Appendix A -- Value of Survival Gains in Chronic Myeloid Leukemia

APPENDIX A

Methodological Framework: Value of Survival Gains

An economic model developed by Becker et al¹ was employed to calculate the social value of survival gains derived from first- and second-line tyrosine kinase inhibitor (TKI) therapy. This economic model calculates patients’ willingness to pay for longevity gains, accounting for discrete (rather than marginal) increases in survival probabilities. Adapting this methodology to the present study, the utility of chronic myeloid leukemia (CML) patients was calculated given the survival curve resulting from TKI treatment and the average income level among CML patients.

Patient income was estimated using the 2005 and 2006 Medical Expenditure Panels Study. Next, the amount of additional annual income necessary for patients to achieve the same level of utility given the counterfactual survival curve in the absence of the estimated TKI effect was calculated. This annual payment was interpreted to be the annual value to a CML patient of an increase in the survival curve associated with TKI treatment.

The present value of annual survival gains was calculated to produce an estimate of the per-patient lifetime value of survival gains derived from TKI treatment. The lifetime value for individual CML patients was summed across all individuals in a CML cohort, and then summed with discounted lifetime values across all present and future cohorts to determine the total social value of survival gains associated with TKI treatment. The estimated social value of TKIs to future cohorts was discounted at 3% per annum, via a method with precedents in the literature.²

1. Becker G, Murphy K, Philipson T. The value of life near its end and terminal care. NBER Working Paper No. 13333. 2007.
2. Philipson TJ, Jena AB. Who benefits from new medical tech- nologies? estimates of consumer and producer urpluses for HIV/AIDS drugs. Forum Health Econ Pol. 2006;9(2).