Are We There Yet? - The Impact of Pharmacoeconomics
and Outcomes Research on Decision Making
Much has changed since ISPOR came into being in
1995. At that time, only Australia and a handful of
Canadian provinces were using pharmacoeconomics
and outcomes research in decisions about the reimbursement
of medicines. Nowadays, the studies conducted
by the Society’s members are being used by several
reimbursement agencies in Europe and there are
signs that the authorities in several Asian and Latin American countries are
beginning to request these analyses.
Of course, just because an economic evaluation or quality of life study has
been submitted to the authorities, it does not necessarily mean that it has had
a major impact on the decision. Indeed, in the past, several commentators
have questioned the impact of pharmacoeconomic studies [1, 2].
Nevertheless, data from Australia  and the UK  does show that the
incremental cost-effectiveness ratio is linked to the reimbursement decision.
Indeed, in the UK, where the basis of NICE’s guidance is in the public
domain, it is clear that the impact of the medicine on clinical and cost-effectiveness
is a major driver of the decision.
However, before we pat ourselves on the back, what about those parts of the
world where pharmacoeconomics and outcomes research is having very little
impact? In most countries in Southern Europe the emphasis seems to be
on negotiating a low price, often by reference to prices of the medicine in
other countries. Coupled with this, there appears to be few attempts to
encourage the cost-effective use of medicines once launched. The role of
pharmacoeconomics and outcomes research appears to be limited, at least
for the present.
Also, in the world’s largest market, the United States, pharmacoeconomics
and outcomes research is struggling to establish a toe-hold. Here, the place
of a medicine on the formulary can depend more on the size of the accompanying
rebate than the size of the incremental cost-effectiveness ratio. In
addition, rather than deciding on inclusion or exclusion of a product based on
a cost-effectiveness assessment, a common way of dealing with medicines
of questionable cost-effectiveness is to put them on a higher tier of the formulary,
thereby increasing patient co-pays. This helps the health plan manage
its budget, but the final assessment of value for money rests with
patients, either alone or in conjunction with their physicians.
Of course, the situation is not as bad as I have painted. The Center for
Medicare and Medicaid Services (CMS) is taking a serious interest in costeffectiveness,
the FDA now has an official view on the role of patient reported
outcomes (PROs) and several health plans (large and small) are asking
for cost-effectiveness data, in line with the AMCP format, to inform their
I doubt whether ISPOR alone can bring about reform of those health care systems
that currently fail to use pharmacoeconomics and outcomes research to
any great extent (although, it could be a target for ISPOR’s Vision 2015!).
Neither do I think it is worthwhile blindly promoting our standard forms of
analyses in systems that have found it difficult to accommodate them. Rather I think we need to understand better the current objectives and concerns
of decision makers in these systems in order to assess how we can
become more useful. For example, at the level of the national or local payer,
should pharmacoeconomic analyses be focused more on assisting price
negotiations, or the determination of discounts? Should such analyses
become an integral part of risk-sharing schemes? In settings where patients
have to assess value for money, should our analyses be directed more
towards them? This would put much more emphasis on the description
and measurement of outcomes, than on standard assessments of costeffectiveness?
Clearly we aren’t there yet. Therefore I welcome the recent initiative of the
Society to hold sessions in our meetings run by decision makers, for decision
makers. Perhaps we will learn something.
Anis AH, Gagnon Y. Using economic evaluations to make formulary coverage decisions: so much for
guidelines? Pharmacoeconomics 2000;18: 55-62.
Laupacis A. Inclusion of drugs in provincial drug benefit programs: who is making these decisions, and
are they the right ones? Can Med Assoc J 2002;166:44-7.
George B, Harris A, Mitchell A. Cost-effectiveness and the consistency of decision-making: evidence
from pharmaceutical reimbursement in Australia (1991 to 1996). Pharmacoeconomics 2001;19:1103-9.
- Devlin N, Parkin D. Does NICE have a cost-effectiveness threshold and what other factors influence its
decisions? A binary choice analysis. Health Econ 2004;13:437-52.