THE PRICE OF SUBSTITUTE TECHNOLOGIES

Author(s)

Santos A1, Guerra Junior AA2, Noronha KVMDS1, Andrade MV1, Ruas CM1
1Universidade Federal de Minas Gerais, Belo Horizonte, Brazil, 2College of Pharmacy, Federal University of Minas Gerais, Belo Horizonte, Brazil

Presentation Documents

Only a small share of new drugs are truly innovative; 85-90% of all new health technologies have little or no advantage over existing therapeutic alternatives. Health economic evaluations can be used to induce acceptable market prices for new technologies through threshold pricing. With these assertions in mind, this work discusses a cost-effectiveness threshold (λ) to be applied to the price regulation of substitute technologies. Considering that substitute technologies add only small marginal benefits in terms of innovation or ethical considerations to the system, it does not make sense to allow a loss of efficiency in order to list them. It has been postulated that the threshold calculated from opportunity costs (κ) represents its maximum possible value and that there must be a threshold (β) that maximize consumer surplus. For a substitute technology to be listed, the cost of treatment associated to it must be lower than the cost of treatment with the comparator added to the difference in effectiveness priced at the threshold. There is no reason for us to believe that the oligopolistic pharmaceutical market is currently charging prices at the cost of production. That way, the cost-effectiveness ratio of the comparator, when lower than κ, is shown through a deductive process to be a plausible estimate for λ that fulfills the objective of maximizing consumer benefit granting producers a part of the combined surplus to stimulate R&D; i. e. it would be between β and κ. In conclusion, the price of substitute technologies should be limited by the efficiency of the comparators.

Conference/Value in Health Info

2019-09, ISPOR Latin America 2019, Bogota, Colombia

Value in Health Regional, Volume 20S (October 2019)

Code

PNS7

Topic

Economic Evaluation

Topic Subcategory

Thresholds & Opportunity Cost

Disease

No Specific Disease

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