On the role of cost-effectiveness thresholds in healthcare priority setting

Abstract

In the past few years, empirical estimates of the marginal cost at which health care produces a quality-adjusted life year (QALY, k) have begun to emerge. In theory, these estimates could be used as cost-effectiveness thresholds by health-maximizing decision makers, but prioritization decisions in practice often include other considerations than just efficiency. Pharmaceutical reimbursement in Sweden is one such example, where the reimbursement authority (TLV) uses a threshold range to give priority to disease severity and rarity. In this paper, we argue that estimates of k should not be used to inform threshold ranges. Instead, they are better used directly in health technology assessment (HTA) to quantify how much health is forgone when a new technology is funded in place of other healthcare services. Using a recent decision made by TLV as a case, we show that an estimate of k for Sweden implies that reimbursement meant forgoing 8.6 QALYs for every QALY that was gained. Reporting cost-effectiveness evidence as QALYs forgone per QALY gained has several advantages: (i) it frames the decision as assigning an equity weight to QALYs gained, which is more transparent about the trade-off between equity and efficiency than determining a monetary cost per QALY threshold, (ii) it makes it less likely that decision makers neglect taking the opportunity cost of reimbursement into account by making it explicit, and (iii) it helps communicate the reason for sometimes denying reimbursement in a way that might be less objectionable to the public than current practice.

Empirical Estimates of the Marginal Cost of Health Produced by a Healthcare System: Methodological Considerations from Country-Level Estimates

“…An estimate of the marginal cost per unit of health produced by the healthcare system simply allows decision makers to articulate the expected net health benefit from publicly funding new health technologies or interventions. Presentation of net health benefit is intuitive, can be expressed at the population level to communicate health magnitudes and budget impact, and can provide a transparent method to justify funding decisions, particularly for those that result in a net health loss that are accepted based on other criteria [ 31 ]. Analyses by disease areas may be further useful in this scenario as they can provide decision makers with an indication of where the opportunity costs may fall [ 1 ], thus highlighting when net health losses also fall on patient groups with similar equity considerations.…”

“…An empirical estimate of the marginal cost per unit of health produced by the healthcare system can provide a key method to inform, justify and legitimise funding decisions. Such estimates make trade-offs between population health maximisation and health equity explicit by quantifying the expected population health effects of decisions to fund healthcare for particular patient groups [ 31 ]. Estimates of the marginal cost per unit of health also inform the monitoring of health system efficiency and the funding of research [ 34 ], implementation processes and disinvestment activities.…”

Is a larger patient benefit always better in healthcare priority setting?

“…Hence, we will assume that the considerations of cost-effectiveness and patient benefit should be balanced against equity considerations. Equity concerns can be represented by accepting different cost-effectiveness thresholds for different severity levels (Siverskog 2021). When these cost-effectiveness thresholds are higher than the marginal productivity of the healthcare system (Claxton 2015, Ednay et al 2018, Vallejo-Torres et al 2018, Sandman & Liliemark 2018, we are willing to reduce the efficiency of the system to achieve a more equitable system.…”

Supply-Side Cost-Effectiveness Thresholds: Questions for Evidence-Based Policy

“…Little attention has been given to the theoretical basis for single thresholds compared with the use of multiple thresholds or a threshold range, despite the latter approach being adopted in some contexts, including appraisals by NICE and the Institute for Clinical and Economic Review [ 2 ]. Some researchers have recently argued that such estimates should be used in appraisals to represent opportunity costs, but not to define a policy threshold range, because such threshold ranges exist in recognition of a variety of other criteria beyond efficiency [ 58 ].…”