The Increasingly Complex Fourth Hurdle for Pharmaceuticals

Abstract

There are three known criteria that underlie drug reimbursement decisions: therapeutic value, cost effectiveness and burden of disease. However, evidence from recent reimbursement decisions in several jurisdictions points to residual unexplained variables, one of which may be budget impact. An economic rationale for carrying out budget impact analyses is opportunity cost, measured by the economic benefits foregone by using resources in one way rather than another. Under certain assumptions, cost-effectiveness analysis accounts for opportunity cost while conveying to the decision maker the price of maximising health gains, subject to a budget constraint. However, the underlying assumptions are implausible, particularly in the context of pharmaceutical care. Although drugs that are cost effective may lead to unambiguous health gains among patient groups for whom the drugs are indicated, the opportunity costs could conceivably lead to a reduction in aggregate health gains, or failure to meet different kinds of equity considerations. The pertinent policy question is where to find the resources to fund new innovations, such as cost-effective pharmaceuticals, or drugs targeting severe diseases. It may be a matter of redeployment of resources across healthcare sectors, cancelling the funding of (older) pharmaceuticals that are less cost effective, or delisting drugs that are cost effective but target less burdensome conditions.

Evaluation on the first 2 years of the positive list system in South Korea

“…In general, however, decision-makers do not use explicit threshold ICER values because they wish to take into account all relevant considerations as well as cost-effectiveness [25,26]. In addition, without sufficient justification for increased efficiency, the use of a single threshold value could increase pharmaceutical spending [27,28]. HIRA decided not to set a threshold value, but to consider per capita GDP [29] as a reference value and make flexible judgments based on disease severity, societal burden, quality of life, and the innovative nature of submissions.…”

“…In addition, assessments of cost-effectiveness and budget impact might have produces contradictory information for decision makers. For example, CEA may indicate an efficient technology but budget impact analysis (BIA) results indicate that it may not be affordable [28], and as yet, there is no scientific guidance as to how to resolve this dilemma [30]. Under the current PLS, these two factors will maintain their importance as decision criteria, and thus, HIRA attempts to balance potentially contradictory information by considering the nature of the drug and of the disease.…”

Initial effects of a reimbursement restriction to improve the cost-effectiveness of antihypertensive treatment

“…The objective is to make the most efficient use of resources in line with economic theory to cancel funding for pharmaceuticals that are no longer seen as cost-effective, and transferring the resources released to fund technologies including new drugs that enhance the level of health gain efficiently [17]. The TLV has divided all existing drugs into 49 groups based on their Anatomical Therapeutic Chemical (ATC) classification [13,15,16].…”

A systematic review of coverage decision-making on health technologies—Evidence from the real world

“…Accounting for criteria such as burden of disease and availability of treatment alternatives, three studies identified that NICE's willingness to pay is a little higher than suggested [25][26][27]. Dakin et al demonstrated that differentiation is required between unrestricted and restricted coverage, which depended on the number of randomized controlled trials, systematic reviews, the timing of the decision and the presence of a patient group submission [25,28]. Jena and Philipson showed that, besides costeffectiveness, the probability of a positive recommendation was influenced by the type of technology [27].…”