The German government is planning to modify law so that price discounts agreed with drugmakers will be publicly available. This is already common practice in some European markets – for example Italy. Some fear that the new German regulation will have considerable impact on other national markets, with the information being used to drive down prices elsewhere.
The pharma industry fears publishing the discounts could trigger price falls elsewhere as dozens of healthcare agencies in Europe and as far as Japan use German prices as references for their own. Countries which have so far used list prices in Germany could switch to discounted prices as the new standard.
Of course, the underlying argument in favour of publication of the prices is they can be standardised across similar markets. But, for example, are European markets that similar?
Karl Claxton and colleagues at the University of York have recently published a working paper on Methods for the Estimation of the NICE Cost Effectiveness Threshold. Since a guideline was issued in 2004, NICE has used standard values of £20-30,000 as cost-effectiveness threshold. These are effectively equivalent to the cost per quality adjusted life year gained by investing in a new technology at the expenses of an already existing intervention.
This paper tries to produce an updated version of the cost-effectiveness threshold, based on empirical evidence (eg programme budgeting data for the English NHS). The methodology used is quite complex – technically, the authors used an instrumental variables approach within a structural equation setting – and aims at simultaneously estimating the impact of the level of investment (and other variables) on health outcomes and the impact the overall budget constraint (and other variables) on the level of spending for a given health programme. Their main result is to suggest a slightly lower value to be used by NICE (£18,317).
While there are some major limitation (eg the availability of data for all the different programmes, to be used to translate the impact of expenditure into changes in quality of life), the paper is extremely interesting, because it may suggest a generalised framework which would allow different settings to compute their own cost-effectiveness threshold. Again, availability of suitable data may represent a major barrier to the wider applicability of the method.
The Office for Health Economics has also produce a critique of this paper, which is available here.
Fabio Pammolli will participate, with invited presentations, at the following upcoming event
Value based pricing is a very hot topic right now, in anticipation of the change in regulation that will happen in the UK, this coming January. The UK Department of Health has commissioned the production of relevant evidence, mainly to the a joint research unit from the universities of Sheffield and York.
The first two publications are Brazier J, Rowen D, Mukura C, Whyte S, Keetharuth A, Risa Hole A, Tsuchiya A, Shackley P. Eliciting societal preferences for burden of illness, therapeutic improvement and end of life for value based pricing: a report of the main survey. Report for the Department of Health, 2013 and Ara R, Kearns, MuC, van Hout B, Brazier J. Examining productivity losses associated with health related quality of life using patient and general population data. Report for the Department of Health, 2013.