Join ISPOR  | Sign up for mailing List  | Follow Us: LinkedIn Twitter Facebook YouTube

The Official News & Technical Journal Of The International Society For Pharmacoeconomics And Outcomes Research

Anouk C. O’Prinsen MScDo Health Politicians Really Listen to Health Economists? Observations from Europe

Thomas Mittendorf PhD, herescon gmbh-Health Economic Research & Consulting, Hannover, Germany; Andrew Briggs PhD, Lindsay Chair in Health Policy and Economic Evaluation, University of Glasgow, UK; Julio Lopez Bastida PhD, Evaluation and Planning Unit, Canary Island Health Service, CIBER, Epide-miología y Salud Pública (CIBERESP), Spain; Mark Nuijten MD, PhD, Institute for Medical Technology Assessment, Erasmus University Rotterdam, Rotterdam, The Netherlands; and Ulf Persson PhD, IHE, the Swedish Institute for Health Economics and Institute for Economic Research, School of Economics and Management, Lund University, Sweden

All  major  countries  around  the  world  in  recent years have introduced into the health industry sector some kind of involvement of health econom-ics  or  at  least  something  like  economic  thinking in the provision of services for their citizens. Even many smaller volume markets from Latin America or Asia devote themselves to including health eco-nomic evidence in their market access decisions. This sounds like a worthwhile endeavour in the ears of a health economist, but some of these markets may not have enough skilled personnel to perform all needed research in this area (this may to a cer-tain degree also be true to some major markets). And now, with a new president in the White House health  economic  research  in  the  United  States might  also  see  the  dawn  of  a  new  era,  with  the health care sector being one of the core areas of ‘change’. Whereas the term ‘comparative effective-ness’ at the moment is discussed as being related only to clinical efficacy, there might be an implicit sense from the beginning on that a full assessment of new and also existing technologies at some point


might also ask for health economic data.


With that in mind all health care markets more or less have to survive under budget restrictions trying to allocate scarce resources to areas in the health care system where there are needed most or where the highest output might be expected. This translates into: to different degrees cost containment and/or rationing has to be done in every system by some-one. At a certain point every health politician has to decide on the way how he or she wants to go down this track. They seriously can initiate a health eco-nomic program identifying services or products that potentially offer cost effective benefits in his setting. For this selection process health economic methods can serve by generating one of the many parts of the jigsaw puzzle needed as input for a transpar-ent decision. Another approach may be to simply restrict market access by decisions not backed by medical or health economic evidence. These two options evidently serve as endpoints in a continuum of multiple ways to introduce rationalization as well as rationing in modern health care systems.


Looking from the outside at different European countries an observer might get the impression that some countries only pretend to use sound health economic methods to inform decision processes. And thus, instead of using evidence from health economic analyses, they more or less still decide on other grounds (not only referring to medical evidence). If that would be the case physicians and patients in those countries might get the perception that the main aim of health economic methods is first and foremost directed towards cost contain-ment, which it isn’t. Unfortunately, economic re-searchers are not as visible in the general public or the medical community as health politicians are us-ing the frame ‘health economics’ for their purposes and to justify rationing decisions.


With this short essay we want to give some reflec-tions on different European jurisdictions and how this problem is seen by health economists throughout Europe presenting a rather heterogeneous picture in the interaction between physicians, health politi-cians, regulators and health economists. Hopefully, this may spike some discussion also in the US on the role of health economics in the decision making process and how different stakeholders in the sys-tem might use and also twist available evidence.


The UK

The UK has a long history of health economics, and the health care reforms of the late 1980s, which introduced an ‘internal market’ into the UK NHS, were driven by recognition that economics had an important role to play. This reform continued in the early 1990s with the introduction of general practi-tioner (GP) fund holding, where some GPs where able to take direct responsibility, for the first time, of the overall cost for patients in their care. Nev-ertheless, a formal system of economic evaluation of health care interventions in the UK did not start until 1999, when the then National Institute for Clini-cal Excellence (NICE) was formed, with a remit to make recommendations on whether health care technologies should be used in the NHS in England and Wales.


NHS Scotland has alternative arrangements due to devolution of government from Westminster (Lon-don) to Holyrood (Edinburgh). In Scotland, the Scot-tish Medicines Consortium (SMC) recommends whether new drugs are value for money. While in principle both bodies look at cost-effectiveness and are therefore something of a fourth hurdle to the NHS marketplace, there are a number of key differ-ences between SMC and NICE. SMC looks only at pharmaceuticals, whereas NICE’s remit covers devices, procedures, diagnostic technologies, and, since 2004 when NICE become the National Insti-tute for Health & Clinical Excellence, public health interventions.


The existence of NICE and SMC in the UK, with their explicit use of cost-effectiveness as an input into the decision making process, has created a strong impetes for the development of health economic evaluation methods. In particular, the Multiple Technology Appraisal (MTA) process in-volves a commissioned academic assessment team that independently appraises the evidence on a number of products from different manufacturers. Methodological developments that have, at least in part, been driven by the MTA process are indirect comparisons, representation of uncertainty in pa-rameters and value of information approaches. As pressure on budgets continues to be felt acutely within the UK NHS, it is likely that the need for health economic evaluation will continue. It is likely there-fore that cost-effectiveness will continue to play a central role in decision making and health econo-mists will remain in demand. Nevertheless, political interference in the decision making process could threaten the principled approach that NICE has so far pioneered. With political pressure to obtain ear-lier access to treatments, particularly in the area of oncology, NICE has recently implemented some de-cisions that appear to be difficult to justify in purely cost-effectiveness terms. For example, where is the scientific rationale for the special considerations to be given to ‘end of life’ treatments for diseases with less than 7,000 eligible patients.



Health economics in Germany has not such a long history as in the UK, but slowly tries to catch up as more and more funding flows from the govern-ment to universities to assemble research units. At the moment health economics is one of the big scarecrows used by health politicians to lure the industry in direct price negotiations as pricing is still more or less free after market approval for new drugs. Most physicians tend to have negative feelings when it comes to health economics as two of the corner-stones of their existence for decades have been freedom in therapeutic choice and also a third-party payer environment with the patient being completely insensitive to prices as Germany has full coverage with only small co-payment obligations.


With health economics becoming very popular as a research area in surrounding countries in the last 10 years regulators as well as sickness funds real-ized that a more scientific appearance of cost con-tainment regulations might help to justify unpopular decisions. Hence, over the last years almost all of the somewhat 200 sickness funds created internal units aiming to produce ‘health economic’ evidence which in some cases merely might end up as cost data not accounting also for outcomes as intended by a full health economic analysis. The major com-munication problem researchers in Germany right now have to face seems to be, that every tiny piece of information containing economic data of some kind will be considered by physicians, regulators as well as the general public as health economics. In addition, this trend even gets accelerated by the introduction of cost-benefit assessments by the Institute for Quality and Efficiency in Health Care (IQWiG), an independent research organization funded by money from the sickness funds. Having said that, the IQWiG quite recently introduced meth-ods for cost-benefit assessment which are let’s say ‘experimental’, further adding to a negative percep-tion of this field among different stakeholders in the system and also patients.


Health economics in Sweden has a long history and several research units many years ago were built up closely linked to universities and their economic departments. For many years health econom-ics was mainly considered as a new field for an academic discussion. Physicians and administra-tors at the health care provider organisations, the county councils, were interested in this new “art”. However, they did not need it for cost containment purposes. The argument “lack of medical evidence” was good enough in most cases. Physicians wanted to implement new innovative therapies and therefore they sometimes adopted arguments from health economic research in their discussions with administrators looking at cost controlling.


One exception is the Swedish National Road Admin-istration (SNRA) who early adopted methods devel-oped by health economists. SNRA’s decisions on investments in new roads are seriously considering economic analyses and their methods have con-tinuously been updated based on the most recent methodological and empirical findings on the valu-ation of life and safety. For the health care sector a similar breakthrough came less than a decade ago. It was then that the Pharmaceutical Benefits Board (LFN) was founded. LFN (currently renamed to TLV) adopted the economic criteria in their decision-making process. Methods for economic analyses are closely following international standards from health economics textbooks. Significant shares of the LFN staff are economists and LFN takes their own decisions within an “arm-lengths” distance from the government and health care providers. Nowadays many clinicians use a language includ-ing concepts like quality-adjusted life years (QALYs) even if they do not have any deeper understanding in underlying utility theories. At the national level unpopular decisions on reimbursement and treat-ment guidelines could easily be justified based on health economic arguments. However, at the local/ regional levels, where the budget responsibility is located, health economics are mainly used as a tool for cost containment, often including limited budget perspectives, ignoring health gains.



The use and value of health economics as a dis-cipline is generally recognised in Spain, however currently implemented methods of economic eval-uation do not assist pragmatic decision making. Despite a growing activity in the field of health eco-nomics which is promoted by the Central Govern-ment by means of its “Quality Plan for the Health Care System”, new research funds, as well as the development of technology assessment units in some autonomous regions, there is no evidence of any influence of health economic information on the decision making process in the Spanish health care system.


Several major barriers can be identified together with a lack of incentives which tend to hinder the use of health economics by Spanish decision mak-ers. Cultural factors such as lack of training in health economics as well as the lack of a commitment to-wards transparency as well as efficiency prevent a higher use of health economic evidence in routine decision making by most political, managerial and professional decision makers at the autonomous communities level. One example is the Spanish drug sector, where a limited availability and access to economic information for general practitioners, together with a lack of interest about the concept of efficiency, are the main obstacles to a wider use of available information. Physicians’ main concerns still are efficacy and safety, which of course should always be a driving factor also in the eyes of a health economist. Hence, a physician will probably not stop prescribing a drug that was shown not to be cost-effective. But on the other side more and better efforts need to be undertaken by the Span-ish community of health economists to reach the target-audience and to prepare for a need of more and better trained health economists.


But the end, looking into the future, economic con-siderations are deemed to influence health care decision making processes more than they do at present in Spain.


The Netherlands

In The Netherlands the main response by politi-cians to rising costs has been the introduction of an impressive number of cost containment poli-cies over the last decade. This resulted in a drug reimbursement system, which is based on the classification of compounds into groups of inter-changeable drugs. For a new drug, which cannot be clustered into the price reference system, it is only reimbursed if there is a proven clinical benefit compared to standard therapy combined with evi-dence of cost-effectiveness.


The use of cost-effectiveness data has been offi-cially implemented in 2005, leading to official re-quirements for submission of health economic data comparable with the UK, Australia and Canada. The

reimbursement decision is also based on the bud-getary impact of a new drug. This fourth and fifth hurdle results in limited access to new drugs, for which relative efficiency comes out above a certain cost-effectiveness threshold or which contribute considerably to expenditure. Health insurers may use cost-effectiveness data in a multi criteria deci-sion making process, but they will not use it as final outcome for reimbursement decisions.


Their incentives are constrained by a silo mental-ity giving them a more limited perspective: yield-ing cost savings in non-drug costs after e.g. five years by increasing the drug budget are often not an incentive for a decentralised authority. Contrary to central health care decision makers, health in-surers will not use the ultimate cost-effectiveness outcome (cost/QALY) as a final outcome. A recent study by the Royal Dutch Medical Association re-flects the opinion of the Dutch medical community as the authors concluded that guideline setting and cost effectiveness might be considered as impor-tant instruments for making choices in health care, but that such an approach should always go hand in hand with a social and political debate about the goals of medicine and health care.


But the importance of health economic data has increased substantially over the last 10 years, es-pecially since they have become an official require-ment in 2005. As a consequence, health econom-ics as a discipline more and more has become a well-accepted and widely known science to other health care professionals. In the past policy makers and clinicians considered health economics often as “ivory tower science” without recognising the practi-cal opportunities. However, because of the increas-ing demand for delivering cost-effective health care, the non-health economic professionals in the Dutch health care arena, have become more and more con-vinced of the value of health economics in clinical decision making and the health care policy process.


Summarizing across the countries reflected here and certainly other places around the globe, health economists as a species are not loved but accepted in some countries. In other spots, while not being hated, researchers more or less try to overcome a reputation of delivering only information aimed at simple cost containment efforts. Europe presents a very heterogeneous picture not only in the accep-tance of health economics as a discipline, but also in the influence researchers have through their work on different stakeholders in the health care system.


A lot of countries for many years have tried to benefit from the expertise in this field, but decision makers in the health care sector must accept that the result from a health economic evaluation is only one piece of the puzzle to reach a transparent deci-sion. At the end of the day all around in the globe the health economist is only one of the messengers and decision makers should be ready to bear the burden of carrying out the consequences of their decisions on their own.

  Issues Index | 2009 Issues Index  

Contact ISPOR @  |  View Legal Disclaimer
©2014 International Society for Pharmacoeconomics and Outcomes Research. All rights reserved under International and Pan-American Copyright Conventions. 
Website design by Eagle Systems USA, Inc.