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| Journal of the New Zealand Medical Association,
04-August-2006, Vol 119 No 1239
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PHARMAC seeks clinical feedback on its cost-utility analysis
methodology
Most will be familiar with the term
‘cost-effectiveness’. It is a term that is frequently seen in
national and international medical journals, health reports, health technology
assessments, and media releases from health funding agencies. In fact, a number
of recent articles in the Journal have
discussed PHARMAC’s processes, including how PHARMAC assesses whether a
treatment is ‘cost-effective’.1-7
PHARMAC uses cost-utility analysis (CUA) to assess whether a
treatment is likely to be cost-effective compared with the next best
alternative. CUA is a form of cost-effectiveness analysis that considers the
impact of treatment on patients’ quality of life as well as length of
life. This type of analysis is important, as cost-effectiveness is one of nine
decision criteria used by the PHARMAC Board when making funding
decisions.8
PHARMAC has undertaken CUA since 1996. The methods PHARMAC
uses when doing this analysis are outlined in PHARMAC’s Prescription for
Pharmacoeconomic Analysis (PFPA), which was published in 1999.
In October 2004 PHARMAC staff initiated a review of this
document. This review has resulted in several proposed changes to
PHARMAC’s CUA methodology. The PFPA has also been completely restructured,
with more information included on clinical evidence and other CUA inputs. This
revised document has been reviewed by four prominent national and international
economists, the Pharmacology and Therapeutic Advisory Committee (PTAC), and
Consumer Advisory Committee (CAC).
PHARMAC is now consulting on this document, and specifically
the methods it uses when doing cost-utility analysis. This document is available
to download from the PHARMAC website: http://www.pharmac.govt.nz/pharmo_economic.asp
In view of the recent debate in the
Journal, this may be a good opportunity
for clinicians to provide feedback to PHARMAC on the methods we are proposing to
use when doing cost-utility analysis. We are seeking feedback from all
interested individuals and organisations, including clinicians and medical
groups.
Consultation responses are requested by
Monday 18 September 2006.
Key proposed amendments to cost-utility analysis methodologyKey proposed methodological
amendments to the PFPA include the discount rate used when undertaking CUA and
the range of costs included in CUAs:
Discount ratePHARMAC’s use of the
8–10% discount rate in CUAs has been the source of considerable debate
amongst the health sector.1,9,10 As a result of the review of the PFPA, it is
proposed that the discount rates used in CUA be based on the 5-year average real
risk-free long term government bond rate (3.5%).
Using a lower discount rate is
likely to affect the cost-effectiveness ranking of pharmaceutical treatments and
impose less of a disadvantage on treatments that confer long-term benefits (i.e.
pharmaceuticals that have high up-front costs and long-term benefits are likely
to appear more cost-effective). Note, however, that it is only the ranking of
treatment that is changed (i.e. a ‘re-shuffling’ of the priority
list).
Direct patient healthcare costsPHARMAC staff have considered in
detail whether direct patient healthcare costs (e.g. cost to the patient of a
General Practitioner visit, prescription co-payments, cost of home and
continuing care) should be included in CUAs, and also obtained expert advice on
this issue. It is proposed that direct patient healthcare costs be included in
CUAs.
While the exact impact on funding
decisions of including direct patient healthcare costs in CUAs is not known, it
is likely that pharmaceuticals that reduce the number of GP visits required or
reduce the need for home care would rank higher (in terms of cost-effectiveness)
on the priority list than in the past.
Note that all amendments to PFPA will be subject to the
outcome of consultation and PHARMAC Board approval.
If you would like to comment on these proposed amendments,
or any of the information in the PFPA, please send a response by Monday 18
September 2006 to Rachel Grocott by email to rachel.grocott@pharmac.govt.nz,
fax to (04) 460 4995, or post to PHARMAC c/o Rachel Grocott, PO Box 10-254,
Wellington 6143.
All consultation responses will be considered and discussed
by PHARMAC staff, necessary amendments made, and a final version will be drafted
for consideration by the PHARMAC Board in late 2006. We look forward to hearing
your views.
Rachel Grocott
Senior Analyst, Hospital Pharmaceuticals Assessment PHARMAC Peter Moodie
Medical Director PHARMAC References:
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