Do Profit Margins of Pharmaceuticals Influence Reimbursement Decisions? A Discrete Choice Experiment Among Dutch Healthcare Decision Makers

The role of budget impact and its relationship with cost-effectiveness in reimbursement decisions on health technologies in the Netherlands

Health authorities using cost-effectiveness analysis (CEA) for informing reimbursement decisions on health technologies increasingly require economic evaluations encompassing both CEA and budget impact analysis (BIA). Good Research Practices advocate that the economic and clinical assumptions underlying these analyses are aligned and consistently applied. Nonetheless, CEAs and BIAs often are stand-alone analyses used in different stages of the decision-making process. This article used policy reports and Ministerial correspondence to discuss and elucidate the role of budget impact and its relationship with cost-effectiveness in reimbursement decisions in the Netherlands. The results indicate that CEAs and BIAs are both considered important for informing these decisions. While the requirements regarding CEAs-and application of the associated decision rule-are consistent across the different stages, the same does not hold for BIAs. Importantly, the definition of and evidence on budget impact differs between stages. Some important aspects (e.g. substitution and saving effects) typically are considered in the assessment and appraisal stages but are seemingly not considered in price negotiations and the final reimbursement decision. Further research is warranted to better understand why BIAs are not aligned with CEAs (e.g. in terms of underlying assumptions), vary in form and importance between stages, and do not have a clear relationship with the results of CEAs in the decision-making framework. Improving the understanding of the circumstances under which decision-makers attach a relatively larger or smaller weight to (different aspects of) budget impact may contribute to increasing the transparency, consistency, and optimality of reimbursement decisions in the Netherlands.

The Value of Health in a Cost-Effectiveness Analysis: Theory Versus Practice

A cost-effectiveness analysis has become an important method to inform allocation decisions and reimbursement of new technologies in healthcare. A cost-effectiveness analysis requires a threshold to which the cost effectiveness of a new intervention can be compared. In principle, the threshold ought to reflect opportunity costs of reimbursing a new technology. In this paper, we contrast the practical use of this threshold within a CEA with its theoretical underpinnings. We argue that several assumptions behind the theoretical models underlying this threshold are violated in practice. This implies that a simple application of the decision rules of CEA using a single estimate of the threshold does not necessarily improve population health or societal welfare. Conceptual differences regarding the interpretation of the threshold, widely varying estimates of its value, and an inconsistent use within and outside the healthcare sector are important challenges in informing policy makers on optimal reimbursement decision and setting appropriate healthcare budgets.

Do Health Technology Assessment organisations consider manufacturers' costs in relation to drug price? A study of reimbursement reports

Introduction

Drug reimbursement decisions are often made based on a price set by the manufacturer. In some cases, this price leads to public and scientific debates about whether its level can be justified in relation to its costs, including those related to research and development (R&D) and manufacturing. Such considerations could enter the decision process in collectively financed health care systems. This paper investigates whether manufacturers’ costs in relation to drug prices, or profit margins, are explicitly mentioned and considered by health technology assessment (HTA) organisations.

Method

An analysis of reimbursement reports for cancer drugs was performed. All relevant Dutch HTA-reports, published between 2017 and 2019, were selected and matched with HTA-reports from three other jurisdictions (England, Canada, Australia). Information was extracted. Additionally, reimbursement reports for three cases of expensive non-oncolytic orphan drugs prominent in pricing debates in the Netherlands were investigated in depth to examine consideration of profit margins.

Results

A total of 66 HTA-reports concerning 15 cancer drugs were included. None of these reports contained information on manufacturer’s costs or profit margins. Some reports contained general considerations of the HTA organisation which related prices to manufacturers’ costs: six contained a statement on the lack of price setting transparency, one mentioned recouping R&D costs as a potential argument to justify a high price. For the case studies, 21 HTA-reports were selected. One contained a cost-based price justification provided by the manufacturer. None of the other reports contained information on manufacturer’s costs or profit margins. Six reports contained a discussion about lack of transparency. Reports from two jurisdictions contained invitations to justify high prices by demonstrating high costs.

Conclusion

Despite the attention given to manufacturers’ costs in relation to price in public debates and in the literature, this issue does not seem to get explicit systematic consideration in the reimbursement reports of expensive drugs.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12962-022-00383-y.