OBJECTIVES: To analyze hypotheses underlying the assumption that more criteria about clinical, managerial, and economic assessment have a positive impact on the judicious decisions of new drug coverage in public health insurance METHODS: I developed a structural equation model in which the process components were considered latent constructs and operationalized by a set of proposed criterions. The dependent variable ''judicious decision'' was defined by the relevance of clinical, economic, and other managerial criteria in new drug appraisal for reimbursement (as opposed to appraisal based on stakeholder lobbying). We conducted a direct and email survey among individuals familiar with coverage decisions of third-party payers in Iran health system in 2013. Partial least squares path modeling (PLS-PM) was used, which allows analyzing small sample sizes without distributional assumptions. Data on 14 decisions criteria from 8 locations and 202 experts in Iran health system were used for model estimation RESULTS: Managerial criteria (regression coefficient [RC] =0.235; P <0.001) and clinical criteria (RC = 0.424; P <0.001) had a significant influence on the construct of judicious decision. The path from economic criteria to judicious decision was not significant (RC = 0.103; P = 0.182). For the judicious decision construct, a considerable share of the variance was explained (R2 = 0.35). Biases from missing data and nesting effects were assessed through sensitivity analyses. CONCLUSIONS: Clinical assessment and intense managerial criteria appeared effective in promoting judicious decision making, whereas the influence of economic criteria was not significant.