The increasingly complex fourth hurdle for pharmaceuticals

Accuracy of budget impact estimations and impact on patient access: a hepatitis C case study

BACKGROUND

High budget impact (BI) estimates of new drugs limit access to patients due to concerns regarding affordability and displacement effects. The accuracy and methodological quality of BI analyses are often low, potentially mis-informing reimbursement decision making. Using hepatitis C as a case study, we aim to quantify the accuracy of the BI predictions used in Dutch reimbursement decision-making and to characterize the influence of market-dynamics on actual BI.

METHODS

We selected hepatitis C direct-acting antivirals (DAAs) that were introduced in the Netherlands between January 2014 and March 2018. Dutch National Health Care Institute (ZIN) BI estimates were derived from the reimbursement dossiers. Actual Dutch BI data were provided by FarmInform. BI prediction accuracy was assessed by comparing the ZIN BI estimates with the actual BI data.

RESULTS

Actual BI, from 1 Jan 2014 to 1 March 2018, was €248 million whilst the BI estimates ranged from €388-€510 million. The latter figure represents the estimated BI for the reimbursement scenario that was adopted, implying a €275 million overestimation. Absent incorporation of timing of regulatory decisions and inadequate correction for the introduction of new products were main drivers of BI overestimation, as well as uncertainty regarding the patient population size and the impact of the final reimbursement decision.

DISCUSSION

BI in reimbursement dossiers largely overestimated actual BI of hepatitis C DAAs. When BI analysis is performed according to existing guidelines, the resulting more accurate BI estimates may lead to better informed reimbursement decisions.

PHARMACEUTICAL BENEFITS ADVISORY COMMITTEE RECOMMENDATIONS IN AUSTRALIA

Objectives: The aim of this study was to examine submissions made to the Pharmaceutical Benefits Advisory Committee (PBAC) and assess whether the predicted financial impact was associated with a recommendation. The second objective was to assess whether the financial and utilization estimates for listing the proposed medicine were reliable.

Methods: Data were extracted from public summary documents of major submissions considered by the PBAC from 2012 to 2014. Information collected included whether submissions were accepted, rejected, or deferred; estimated use; and financial impact. For those submissions that were recommended in 2012 and listed on the Pharmaceutical Benefits Scheme (PBS) by January 2014, a comparison was made between predicted and actual use and cost in 2014, based on PBS utilization.

Results: In 2012 to 2014, the PBAC considered 142 unique major submissions; of those, 65 were recommended for listing. A higher financial cost to the government was a statistically significant factor in predicting rejection (p = .004 for cost > AUD 30 million Australian dollars [20.7 million Euros] compared with cost-saving). Of the submissions that were recommended in 2012 and listed by 2014, the actual use was higher than predicted for 5/19 medications. The estimated cost was outside the predicted bracket of cost for 10/19 medications, with 8/19 medications having threefold underestimated expenditure, and 2/19 items having lower than predicted expenditure.

Conclusions: This study highlights that the predicted financial impact of a medication to the PBS budget is associated with a PBAC recommendation and also highlights that predicted use may not reflect actual prescribing practices.

Health Economics as Rhetoric: The Limited Impact of Health Economics on Funding Decisions in Four European Countries

BACKGROUND

A response to the challenge of high-cost treatments in health care has been economic evaluation. Cost-effectiveness analysis presented as cost per quality-adjusted life-years gained has been controversial, raising heated support and opposition.

OBJECTIVES

To assess the impact of economic evaluation in decisions on what to fund in four European countries and discuss the implications of our findings.

METHODS

We used a protocol to review the key features of the application of economic evaluation in reimbursement decision making in England, Germany, the Netherlands, and Sweden, reporting country-specific highlights.

RESULTS

Although the institutions and processes vary by country, health economic evaluation has had limited impact on restricting access of controversial high-cost drugs. Even in those countries that have gone the furthest, ways have been found to avoid refusing to fund high-cost drugs for particular diseases including cancer, multiple sclerosis, and orphan diseases. Economic evaluation may, however, have helped some countries to negotiate price reductions for some drugs. It has also extended to the discussion of clinical effectiveness to include cost.

CONCLUSIONS

The differences in approaches but similarities in outcomes suggest that health economic evaluation be viewed largely as rhetoric (in D.N. McCloskey's terms in The Rhetoric of Economics, 1985). This is not to imply that economics had no impact: rather that it usually contributed to the discourse in ways that differed by country. The reasons for this no doubt vary by perspective, from political science to ethics. Economic evaluation may have less to do with rationing or denial of medical treatments than to do with expanding the discourse used to discuss such issues.

Orphan drugs expenditure in the Netherlands in the period 2006-2012

Background

The relatively low budget impact of orphan drugs is often used as an argument in reimbursement decisions. However, overall, the budget impact of orphan drugs can still be substantial. In this study, we assess the uptake and budget impact of orphan drugs in the Netherlands.

Methods

We examined the number of orphan drugs, the number of patients and budget impact of orphan drugs in the Netherlands in the period 2006 to 2012, both for inpatient and outpatient orphan drugs. Budget impact was provided in absolute numbers and relative to total pharmaceutical spending.

Results

The number of orphan drugs and patients treated increased substantially over the period studied. Overall, budget impact increased substantially over a period of six years, both in absolute terms (326% increase) as well as relative to total pharmaceutical spending (278% increase). Growth rates decreased over time. In 2012, 17% of available drugs had an individual budget impact of more than €10 million per year.

Conclusions

Individual budget impact of orphan drugs is often limited, although exceptions exist. However, in total, the budget impact of orphan drugs is considerable and has grown substantially over the years. This could potentially influence reimbursement decisions for orphan drugs in the future.

Unravelling drug reimbursement outcomes: a comparative study of the role of pharmacoeconomic evidence in Dutch and Swedish reimbursement decision making

BACKGROUND

To sustainably manage equitable access to effective drugs, many developed countries have established a national system to determine whether drugs should be reimbursed.

OBJECTIVES

Our objectives were (i) to investigate the role of pharmacoeconomic evidence in Dutch and Swedish drug reimbursement decision making; and (ii) to determine the extent to which appraising the importance of full economic evaluations relative to other evidence is a transparent process.

DATA SOURCES

Data sources included all Dutch and Swedish drug reimbursement information published in the period January 2005 to July 2011.

METHODS

After categorising all the reimbursement applications and decisions in published data sources, we selected all dossiers-in both countries-that included a full economic evaluation (i.e. cost-effectiveness and/or cost-utility analysis) and then investigated how the evidence was appraised for its societal value.

RESULTS

In The Netherlands, only 35 % of the 118 applications on List 1B (i.e. claiming added therapeutic value) were found to include pharmacoeconomic evidence. In all cases where drugs received a 'no' decision, combined with an evaluation that they were of similar (n = 7) or added (n = 5) therapeutic value, we found that the pharmacoeconomic evidence had been judged insufficiently robust. We also found that in 21 % of the 'yes' decisions, combined with an evaluation of similar (n = 2) or added (n = 2) therapeutic value, the pharmacoeconomic evidence had been judged insufficiently robust. In Sweden, we found that drugs that received a 'no' decision (n = 39) had been judged either not cost effective (74 %) or not supported by sufficiently credible data (26 %). Nearly all drugs that received a 'yes' decision (n = 252) had been judged cost effective (92 %). However, of all these judgements, 53 % were based on a price comparison and 10 % on a cost-minimisation analysis; only 33 % were based on a full economic evaluation. More economic evaluations were available in Sweden than in The Netherlands (97 vs. 31, respectively), mainly due to the numerous exemptions from pharmacoeconomic evidence in The Netherlands (65 %). Dossiers for only 11 drugs included a full economic evaluation in both countries; of these, the reimbursement decisions differed for four drugs. Appraisal elements were reported only descriptively; their actual influence on the final decision remained unclear. In four dossiers, the (high) severity of the treatable disease was explicitly mentioned in both countries; three of these were identical and related to indications in cancer.

CONCLUSIONS

Both countries publish drug reimbursement information. Therapeutic value appears to be the most decisive criterion; the relative importance of full economic evaluations is more modest than would generally be expected, especially in The Netherlands. Although the assessment process is reasonably transparent, both countries could make the appraisal process more transparent by more explicitly showing the actual role of each different (societal) criterion in their decision making.

Relationship between financial impact and coverage of drugs in Australia

OBJECTIVES

The aim of this study was to estimate the relationship between the financial impact of a new drug and the recommendation for reimbursement by the Australian Pharmaceutical Benefits Advisory Committee (PBAC).

METHODS

Data in the PBAC summary database were abstracted for decisions made between July 2005 and November 2009. Financial impact-the upper bound of the values presented in the PBAC summary database-was categorized as ≤A$0, >A$0 up to A$10 million, A$10 million up to A$30 million, and >A$30 million per year. Descriptive, logistic, survival, and recursive partitioning decision analyses were used to estimate the relationship between the financial impact of a new drug indication and the recommendation for reimbursement. Multivariable analyses controlled for other clinical and economic variables, including cost per quality-adjusted life-year gained.

RESULTS

Financial impact was a significant predictor of the recommendation for reimbursement. In the logistic analysis, the odds ratios of reimbursement for drug submissions with financial impacts ≥A$10 million to ≥A$30 million or >A$0 to

CONCLUSIONS

In Australia, financial impact on the drug budget is an important determinant of whether a new drug is recommended for reimbursement when cost-effectiveness estimates and other clinical and economic variables are controlled.

Collapse

Key Words

• financial impact
• budget impact
• reimbursement
• australia
• pbac

Collapse

MESH Headings

• Advisory Committees
• Australia
• Cost-Benefit Analysis
• Insurance, Health, Reimbursement
• Insurance, Pharmaceutical Services
• National Health Programs
• Pharmaceutical Preparations/economics

Collapse

Grants Collapse

Affiliation(s)

Josephine Mauskopf RTI Health Solutions, Research Triangle Park, NC 27709, USA.
Costel Chirila
Catherine Masaquel
Kristina S Boye
Lee Bowman
Julie Birt
David Grainger

Collapse

SIMILARITIES AND DIFFERENCES BETWEEN FIVE EUROPEAN DRUG REIMBURSEMENT SYSTEMS

Objectives: The aim of our study is to compare five European drug reimbursement systems, describe similarities and differences, and obtain insight into their strengths and weaknesses and formulate policy recommendations.

Methods: We used the analytical Hutton Framework to assess in detail drug reimbursement systems in Austria, Belgium, France, the Netherlands, and Sweden. We investigated policy documents, explored literature, and conducted fifty-seven interviews with relevant stakeholders.

Results: All systems aim to balance three main objectives: system sustainability, equity and quality of care. System impact, however, is mainly assessed by drug expenditure. A national reimbursement agency evaluates reimbursement requests on a case-by-case basis. The minister has discretionary power to alter the reimbursement advice in Belgium, France, and the Netherlands. All systems make efforts to increase transparency in the decision-making process but none uses formal hierarchical reimbursement criteria nor applies a cost-effectiveness threshold value. Policies to deal with uncertainty vary: financial risk-sharing by price/volume contracts (France, Belgium) versus coverage with evidence development (Sweden, the Netherlands). Although case-by-case revisions are embedded in some systems for specific groups of drugs, systematic (group) revisions are limited.

Conclusions: As shared strengths, all systems have clear objectives reflected in reimbursement criteria and all are prepared to pay for drugs with sufficient added value. However, all systems could improve the transparency of the decision-making process; especially appraisal lacks transparency. Systems could increase the use of (systematic) revisions and could make better use of HTA (among others cost-effectiveness) to obtain value for money and ensure system sustainability.

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

OBJECTIVE

Quantitative analysis of real-world coverage decision-making offers insights into the revealed preferences of appraisal committees. Aim of this review was to structure empirical evidence of coverage decisions made in practice based on the components 'methods and evidence', 'criteria and standards', 'decision outcome' and 'processes'.

METHODS

Several electronic databases, key journals and decision committees' websites were searched for publications between 1993 and June 2011. Inclusion criteria were the analysis of past decisions and application of quantitative methods. Each study was categorized by the scope of decision-making and the components covered by the variables used in quantitative analysis.

RESULTS

Thirty-two studies were identified. Many focused on pharmaceuticals, the UK NICE or the Australian PBAC. The components were covered comprehensively, but heterogeneously. Seventy-two variables were identified of which the following were more prevalent: specifications of the decision outcome; the indications considered for appraisal, identification of incremental cost-effectiveness ratios, appropriateness of evaluation methods, type of economic or clinical evidence used for assessment, and the decision date.

CONCLUSIONS

Research was dominated by analysis of decision outcomes and appraisal criteria. Although common approaches were identified, the complexity of coverage decision-making - reflected by the heterogeneity of identified variables - will continue to challenge empirical research.

Economic evaluations of adult weight management interventions: a systematic literature review focusing on methods used for determining health impacts

BACKGROUND

One of the challenges when undertaking economic evaluations of weight management interventions is to adequately assess future health impacts. Clinical trials commonly measure impacts using surrogate outcomes, such as reductions in body mass index, and investigators need to decide how these can best be used to predict future health effects. Since obesity is associated with an increased risk of numerous chronic diseases occurring at different future time points, modelling is needed for predictions.

OBJECTIVE

To assess the methods used in economic evaluations to determine health impacts of weight management interventions and to investigate whether differences in methods affect the cost-effectiveness estimates.

METHODS

Eight databases were systematically searched. Included studies were categorized according to a decision analytic approach and effect measures incorporated.

RESULTS

A total of 44 articles were included; 21 evaluated behavioural interventions, 12 evaluated surgical procedures and 11 evaluated pharmacological compounds. Of the 27 papers that estimated future impacts, eleven used Markov modelling, seven used a decision tree, five used a mathematical application, two used patient-level simulation and the modelling method was unclear in two papers. The most common types of effects included were co-morbidity treatment costs, heath-related quality of life due to weight loss and gain in survival. Only 12 of the studies included heath-related quality of life gains due to reduced co-morbidities and only one study included productivity gains. Despite consensus that trial-based analysis on its own is inadequate in guiding resource allocation decisions, it was used in 39% of the studies. Several of the modelling papers used model structures not suitable for chronic diseases with changing health risks. Three studies concluded that the intervention dominated standard care; meaning that it generated more quality-adjusted life-years (QALYs) for less cost. The incremental costs per QALY gained varied from $US235 to $US56,836 in the remaining studies using this outcome measure. An implicit hypothesis of the review was that studies including long-term health effects would illustrate greater cost effectiveness compared with trial-based studies. This hypothesis is partly confirmed with three studies arriving at dominating results, as these reach their conclusion from modelling future co-morbidity treatment cost savings. However, for the remaining studies there is little indication that decision-analytic modelling disparities explain the differences.

CONCLUSIONS

This is the first literature review comparing methods used in economic evaluations of weight management interventions, and it is the first time that observed differences in study results are addressed with a view to methodological explanations. We conclude that many studies have methodological deficiencies and we urge analysts to follow recommended practices and use models capable of depicting long-term health consequences.

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

OBJECTIVE

The South Korean positive list system in pharmaceutical reimbursement was introduced by the Health Care System Reform Act implemented in December 2006. This study introduces this positive list system (PLS), and reports on an evaluation of two years of operation. In addition, decision-making factors are evaluated and current issues and solutions discussed.

METHODS

We analyzed 91 submissions with reimbursement decisions completed by December 31, 2008. Submission characteristics and relevant factors related to decision criteria were identified by the decision outcomes (recommended/rejected).

RESULTS

Under the new system, Health Insurance Review and Assessment service (HIRA) recommended 64 submissions for reimbursement and rejected 27 submissions. For recommended submissions, 59 met all criteria and 5 were recommended based on the rule of rescue. The primary reason for rejection was unacceptable cost-effectiveness. The likelihood of recommendation was found to be significantly elevated if a drug was superior to its comparator, if treatment cost was not greater than that of its comparator, or if the number of recommended decisions made by other committees increased.

CONCLUSIONS

The South Korean PLS has stabilized during the 2 years after its introduction. The recommended submissions were qualified in all decision-making criteria used. Among the various decision criteria, clinical benefit and cost-effectiveness were the main drivers of reimbursement decisions. In addition, there is a certain degree of consistency between the reimbursement decisions of HIRA and other countries.

Comparing pharmaceutical pricing and reimbursement policies in Croatia to the European Union Member States

Aim

To perform a comparative analysis of the pharmaceutical pricing and reimbursement systems in Croatia and the 27 European Union (EU) Member States.

Methods

Knowledge about the pharmaceutical systems in Croatia and the 27 EU Member States was acquired by literature review and primary research with stakeholders.

Results

Pharmaceutical prices are controlled at all levels in Croatia, which is also the case in 21 EU Member States. Like many EU countries, Croatia also applies external price referencing, ie, compares prices with other countries. While the wholesale remuneration by a statutorily regulated linear mark-up is applied in Croatia and in several EU countries, the pharmacy compensation for dispensing reimbursable medicines in the form of a flat rate service fee in Croatia is rare among EU countries, which usually apply a linear or regressive pharmacy mark-up scheme. Like in most EU countries, the Croatian Social Insurance reimburses specific medicines at 100%, whereas patients are charged co-payments for other reimbursable medicines. Criteria for reimbursement include the medicine’s importance from the public health perspective, its therapeutic value, and relative effectiveness. In Croatia and in many EU Member States, reimbursement is based on a reference price system.

Conclusion

The Croatian pharmaceutical system is similar to those in the EU Member States. Key policies, like external price referencing and reference price systems, which have increasingly been introduced in EU countries are also applied in Croatia and serve the same purpose: to ensure access to medicines while containing public pharmaceutical expenditure.

Budget impact analysis of adjunctive therapy with lacosamide for partial-onset epileptic seizures in Belgium

OBJECTIVE

This study aims to compute the budget impact of lacosamide, a new adjunctive therapy for partial-onset seizures in epilepsy patients from 16 years of age who are uncontrolled and having previously used at least three anti-epileptic drugs from a Belgian healthcare payer perspective.

METHODS

The budget impact analysis compared the 'world with lacosamide' to the 'world without lacosamide' and calculated how a change in the mix of anti-epileptic drugs used to treat uncontrolled epilepsy would impact drug spending from 2008 to 2013. Data on the number of patients and on the market shares of anti-epileptic drugs were taken from Belgian sources and from the literature. Unit costs of anti-epileptic drugs originated from Belgian sources. The budget impact was calculated from two scenarios about the market uptake of lacosamide.

RESULTS

The Belgian target population is expected to increase from 5333 patients in 2008 to 5522 patients in 2013. Assuming that the market share of lacosamide increases linearly over time and is taken evenly from all other anti-epileptic drugs (AEDs), the budget impact of adopting adjunctive therapy with lacosamide increases from €5249 (0.1% of reference drug budget) in 2008 to €242,700 (4.7% of reference drug budget) in 2013. Assuming that 10% of patients use standard AED therapy plus lacosamide, the budget impact of adopting adjunctive therapy with lacosamide is around €800,000-900,000 per year (or 16.7% of the reference drug budget).

CONCLUSIONS

Adjunctive therapy with lacosamide would raise drug spending for this patient population by as much as 16.7% per year. However, this budget impact analysis did not consider the fact that lacosamide reduces costs of seizure management and withdrawal. The literature suggests that, if savings in other healthcare costs are taken into account, adjunctive therapy with lacosamide may be cost saving.

The impact of ageing and changing utilization patterns on future cardiovascular drug expenditure: a pharmacoepidemiological projection approach

PURPOSE

To develop a method for projecting the impact of ageing and changing drug utilization patterns on future drug expenditure.

METHODS

Applying nationwide registries, prescriptions of three categories of cardiovascular drugs were followed for all Danish residents from 1 January 1996 until 2006. The official Danish population forecast 2006-2015 was applied for projecting the population composition. A previously developed pharmacoepidemiological semi-Markov model was extended to apply for projection of future drug utilization. We either assumed that past trends in model parameters (incidence, discontinuation and drug user mortality) would continue during 2006-2015, or that all model parameters would remain unchanged at their values in 2005. Yearly drug expenditure per user of a particular drug was assumed to remain unchanged. Scenarios of future treatment prevalence with different drug categories were modelled by extrapolating future age- and gender-specific parameter values (treatment incidence, discontinuation and drug user mortality) from historic point estimates and their historic trend.

RESULTS

Provided a continuance of past trends, increasing utilization of ACE inhibitors, angiotensin II antagonists and statins translates into a rise in annual expenditure of 176%, mainly explained by increases in treatment incidence. Due to pharmacoepidemiological disequilibrium, unchanged model parameters would imply an increase of 64%, ageing alone 14%.

CONCLUSION

Increasing cardiovascular drug utilization may pose a substantial burden on future health care resources. However, prescribing behaviour is likely to depend on changing clinical guidelines. Despite the limited impact as cost driver, population ageing remains a challenge for future health care services.

How to assess the value of medicines?

This study aims to discuss approaches to assessing the value of medicines. Economic evaluation assesses value by means of the incremental cost-effectiveness ratio (ICER). Health is maximized by selecting medicines with increasing ICERs until the budget is exhausted. The budget size determines the value of the threshold ICER and vice versa. Alternatively, the threshold value can be inferred from pricing/reimbursement decisions, although such values vary between countries. Threshold values derived from the value-of-life literature depend on the technique used. The World Health Organization has proposed a threshold value tied to the national GDP. As decision makers may wish to consider multiple criteria, variable threshold values and weighted ICERs have been suggested. Other approaches (i.e., replacement approach, program budgeting and marginal analysis) have focused on improving resource allocation, rather than maximizing health subject to a budget constraint. Alternatively, the generalized optimization framework and multi-criteria decision analysis make it possible to consider other criteria in addition to value.

Should financial incentives be used to differentially reward 'me-too' and innovative drugs?

Strategies to change the existing mix of innovative and 'me-too' drugs are intended to increase societal value of a given investment in R&D by providing an incentive for firms to invest in drugs that are more likely to be clinically innovative. How can financial incentives be used to change this mix? Will a strategy have its intended consequence or will it have the unintended outcome of reducing the rate at which the population burden of disease is reduced? The perspective of this review is a country such as Australia, Canada or the UK that has universal health insurance and a drug reimbursement process that is informed by economic evidence. A review of the literature was performed and the views of both the proponents and the opponents of such strategies and the mechanisms by which they could be implemented were summarized. The debate is based largely on hypothesized responses by firms to changes in incentives rather than empirical evidence. The main point of contention is whether a changed mix of new molecular entities (NMEs) increases or decreases the total amount of clinical innovation launched each year. The argument presented in this article is that, despite the limited empirical evidence, it is possible to improve our assessment of the likely costs and consequences of a proposed strategy by appealing to economic theory and observations about the reimbursement process. First, the empirical evidence supporting the view that changing a mix of drugs will improve clinical innovation is based on the average launched drug, not the marginal innovative drug otherwise not developed, and therefore could be misleading. Second, the dynamic and complex nature of evidence of clinical innovation will reduce the feasibility of using contractually based mechanisms to implement such a strategy. Also, a single country is unlikely to have an impact on R&D decisions, and variation in the per capita economic value of new drugs would make multi-jurisdiction contracts with one firm difficult to implement. Third, the quality of evidence of the clinical innovation of the lead drug could be reduced if there are fewer or no follow-on drugs. Finally, the existing inefficiencies in the process of displacement to finance new technologies from a capped budget reduces the efficiency with which any additional potential clinical innovation from NMEs will be translated to reduced population burden of disease. The article concludes that it is possible that such a strategy could be costly to implement, and the impact on global burden of disease uncertain in both direction and magnitude. This is likely to be the case even if the average clinical innovation content of innovative NMEs is higher than for me-too NMEs and the mechanisms designed to change the mix of NMEs are effective. Other options to improve the effectiveness with which pharmaceutical clinical innovation reduces burden of disease should be explored, including improved efficiency of both firm R&D and the process of disinvestment to finance new technologies.

Healthcare rationing by proxy: cost-effectiveness analysis and the misuse of the $50,000 threshold in the US

The application of cost-effectiveness analysis in healthcare has become commonplace in the US, but the validity of this approach is in jeopardy unless the proverbial $US50,000 per QALY benchmark for determining value for money is updated for the 21st century. While the initial aim of this article was to review the arguments for abandoning the $US50,000 threshold, it quickly turned to questioning whether we should maintain a fixed threshold at all. Our consideration of the relevance of thresholds was framed by two important historical considerations. First, cost-effectiveness analysis was developed for a resource allocation exercise where a threshold would be determined endogenously by maximizing a fixed budget across all possible interventions and not for piecemeal evaluation where a threshold needs to be set exogenously. Second, the foundations of the $US50,000 threshold are highly dubious, so it would be unacceptable merely to adjust for inflation or current clinical practice. Upon consideration of both sides of the argument, we conclude that the arguments for abandoning the concept for maintaining a fixed threshold outweigh those for keeping one. Furthermore, we document a variety of reasons why a threshold needs to vary in the US, including variations across payer, over time, in the true budget impact of interventions and in the measurement of the effectiveness of interventions. We conclude that while a threshold may be needed to interpret the results of a cost-effectiveness analysis, that threshold must vary across payers, populations and even procedures.

Health economic assessment: a methodological primer

This review article aims to provide an introduction to the methodology of health economic assessment of a health technology. Attention is paid to defining the fundamental concepts and terms that are relevant to health economic assessments. The article describes the methodology underlying a cost study (identification, measurement and valuation of resource use, calculation of costs), an economic evaluation (type of economic evaluation, the cost-effectiveness plane, trial- and model-based economic evaluation, discounting, sensitivity analysis, incremental analysis), and a budget impact analysis. Key references are provided for those readers who wish a more advanced understanding of health economic assessments.

Health economics of market access for biopharmaceuticals and biosimilars

BACKGROUND AND SCOPE

This article discusses health economic challenges of research and development, registration, pricing and reimbursement of biopharmaceuticals and biosimilars. A literature search was carried out of PubMed, Centre for Reviews and Dissemination databases, Cochrane Database of Systematic Reviews and EconLit up to March 2009.

FINDINGS

The development process of biopharmaceuticals is risky, lengthy, complex and expensive. Registration is complicated by the inherent variation between biopharmaceuticals. Also, as biopharmaceuticals are likely to be efficacious in a subgroup of the patient population, there is a need to select the most responsive target population and to identify biomarkers. To inform pricing and reimbursement decisions, the development process needs to collect comparative data to calculate the incremental cost effectiveness and budget impact of biopharmaceuticals. There is a role for innovative mechanisms such as risk-sharing arrangements to reimburse biopharmaceuticals.

CONCLUSIONS

Given that biosimilars are similar, but not identical to the reference biopharmaceutical, the development process needs to generate clinical trial data in order to gain marketing authorisation. From a health economic perspective, the question arises whether inherent differences between biopharmaceuticals and biosimilars produce differences in safety, effectiveness and costs: to date, this question is unresolved. The early inclusion of health economics in the process of developing biopharmaceuticals and biosimilars is imperative with a view to demonstrating their relative (cost) effectiveness and informing registration, pricing and reimbursement decisions.

Applying Programme Budgeting Marginal Analysis in the health sector: 12 years of experience

The Pharmaceutical Management Agency in New Zealand, PHARMAC, was established in 1993 at a time when growth in pharmaceutical expenditure was very high and arguably unsustainable. PHARMAC was charged with finding new and effective ways to manage expenditure growth, while also obtaining the best health outcomes for the New Zealand population. In order to help achieve this goal, PHARMAC has used Programme Budgeting Marginal Analysis. The use of Programme Budgeting Marginal Analysis, together with a capped budget and tools to generate savings, has significantly contributed to PHARMAC achieving its objective. However, there are implications of using Programme Budgeting Marginal Analysis with a capped budget. In particular, a different approach is required when undertaking and using cost-utility analysis (focused strongly on relative cost-effectiveness), and the opportunity cost of poor decisions is magnified significantly. As the demand on pharmaceutical expenditure continues to rise, the opportunity cost of not having a capped budget and tools for controlling pharmaceutical subsidies will only increase.

Finding legitimacy for the role of budget impact in drug reimbursement decisions

OBJECTIVES

Research has shown that effectiveness, cost-effectiveness, and severity of illness each play a role in drug reimbursement decisions. However, the role of budget impact in such decisions is less obvious. Policy makers almost always demand a budget impact estimate yet seem reluctant to formally include budget impact as a rationing criterion. Health economists even reject budget impact as a legitimate criterion. For these reasons, it is important to examine its use in rationing decisions, and rationales underlying its use.

METHODS

We trace several rationales supporting the use of budget impact through a literature review, supplemented by semistructured interviews with eleven key stakeholders involved in drug reimbursement decisions in the Netherlands.

RESULTS

Budget impact arguments are used in certain instances, although policy makers appear uncomfortable with its use because well described rationales still are lacking. In addition, we identify the following rationales to support budget impact as a rationing criterion: opportunity costs, loss aversion, uncertainty and equal opportunity.

CONCLUSIONS

Budget impact plays a role in drug reimbursement decisions and has rationales to support its use. However, policy makers do not easily admit that they consider budget impact and are even reluctant to explicitly use budget impact as a formal criterion. A debate would strengthen the theoretical foundation of budget impact as a legitimate criterion in the context of drug reimbursement decisions. Such discussion of budget impact's role will also enhance policy-makers' accountability.

Which barriers prevent the efficient use of resources in medical device sectors?

This article aims to examine barriers to the efficient use of resources relating to medical devices, by focusing specifically on an economic analysis of the market structure of medical devices and on the assessment procedures for medical devices. A desktop analysis was conducted of the health economic literature relating to both of these aspects. This information was structured and analysed with a view to identifying and discussing the major issues that may threaten the efficient use of medical devices. Medical device sectors do not tend to operate as perfectly competitive markets because of the presence of heterogeneous products, information asymmetry and a restricted number of manufacturers. There is a need for government intervention to keep prices down, restrict public reimbursement and promote an efficient use of medical devices. Assessment procedures governing pricing and reimbursement of medical devices are lacking, are in development, or have only recently been established in the majority of developed countries. There is limited transparency and less formal attention of decision makers to assessment of the efficient use of resources in medical device sectors as compared with medicines. In conclusion, there is a need for more studies exploring the safety, effectiveness, cost effectiveness and budget impact of medical devices, so that decision makers can make informed pricing and reimbursement decisions based on objective analyses. Additionally, there is a need for more formal assessment systems for medical devices.

Self-reported healthcare decision-makers' attitudes towards economic evaluations of medical technologies

BACKGROUND

Increasing costs have generated concern among governments and healthcare providers who have realized the need for cost containment measures and more efficient resource utilization. Health economics is one potential source of information that can make healthcare more efficient.

SCOPE

This review article summarizes the published literature on self-reported attitudes of healthcare decision-makers towards economic evaluations of medical technologies and examines the extent to which economic evaluations are used in health policy decisions.

METHODS

A systematic literature review of published English language studies was conducted using MEDLINE, EMBASE, and HEED from January 1995 to December 2007.

FINDINGS

Fifty-five articles investigated the use of economic evaluations on three levels of decision-making: central, local, and physician level. Results indicate the use of economic evaluation information increased from limited/minor to moderate use. The influence of economic evaluations increased with the level of centralization of healthcare system. Barriers to use health economics research varied across levels and included health economics research-related barriers such as timely availability, lack of credibility, insufficient methodological quality and decision-context-related barriers including limited decision makers' knowledge, inflexibility in healthcare budgets and variability among healthcare organizations.

CONCLUSIONS

For consistent policy-making it is important that similar recommendations for cost-effective interventions and programs are developed at all levels and that implementation is promoted by incorporating the appropriate incentives in healthcare provision.

Recent national and regional drug reforms in Sweden: implications for pharmaceutical companies in Europe

With an aging population and increased prevalence of chronic diseases, such as obesity and diabetes mellitus, drug reforms are needed across Europe to ensure the continued provision of comprehensive healthcare. It is also a challenge, with the limited resources available, to fund new innovative drugs that significantly improve patient health. Recent national and regional reforms in Sweden have moderated the rate of increase in drug expenditure, despite increased volumes of drug use and the launch of new, expensive drugs. National reforms include the adoption of economic principles when assessing the value and subsequent reimbursement of new and existing drugs, as well as reforms to obtain low prices for generic drugs. Regional reforms aim to encourage the rational use of medicines through the establishment of drug and therapeutic committees, development of guidelines, academic detailing, continuous benchmarking of prescribing patterns, and financial incentives. Some of these reforms provide examples to other European countries, whilst others duplicate existing measures. As such, we believe other European countries can benefit from an analysis of the Swedish reforms. We believe the pharmaceutical industry can also benefit from this analysis by working with key regional payers involved with developing and implementing the reforms as they moderate and refine their future activities, including finding acceptable ways of introducing new expensive drugs.