better support decision makers such as HTA bodies, insurers, and policy makers. Continual application and testing will also help identify challenges and lead to methodological and process improvements over time.

Market access, health economics and outcomes research, and commercial teams in pharmaceutical companies often rely on cost-effectiveness models to shape market access strategies and meet country-specific regulatory requirements. Embracing and advocating for GCEA would help these teams demonstrate the full value of their products and align with evolving expectations from payers and policy makers. GCEA will likely require closer collaboration with cross-functional teams, including research, commercial, and medical affairs, to ensure that new, pertinent data points are captured and integrated into these models.

Clinical development and real-world evidence generation teams in pharmaceutical companies are critical in ensuring that clinical trial design and real-world evidence studies capture the needed data inputs for GCEA models. Early cross-functional discussions around GCEA elements can help identify evidence and data gaps. For instance, if reduced caregiver burden and productivity gains are crucial to the overall value proposition of a therapy, these data must be systematically collected during clinical trials or through post-launch studies. By proactively addressing data gaps, companies can be better positioned to leverage GCEA in their discussions with HTA bodies or payers.

Health technology assessment bodies and policy makers can engage with different stakeholders including innovators and health economists/modelers to operationalize the use of new frameworks like GCEA and adapt guidelines accordingly. Such changes can help ensure that value-based decisions more closely align with patient and societal priorities. Ultimately, this could drive policy changes that lead to improved patient access, fair pricing, and sustainable innovation incentives.

A Call to Action

Adopting a GCEA framework will not happen overnight, and it requires concerted efforts from all stakeholders in the innovation ecosystem. As innovators, payers, and regulatory bodies rethink the future of healthcare, GCEA offers a useful tool for more comprehensive and unbiased value assessments. The journey will involve close collaboration among diverse stakeholders—patients, caregivers, clinicians, economists, and policy makers—to ensure that value assessment truly reflects real-world impact.

To start, health economists and modelers can take the lead in applying and demonstrating the GCEA framework in assessing the value of innovative therapies and illustrating the importance and mechanics in healthcare decision-making to other stakeholders. Innovators such as pharmaceutical companies can reference the GCEA value elements in crafting their value demonstration strategies, require modeling partners to apply the framework, and ensure that the necessary data inputs are gathered through clinical trials or real-world studies. Payers and regulatory bodies can work with health economists and pharmaceutical companies to design and refine the appropriate guidelines for the application of GCEA through real-world coverage and reimbursement decisions.

By taking steps to adopt, refine, and validate GCEA models, the healthcare community can help drive a new era of cost-effectiveness analysis—one that moves beyond the limitations of traditional CEA and better serves patients and society, as well as better directing the resources of the innovators who shape our therapeutic future. We have early signs of impact from (1) the increasing number of GCEA studies, and (2) conference discussions. But, given that the GCEA framework was officially published in 2024, no empirical studies have yet measured impact.

The time has come to broaden our perspective on value. Let’s seize the opportunity to make cost-effectiveness analyses more comprehensive, equitable, and aligned with the realities of today’s health ecosystem.