Presentation (CTI)

OBJECTIVES: Medical innovations provide numerous benefits to society including reductions in morbidity, mortality, and hospitalizations, which are conventionally incorporated into cost-effectiveness analyses (CEA). Additionally, total societal benefits may include other elements of value captured by the ISPOR value flower. In welfare economics, manufacturers’ total net revenue is referred to as producer surplus (PS), while the remaining proportion of total societal benefits is termed consumer surplus (CS). PS is important as it is a common element in normative debates on firm profits and, more recently, in developing methods to assess the pharmaceutical market’s dynamic efficiency. Our objective was to review empirical studies estimating PS in pharmaceutical markets.
METHODS: We conducted a targeted literature search and extracted PS estimates and stratified results on study methodology, therapeutic area, drug or drug class, willingness to pay (WTP) for health gains, components of value incorporated, and country.
RESULTS: A total of 16 studies provided 43 PS estimates, predominantly from the US (55.8%) and the UK (34.9%), with the remainder from other countries (9.3%). All studies operationalized CS based only on healthcare costs and patient health benefits, not total social benefits. There was considerable variation in methods, including different retrospective and CEA-based analyses. All studies included WTP for health gains capturing demand-side opportunity costs; one study also included supply-side budgetary constraints. There was a weak correlation between PS and WTP in unweighted analyses. A major driver was study methodology. Overall, the average PS was 16.9% for the 15 studies utilizing demand-side WTP for health, and 42.8% including estimates also using supply-side opportunity costs.
CONCLUSIONS: Many studies fail to account for the full range of social benefits, leading to an overestimation of PS. Our findings underscore the need to more comprehensively capture elements of value to estimate PS with validity.