Influential Factors on the Economic Justifiable Price: Systematic Investigation of Factors and Mechanisms Beyond the Incremental Cost Effectiveness Ratio


Poirrier JE1, Maervoet J2, Chowdhury E3, Cai R4, Bergemann R5
1Parexel International, Wavre, WBR, Belgium, 2Parexel International, Wavre, Belgium, 3Parexel, HEOR Modeling, London, LON, UK, 4Parexel International, Gouda, ZH, Netherlands, 5Access Consulting, Parexel International (CH) AG, Loerrach, Germany

OBJECTIVES: The economically justifiable price (EJP) reflects the maximum price that can be set for a healthcare intervention, whilst it still being regarded as an efficient use of limited healthcare resources. This study aims to describe the interdependencies between the EJP, the Incremental Cost Effectiveness Ratio (ICER), and the Willingness-To-Pay (WTP) threshold in health economic evaluations and assess any observed patterns.

METHODS: A three-state partitioned survival model was used to assess the relationship between these three parameters in the evaluation of a hypothetical novel late-stage oncology drug. Various factors including clinical endpoints, costs (drug acquisition, drug administration, patient follow-up, adverse events), discount rates (costs, effects), and utility values were varied within plausible ranges to evaluate their potential impact.

RESULTS: At a constant WTP, any input that increases the ICER generally reduces the EJP for the novel drug. Inputs related to survival and utility values have the largest bearing on ICERs and EJPs, whereas the impact of adverse events and administration costs generally appear to be more limited. The importance of discount rates and cost of patient follow-up increases with survival extending. Five distinct categories were identified: Scenario 1 wherein the EJP remains constant despite changes in input factors for ICER; Scenario 2 involving increased ICER and decreased EJP due to changes; Scenario 3 where both ICER and EJP increase; Scenario 4 in which both ICER and EJP decrease; and Scenario 5 leading to decreased ICER and increased EJP.

CONCLUSIONS: This analysis demonstrates that numerous factors can influence EJP levels and that counterintuitive scenarios are possible. The EJP can vary between different countries, even if they apply the same WTP threshold.

Conference/Value in Health Info

2024-05, ISPOR 2024, Atlanta, GA, USA

Value in Health, Volume 27, Issue 6, S1 (June 2024)




Clinical Outcomes, Economic Evaluation

Topic Subcategory

Comparative Effectiveness or Efficacy, Cost-comparison, Effectiveness, Utility, Benefit Analysis


Cardiovascular Disorders (including MI, Stroke, Circulatory), Diabetes/Endocrine/Metabolic Disorders (including obesity), Neurological Disorders, No Additional Disease & Conditions/Specialized Treatment Areas, Oncology

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