OBJECTIVES : Health Technology Assessments (HTAs) using cost-utility modelling typically rely on comparison of intervention and comparator(s) prices at time of introduction of the intervention. However, lifecycle pricing may be a bigger determinant of the incremental cost-effectiveness ratio (ICER) than many of the other assumptions currently discussed in HTA decisions. The objective of this study was to assess the methodological arguments for and against consideration of modelling lower future prices of therapies following patent expiration.

METHODS : A targeted literature review was conducted to assess arguments made for and against inclusion of lifecycle pricing within cost-effectiveness models.

RESULTS : There is a large body of evidence assessing the market dynamics of patent expiration and impact on pricing. However, literature on incorporation of these future price reductions within HTA is limited. It has been proposed that economic evaluations should incorporate expected price reductions over the lifecycle of the drug by modelling multiple future incident cohorts. Not adjusting future prices to account for future generic entrants may systemically underestimate ICERs or could overestimate ICERs where a new drug intervention is being compared with a generic comparator at time of launch. The arguments against inclusion of future price reductions within models appear to be based more on practical considerations of data availability and extent of price reductions to be considered rather than whether inclusion of future price reductions is methodologically inappropriate. A published systematic literature review has concluded that further country-specific research is needed to reduce uncertainty regarding the prediction of future price developments after patent expiry.

CONCLUSIONS : There does not appear to be a strong methodological rationale for excluding future price reductions from consideration within all HTAs. We believe that discussion should focus on which HTAs should consider this issue and the magnitude and timing of future price reductions to be modelled.