Darius Lakdawalla

University of Southern California, Los Ángeles, California, United States

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Publications (148)509.78 Total impact

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    ABSTRACT: Medical innovation has generated significant gains in health over the past decades, but these advances have been accompanied by rapid growth in healthcare spending. Faced with a growing number of high-cost but high-impact innovations, some have argued to constrain prices for new therapies – especially through global caps on pharmaceutical spending and limits on prices for individual drugs. We show that applying this threshold to past innovations would have limited access to many highly valuable drugs such as statins and anti-retrovirals. We also argue that budget caps violate several important principles of health policy. First, budget caps treat healthcare spending as a consumption good, like going to a movie or buying a meal. However, healthcare spending should be viewed as an investment, whose benefits accrue over many years – much like spending on education. Second, budgetary cost is a poor indicator of value, thereby distorting coverage decisions. Third, affordability arguments often use a short-term horizon, thereby missing that long-term health is society’s ultimate goal. Fourth, assessments of benefit should incorporate not just the immediate clinical benefit to patients, but also long-term health improvements, cost savings, and increased productivity. Fifth, global budget caps arbitrarily anchor spending on the status quo, thereby setting too stringent a threshold for socially-desirable innovation. In sum, a solitary focus on short-term costs can be detrimental to population health in the long-run. When medical treatment decisions are properly viewed as investments, budget caps are not the answer; rather, we need to find mechanisms to encourage spending decisions based on long-term value. Only then can we generate health returns to societal investments, while also encouraging the new research and development necessary to extend the gains of recent decades.
    No preview · Article · Jan 2016
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    ABSTRACT: Objective: It is unclear how well different outcome measures in randomized controlled trials (RCTs) perform in predicting real-world cancer survival. We assess the ability of RCT overall survival (OS) and surrogate endpoints - progression-free survival (PFS) and time to progression (TTP) - to predict real-world OS across five cancers. Methods: We identified 20 treatments and 31 indications for breast, colorectal, lung, ovarian, and pancreatic cancer that had a phase III RCT reporting median OS and median PFS or TTP. Median real-world OS was determined using a Kaplan-Meier estimator applied to patients in the Surveillance and Epidemiology End Results (SEER)-Medicare database (1991-2010). Performance of RCT OS and PFS/TTP in predicting real-world OS was measured using t-tests, median absolute prediction error, and R-squared from linear regressions. Results: Among 72,600 SEER-Medicare patients similar to RCT participants, median survival was 5.9 months for trial surrogates, 14.1 months for trial OS, and 13.4 months for real-world OS. For this sample, regression models using clinical trial OS and trial surrogates as independent variables predicted real-world OS significantly better than models using surrogates alone (P=0.026). Among all real-world patients using sample treatments (N=309,182), however, adding trial OS did not improve predictive power over predictions based on surrogates alone (P=0.194). Results were qualitatively similar using median absolute prediction error and R-squared metrics. Conclusions: Among the five tumor types investigated, trial OS and surrogates were each independently valuable in predicting real-world OS outcomes for patients similar to trial participants. In broader real-world populations, however, trial OS added little incremental value over surrogates alone.
    No preview · Article · Jan 2016 · Current Medical Research and Opinion
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    ABSTRACT: Medication adherence is increasingly being considered as a measure for performance-based reimbursement contracts in healthcare systems. However, the association between health outcomes and adherence at the plan level is unknown. Retrospective analysis of medical and pharmacy claims from a large private sector claims database from 2000 to 2009. We compared plan-level measures of medication adherence and health outcomes for patients with diabetes and congestive heart failure (CHF). Plan performance was based on average rates of disease complications. Medication adherence was calculated as the percent of patients having 80% of days covered for medications treating diabetes or CHF. Both adherence and outcomes were adjusted for patient differences using multivariate regression. Plans were stratified into low, moderate, and high adherence, based on adherence in the bottom quartile, middle 2 quartiles, and top quartile, respectively. Average adherence varied significantly across plans. Plans with low adherence to diabetes medications had adjusted rates of uncontrolled diabetes admissions of 13.2 per 1000 patients, compared with 11.2 in moderate adherence plans and 8.3 in high adherence plans (P < .001). The adjusted rate of CHF-related hospitalization was 15.3% in low adherence plans, compared with 12.4% in moderate adherence plans and 12.2% in high adherence plans (P < .001). These patterns were consistent across different types of complications for both diabetes and CHF. Private health plans vary considerably in average adherence to medications treating chronic diseases. Plans with higher average adherence had lower rates of disease complications, suggesting that medication adherence measures are potentially useful tools for improving the performance of health plans.
    No preview · Article · Aug 2015 · The American journal of managed care
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    ABSTRACT: This study aims to analyze the impacts of a range of clinical evidence generation scenarios associated with comparative effectiveness research (CER) on pharmaceutical innovation. We used the Global Pharmaceutical Policy Model to project the effect of changes in pharmaceutical producer costs, revenues and timings on drug innovation and health for the age 55+ populations in the USA and Europe through year 2060 using three clinical scenarios. Changes in producer incentives from widespread CER evidence generation and use had varied but often large predicted impacts on simulated outcomes in 2060. Effect on the number of new drug introductions ranged from a 81.1% reduction to a 45.5% increase, and the effect on population-level life expectancy ranged from a 15.6% reduction to a 11.4% increase compared to baseline estimates. The uncertainty surrounding the consequences of increased clinical evidence generation and use on innovation calls for a carefully measured approach to CER implementation, balancing near-term benefits to spending and health with long-term implications for innovation.
    No preview · Article · May 2015 · Journal of Comparative Effectiveness Research
  • A Shrestha · A Eldar-Lissai · Y Wu · K Batt · S Krishnan · D Lakdawalla

    No preview · Article · May 2015 · Value in Health
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    ABSTRACT: Technology drives both health care spending and health improvement. Yet policy makers rarely see measures of cost growth that account for both effects. To fill this gap, we present the quality-adjusted cost of care, which illustrates cost growth net of growth in the value of health improvements, measured as survival gains multiplied by the value of survival. We applied the quality-adjusted cost of care to two cases. For colorectal cancer, drug cost per patient increased by $34,493 between 1998 and 2005 as a result of new drug launches, but value from offsetting health improvements netted a modest $1,377 increase in quality-adjusted cost of care. For multiple myeloma, new therapies increased treatment cost by $72,937 between 2004 and 2009, but offsetting health benefits lowered overall quality-adjusted cost of care by $67,863. However, patients with multiple myeloma on established first-line therapies saw costs rise without corresponding benefits. All three examples document rapid cost growth, but they provide starkly different answers to the question of whether society got what it paid for. Project HOPE—The People-to-People Health Foundation, Inc.
    No preview · Article · Apr 2015 · Health Affairs
  • W. Stevens · Y. Sanchez · R. Brookmeyer · D. Lakdawalla · S. Marx · T. Juday

    No preview · Article · Apr 2015 · Journal of Hepatology
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    ABSTRACT: Surrogate end points may be used as proxy for more robust clinical end points. One prominent example is the use of progression-free survival (PFS) as a surrogate for overall survival (OS) in trials for oncologic treatments. Decisions based on surrogate end points may expedite regulatory approval but may not accurately reflect drug efficacy. Payers and clinicians must balance the potential benefits of earlier treatment access based on surrogate end points against the risks of clinical uncertainty. To present a framework for evaluating the expected net benefit or cost of providing early access to new treatments on the basis of evidence of PFS benefits before OS results are available, using non-small-cell lung cancer (NSCLC) as an example. A probabilistic decision model was used to estimate expected incremental social value of the decision to grant access to a new treatment on the basis of PFS evidence. The model analyzed a hypothetical population of patients with NSCLC who could be treated during the period between PFS and OS evidence publication. Estimates for delay in publication of OS evidence following publication of PFS evidence, expected OS benefit given PFS benefit, incremental cost of new treatment, and other parameters were drawn from the literature on treatment of NSCLC. Incremental social value of early access for each additional patient per month (in 2014 US dollars). For "medium-value" model parameters, early reimbursement of drugs with any PFS benefit yields an incremental social cost of more than $170 000 per newly treated patient per month. In contrast, granting early access on the basis of PFS benefit between 1 and 3.5 months produces more than $73 000 in incremental social value. Across the full range of model parameter values, granting access for drugs with PFS benefit between 3 and 3.5 months is robustly beneficial, generating incremental social value ranging from $38 000 to more than $1 million per newly treated patient per month, whereas access for all drugs with any PFS benefit is usually not beneficial. The value of providing access to new treatments on the basis of surrogate end points, and PFS in particular, likely varies considerably. Payers and clinicians should carefully consider how to use PFS data in balancing potential benefits against costs in each particular disease.
    No preview · Article · Mar 2015
  • Jacquelyn W. Chou · Darius N. Lakdawalla · Jacqueline Vanderpuye-Orgle
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    ABSTRACT: The BRICS countries (Brazil, Russia, India, China, and South Africa) have experienced tremendous economic and health gains in recent decades. Two of the major health challenges faced by the BRICS and other low and middle income countries are decreasing inequity in health outcomes and increasing affordability of health insurance. One fiscally sustainable option for the BRICS governments is a public subsidy system for private health insurance plans. This essay lays out the potential applicability and impacts of public subsidies for private health insurance plans, as well as opportunities and challenges for implementation, in the BRICS countries. Overall, providing public subsidies rather than health insurance would enable the BRICS governments to avoid the open-ended financial liabilities that have plagued advanced economies, while still expanding access to health insurance and encouraging the develoment of a robust private health insurance market. We conclude by suggesting an array of pilot programs that could serve as the seeds for publicly subsidized health insurance schemes within the BRICS markets.
    No preview · Article · Mar 2015 · Forum for Health Economics & Policy
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    ABSTRACT: There have been significant improvements in both treatment and screening efforts for many types of cancer over the past decade. However, the effect of these advancements on the survival of cancer patients is unknown, and many question the value of both new treatments and screening efforts. This study uses a retrospective analysis of SEER Registry data to quantify reductions in mortality rates for cancer patients diagnosed between 1997 and 2007. Using variation in trends in mortality rates by stage of diagnosis across cancer types, we use logistic regression to decompose separate survival gains into those attributable to advances in treatment versus advances in detection. We estimate the gains in survival due to gains in both treatment and detection overall and separately for 15 of the most common cancer types. We estimate that 3-year cancer-related mortality of cancer patients fell 16.7% from 1997 to 2007. Overall, advances in treatment reduced mortality rates by approximately 12.2% while advances in early detection reduced mortality rates by 4.5%. The relative importance of treatment and detection varied across cancer types. Improvements in detection were most important for thyroid, prostate and kidney cancer. Improvements in treatment were most important for non-Hodgkins lymphoma, lung cancer and myeloma. Both improved treatment options and better early detection have led to significant survival gains for cancer patients diagnosed from 1997 to 2007, generating considerable social value over this time period.
    No preview · Article · Jan 2015
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    ABSTRACT: To explore the relationship between commercial health care prices and Medicare spending/utilization across U.S. regions. Claims from large employers and Medicare Parts A/B/D over 2007-2009. We compared prices paid by commercial health plans to Medicare spending and utilization, adjusted for beneficiary health and the cost of care, across 301 hospital referral regions. A 10 percent lower commercial price (around the average level) is associated with 3.0 percent higher Medicare spending per member per year, and 4.3 percent more specialist visits (p < .01). Commercial health care prices are negatively associated with Medicare spending across regions. Providers may respond to low commercial prices by shifting service volume into Medicare. Further investigation is needed to establish causality. © Health Research and Educational Trust.
    No preview · Article · Nov 2014 · Health Services Research

  • No preview · Article · Nov 2014 · Value in Health
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    ABSTRACT: Background: COPD is a leading cause of death and disability in the United States. Patients with COPD are at a high risk of nutritional deficiency, which is associated with declines in respiratory function, lean body mass and strength, and immune function. Although oral nutritional supplementation (ONS) has been associated with improvements in some of these domains, the impact of hospital ONS on readmission risk, length of stay (LOS), and cost among hospitalized patients is unknown. Methods: Using the Premier Research Database, we first identified Medicare patients aged ≥ 65 years hospitalized with a primary diagnosis of COPD. We then identified hospitalizations in which ONS was provided, and used propensity-score matching to compare LOS, hospitalization cost, and 30-day readmission rates in a one-to-one matched sample of ONS and non-ONS hospitalizations. To further address selection bias among patients prescribed ONS, we also used instrumental variables analysis to study the association of ONS with study outcomes. Model covariates included patient and provider characteristics and a time trend. Results: Out of 10,322 ONS hospitalizations and 368,097 non-ONS hospitalizations, a one-to-one matched sample was created (N = 14,326). In unadjusted comparisons in the matched sample, ONS use was associated with longer LOS (8.7 days vs 6.9 days, P < .0001), higher hospitalization cost ($14,223 vs $9,340, P < .0001), and lower readmission rates (24.8% vs 26.6%, P = .0116). However, in instrumental variables analysis, ONS use was associated with a 1.9-day (21.5%) decrease in LOS, from 8.8 to 6.9 days (P < .01); a hospitalization cost reduction of $1,570 (12.5%), from $12,523 to $10,953 (P < .01); and a 13.1% decrease in probability of 30-day readmission, from 0.34 to 0.29 (P < .01). Conclusions: ONS may be associated with reduced LOS, hospitalization cost, and readmission risk in hospitalized Medicare patients with COPD.
    No preview · Article · Oct 2014 · Chest
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    ABSTRACT: Disease-associated malnutrition (DAM) is a well-recognized problem in many countries, but the extent of its burden on the Chinese population is unclear. This article reports the results of a burden-of-illness study on DAM in 15 diseases in China. Using data from the World Health Organization (WHO), the China Health and Nutrition Survey, and the published literature, mortality and disability-adjusted life years (DALYs) lost because of DAM were calculated; a financial value of this burden was calculated following WHO guidelines. DALYs lost annually to DAM in China varied across diseases, from a low of 2248 in malaria to a high of 1 315 276 in chronic obstructive pulmonary disease. The total burden was 6.1 million DALYs, for an economic burden of US$66 billion (Chinese ¥ 447 billion) annually. This burden is sufficiently large to warrant immediate attention from public health officials and medical providers, especially given that low-cost and effective interventions are available.
    No preview · Article · Oct 2014 · Asia-Pacific Journal of Public Health
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    ABSTRACT: Background: The burden imposed by disease-associated malnutrition (DAM) on patients and the healthcare system in food-abundant industrialized countries is often underappreciated. This study measured the economic burden of community-based DAM in the United States. Methods: The burden of DAM was quantified in terms of direct medical costs, quality-adjusted life years lost, and mortality across 8 diseases (breast cancer, chronic obstructive pulmonary disease [COPD], colorectal cancer [CRC], coronary heart disease [CHD], dementia, depression, musculoskeletal disorders, and stroke). To estimate the total economic burden, the morbidity and mortality burden was monetized using a standard value of a life year and combined with direct medical costs of treating DAM. Disease-specific prevalence and malnutrition estimates were taken from the National Health Interview Survey and the National Health and Nutrition Examination Survey. Deaths by disease were taken from the Center for Disease Control and Prevention. Estimates of costs and morbidity were taken from the literature. Results: The annual burden of DAM across the 8 diseases was $156.7 billion, or $508 per U.S. resident. Nearly 80% of this burden was derived from morbidity associated with DAM; around 16% derived from mortality and the remainder from direct medical costs of treating DAM. The total burden was highest in COPD and depression, while the burden per malnourished individual was highest in CRC and CHD. Conclusion: DAM exacts a large burden on American society. Therefore, improved diagnosis and management of community-based DAM to alleviate this burden are needed.
    Full-text · Article · Sep 2014 · Journal of Parenteral and Enteral Nutrition
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    ABSTRACT: Background: Nutrition deficiency is common among hospitalized children. Although oral nutrition supplements (ONS) may improve malnutrition in this population, the benefits and healthcare costs associated with their use have not yet been fully explored. The objective of this study was to assess the effect of ONS use on inpatient length of stay (LOS) and episode cost in hospitalized children. Materials and methods: Retrospective analysis of 557,348 hospitalizations of children aged 2-8 years in the Premier Research Database. The effect of ONS use on LOS and episode cost in a propensity score- matched sample was estimated in analyses with and without the use of instrumental variables (IVs) to reduce confounding from unobserved variables. Results: ONS were prescribed in 6066 of 557,348 inpatient episodes (1.09%). In IV analysis, using a matched sample of 11,031 episodes, hospitalizations with ONS use had 14.8% shorter LOS (6.4 vs 7.5 days; 1.1 days [95% CI, 0.2-2.4]). Hospitalizations with ONS use had 9.7% lower cost ($16,552 vs $18,320; $1768 [95% CI, $1924-$1612]). Conclusions: ONS use was associated with lower LOS and episode cost among pediatric inpatients. ONS use in hospitalized pediatric patients may provide a cost-effective, evidence-based approach to improving pediatric hospital care.
    No preview · Article · Sep 2014 · Journal of Parenteral and Enteral Nutrition

  • No preview · Article · Sep 2014 · European geriatric medicine
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    ABSTRACT: We analyzed the effect of oral nutritional supplement (ONS) use on 30-day readmission rates, length of stay (LOS), and episode costs in hospitalized Medicare patients (≥65), and subsets of patients diagnosed with acute myocardial infarction (AMI), congestive heart failure (CHF) or pneumonia (PNA). Propensity-score matching and instrumental variables were used to analyze ONS and non-ONS episodes from the Premier Research Database (2000–2010). ONS use was associated with reductions in probability of 30-day readmission by 12.0% in AMI and 10.1% in CHF. LOS decreases of 10.9% in AMI, 14.2% in CHF, and 8.5% in PNA were associated with ONS, as were decreases in episode costs in AMI, CHF and PNA of 5.1%, 7.8% and 10.6%, respectively. The effect on LOS and episode cost was greatest for the Any Diagnosis population, with decreases of 16.0% and 15.8%, respectively. ONS use in hospitalized Medicare patients ≥65 is associated with improved outcomes and decreased healthcare costs, and is therefore relevant to providers seeking an inexpensive, evidence-based approach for meeting Affordable Care Act quality targets.
    No preview · Article · Sep 2014
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    ABSTRACT: Many state Medicaid programs have implemented policies designed to reduce spending on prescription drugs by restricting access to branded products. For patients with major depressive disorder, formulary restrictions could severely limit access to antidepressant therapies and disrupt care. We linked data on patient outcomes and spending from 24 state Medicaid programs to information on formulary restrictions from 2001 to 2008. Outcomes included frequency of MDD-related hospitalizations and ER visits per patient and total healthcare spending. We estimated the effect of the policies on patient outcomes and spending using a difference-and-difference approach. We found that restricting access to antidepressants increased the probability of an MDD-related hospitalization by 1.7 percentage points (16.6%). Furthermore, we found no evidence that these restrictions resulted in any net savings for Medicaid.
    No preview · Article · Sep 2014
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    ABSTRACT: Objective To demonstrate how expanding services covered by a “bundled payment” can also expand variation in the costs of treating patients under the bundle, using the Medicare dialysis program as an example.Data Sources/Study SettingObservational claims-based study of 197,332 Medicare hemodialysis beneficiaries enrolled for at least one quarter during 2006–2008.Study DesignWe estimated how resource utilization (all health services, dialysis-related services, and medications) changes with intensity of secondary hyperparathyroidism (sHPT) treatment.Data Extraction Methods Using Medicare claims, a patient-quarter level dataset was constructed, including a measure of sHPT treatment intensity.Principal FindingsUnder the existing, narrow dialysis bundle, utilization of covered services is relatively constant across treatment intensity groups; under a broader bundle, it rises more rapidly with treatment intensity.Conclusions The broader Medicare dialysis bundle reimburses providers uniformly, even though patients treated more intensively for sHPT cost more to treat. Absent any payment adjustments or efforts to ensure quality, this flat payment schedule may encourage providers to avoid high-intensity patients or reduce their treatment intensity. The first incentive harms efficiency. The second may improve or worsen efficiency, depending on whether it reduces appropriate or inappropriate treatment.
    No preview · Article · Jul 2014 · Health Services Research

Publication Stats

3k Citations
509.78 Total Impact Points


  • 2009-2016
    • University of Southern California
      • Schaeffer Center for Health Policy and Economics
      Los Ángeles, California, United States
  • 2010-2015
    • University of California, Los Angeles
      Los Ángeles, California, United States
  • 2014
    • Harvard Medical School
      Boston, Massachusetts, United States
  • 2012
    • University of Chicago
      • Department of Economics
      Chicago, Illinois, United States
  • 2004-2012
    • Stanford University
      Palo Alto, California, United States
    • Federal Reserve Bank of New York
      New York City, New York, United States
  • 1998-2012
    • RAND Corporation
      Santa Monica, California, United States
  • 2004-2007
    • The National Bureau of Economic Research
      Cambridge, Massachusetts, United States
  • 2003
    • Concordia University–Ann Arbor
      Ann Arbor, Michigan, United States