Valuing Life - Decision-Making for Medicines in Australia: A Retrospective Analysis (2020-2023)

BACKGROUND: Funding for new healthcare technologies is an important area of government health expenditure in Australia, with the Pharmaceutical Benefits Advisory Committee (PBAC) making recommendations on drugs covered under the Pharmaceutical Benefits Scheme (PBS). Legislation requires PBAC to only recommend medicines which are “cost-effective” but does not define what “cost-effective” means.

OBJECTIVES: The objective of this study was to analyze recent PBAC decision making to understand the absolute level of value placed on medicines and the relative influence of factors in decision making for the reimbursement of new medicines in Australia.

METHODS: Public Summary Documents for PBAC decisions were used to investigate the relationship between submission components – such as the incremental cost-effectiveness ratio, financial impact, disease severity and evidence base – and the likelihood of a positive recommendation for public funding. The probability of recommending a medicine for funding was estimated using multivariate probit regression models. All major submissions to the PBAC between March 2020 and May 2022 (n=422) if the PBAC decision relied upon a cost-utility analysis (36%, n=153) were considered.

RESULTS: Clinical significance (p=0.005), cost to government (p=0.005), relevance of evidence (p=0.008), rarity of disease (p=0.008) and previously considered submissions (p<0.001) were all found to be statistically significant factors influencing the listing of medicines in Australia. Interestingly, the incremental cost-effectiveness ratio did not have an independent statistical influence on decision-making (p=0.090), along with submissions for life-threatening conditions (p=0.794).

CONCLUSIONS: Willingness to pay in Australia appears not so much subject to a cost-effectiveness threshold, rather influenced by various submission components, notably clinical need, rarity of disease, relevance of evidence and total cost to government.