Presentation (CTI)

OBJECTIVES: Pharmacoeconomic evaluations aim to maximize health outcomes from limited healthcare resources. When the evaluation time horizon exceeds one year, current guidelines recommend discounting future costs and outcomes to present values. Given the dynamic nature of China’s economic development, there is a pressing need to reassess and update the discount rate.
METHODS: Discount rate is caculated using both the social opportunity cost (SOC) method and the social rate of time preference (SRTP) method, then a final rate is derived by weighting them. For the SOC method, we use real annual average yields of long-term Chinese government bonds. For the SRTP method, we apply the Ramsey equation using Chinese economic data from 2001 to 2024. Finally, we compute a weighted average of two rates, where the weights are determined based on the volume of private investment and savings, and the elasticities of them to market interest rates.
RESULTS: Empirical results show that the discount rates derived from the SOC and SRTP methods are 1.24% and 9.00%, with the SRTP calculated via the Ramsey formula (pure time preference = 0, catastrophe risk = 0.70%, the elasticity of marginal utility of consumption = 1.25, the growth rate of consumption = 6.61%). Using a weighted average approach with weights of 0.59 (SOC) and 0.41 (SRTP), we obtain a final discount rate of 4.43%. Sensitivity analysis confirms the robustness of the primary results.
CONCLUSIONS: This study provides important references for updating the discount rate in pharmacoeconomic evaluations in China. Based on the final calculated result of 4.43%, the study suggests a moderate reduction of the current 5% discount rate for costs and health outcomes in pharmacoeconomic guidelines.