Priority Decisions - The Authority Challenge
The following was presented during the First Plenary Session, “Health
Technology Assessment (HTA) as a Reimbursement and Priorities in Health
Care,” at the ISPOR 9th Annual European Congress, 29 October 2006,
Figure 1 gives a short overview of the situation in Norway (see below).
Norway is not a member of the European Union (EU), but is a member of the
EU single market through the EEA agreement. When it comes to pharmaceuticals,
we take part in the EMEA Corporation so in this respect we are more
or less like a member of the EU. Seventy percent of the pharmaceutical costs
are covered by public spending which again is financed through taxes.
Norway’s social security system, the Norwegian Labor and Welfare organization
(NLWO), covers 85% of the 70% through two main reimbursement
systems. First we have the general reimbursement system that has a positive
list of pharmaceuticals that are included. Second, Norway also has a
system of individual reimbursement where the physician can apply for reimbursement
on a named patient basis. If the application is granted, then the
patient has reimbursement as if the pharmaceutical was included in the general
system. The split between general reimbursement through a positive list
and reimbursement on a named patient basis is also approximately 85% and
15%. In addition to reimbursement by NLWO the hospitals and institutions
cover 15% of the public spending on pharmaceuticals. The hospitals are
organized in five regions as five Regional Health Authorities and are further
divided into hospital trusts. They have separate budgets and they are responsible
for covering all use of pharmaceuticals in the hospitals. It is important
to note not being on the positive list for reimbursement in Norway does not
necessarily implicate that the patient is cut off from public coverage, as the
positive list is 85% of the 85%.
Let us now focus on the question how to make good decisions regarding
which pharmaceuticals to include in the positive list for general reimbursement.
Ethics and Economics
Many of us may believe that it is somewhat unethical to take economics into
consideration when it comes to illness and health. In Norway we have actually
gone relatively far when it comes to accepting cost effectiveness as an
important criterion in priority decisions, not only for pharmaceuticals but also
for health care in general. Actually this is stated in Norway’s legislation.
The first quote in Figure 2 is taken from the act relating to patients’
rights and the right to necessary health care. This right only applies if the
patient can be expected to benefit from the health care and if the costs are
reasonable in relation to the effect of the measure. It has also been issued an
official report stating what kind of criteria that should be used when making
priority decisions. The criteria stated were severity of illness, expected benefits
from the treatment, and finally cost effectiveness. The leader of the
group that made this report is a professor in theology and also a member of
our parliament and he has made the statement that “Cost is a relevant ethical
argument”. Have we gone totally crazy at the Polar Circle? Has the snow
and the ice gotten the best of our empathy, or is it just the opposite? Is it ethical
to consider costs in relation to health or not? We on the authority side
are very often accused of just being focused on saving money without taking
the patient into consideration. This claim has been made many times. The
goal is definitely not to save money to make the situation bad for the patients.
All of us who are involved in the pharmaceutical field, we have a common
goal: best possible health. But maybe we have slightly different interpretations
of what “best possible” might mean or implicate. The individual patient
will of course state that “best possible” means best possible regardless of
cost. But from the society’s side, we have to see things differently because
then we must be concerned with obtaining best possible treatment for all the
patients within the limits of our available resources. If we accept the fact that
available resources are limited, it changes a lot of things upside down.
Medical and technological possibilities are being developed and offered to us
all the time, which is great. We need new treatments and new good drugs.
We need important new possibilities to treat people. But these new possibilities
are always offered at a higher cost as shown by the red line in
Figure 3 on the following page.
Therefore in a system where the authorities are covering the major part of the
costs, the problem arises when the availability of society’s resources (green
line) doesn’t increase as rapidly as the cost of possibilities offered. This creates a problem because it develops a difference between the expectations
of what should be covered and be available to all, and what society is actually
able to cover. It develops into something we can call a “health gap” in the
system. Norway can be considered a rich country. Norway has struck oil in
the North Sea and has been able to build up an oil fund with a lot of money.
Why can’t we just take some of that money and throw it in the health gap to
close it and get it over with? Would it solve the problem? Only temporarily; it
would soothe the symptoms for a while, but not cure the problem since this
solution does not change the inclinations of the red and the green lines. Even
if we spent all our savings, the problem would start to develop again the next
day. It is not possible for society to cover what the individual patients’ regard
as best possible treatment in all fields. It is simply not possible. Therefore it
is the authorities’ duty to balance the needs to obtain best possible treatments
for as many as possible; to maximize health in the nation within the
limits of available resources. To be able to do this, you need to make good
priority decisions. By doing so, you will generate more health within the available
resources and better health care in total for the population. Given this
line of arguments, the argument that it is unethical not to take economics into
consideration when prescribing a pharmaceutical is questionable.
Priority Decisions at Different Levels
Figure 4 illustrates the difficult task that has to be done through priority decisions.
The challenge is to obtain best possible health within the budget that
We need to identify resources that can be of better use and resources that
can have a better alternative use somewhere else in the system. And then
identify where we ought to invest more resources because it will generate a
lot of health. And then finally make the switch between these two through
good priority decisions.
In the process of trying to implement systems for good priority decisions, we
have learned some important lessons. One of the most important is shown
in Figure 5 below.
Priority decisions can be made at different levels. Example: If you have a
reimbursement application for a new drug lowering cholesterol, you usually
compare the new drug to other measures that lower cholesterol. By doing
this you can decide whether you regard the new pharmaceutical as a good
investment or not. But doing this is actually not sufficient. You also have to
evaluate the investment in reimbursing the new pharmaceutical against other
measures in health care, like psychiatric care or many other possibilities. In
the process of deciding a new budget, the Minister will be faced with many
very good suggestions for new investments. Some of them might be pharmaceuticals,
but there will also be a lot of other suggested measures within
the health care field. To make a responsible budget, the Minister knows that
only a few of the suggestions can be selected and brought further. It is not
possible to select them all, even though they can be regarded as cost effective.
This is a second level of priority decisions. As a next step the Minister
has to bring the selected measures to the government level and have the
healthcare investments compared against all the other investments suggested
by the other ministries, for instance schools and transportation. This will
be the third level of decisions. The outcome in each level may vary - and still
be totally correct. If we have a pharmaceutical on the first level which is
regarded as cost effective and suggested as an investment, it might still be
that there are other measures on the next decision level that are even more
cost effective or preferred for other reasons. So a “yes” decision on the first
level might be totally correct, and a “no” decision on the next level might also
be totally correct even though it involves the same pharmaceutical with the
same documentation. This illustrates that a positive cost effectiveness evaluation
of a pharmaceutical at the first decision level doesn’t necessarily
implicate that it should be given priority and be reimbursed. If reimbursement
should be granted solely on the basis of the first level decision, it would in
reality mean that we gave right of way to pharmaceuticals compared to other
measures in society.
How do we try to put this experience into practice when it comes to uptake
on the positive list for reimbursement of pharmaceuticals in Norway?
As shown in Figure 6, the applications for reimbursement
are made by the industry and assessed by the Norwegian Medicines
We have developed guidelines for these applications and we are using four
main criteria when assessing: Serious illness, need for long term treatment,
well documented effect, and cost effectiveness. For new chemical entities,
the NoMA might consult an external Reimbursement Committee to get guidance
in all the difficult questions you usually are facing when you assess an
application. This committee does not recommend or decide upon reimbursement,
they just give guidance regarding questions associated to the documentation.
The scope of the assessments is most of the times “Level one”
decisions, which means that a new pharmaceutical is compared to alternative
measures within the same diagnosis or condition. NoMA has a strict time
limit of 180 days for deciding maximum price and making a reimbursement
decision. This restriction in time makes it rather difficult to use HTA input
from external sources. The assessments by NoMA may lead to three possible
outcomes. First possibility: The new drug is not considered to fulfill the
four criteria mentioned earlier. In this case the application will be rejected.
Second: It might fulfill the criteria at the same or lower cost as the comparators.
In this case it is granted reimbursement and put on the positive list.
Third: It might fulfill the criteria, but reimbursement will implicate an extra
investment from society. The pharmaceutical can be considered as cost
effective, but reimbursing it will lead to higher costs. In this case it is automatically
rejected, but the NoMA makes a recommendation and forwards this
to the Ministry for priority decision on the next level.
In the Level 2 decisions made by the ministry, investment in the new pharmaceutical
is compared to other measures within the healthcare budget as
shown in Figure 7 below.
This typically happens during the budget processes. Maybe the suggested
investment is taken further to Government and Parliament and compared to
all other proposed measures within the total budget (Level 3). And maybe it
is not, because somewhere in the process it did not make it in competition
with other good measures proposed.
We are often faced with the claim that drugs are reimbursed very late in
Norway, and that this is due to this system. It has been in place since the
summer of 2003 and five pharmaceuticals have been brought forward to
Level 2 priority decisions to this date-only five. To put this figure into perspective,
NoMA handled in total 232 applications for reimbursement in the
years 2004 and 2005 only. Twenty-eight of these were for new chemical entities
and as mentioned only five of them were brought further to Level 2. Of
those who were brought further, two were granted reimbursement during the
first budget process, two have been rejected one time, and then we are left
with one pharmaceutical that has been rejected several times. Based on this,
it is fair to claim that only a fraction of the reimbursement applications ends
up in the system for Level 2 decisions.
HTA and CEA in Reimbursement Decisions
BIt is not meant that it is quite meaningless to use HTA and CEA in Norway
since it does not give any sort of guarantee for reimbursement even if the
documentation makes it through the assessment by NoMA. It is still is very
important. As shown in Slide 8 it is of course used as a central criterion when
NoMA is doing their assessment and granting reimbursement, but the documentation
is also needed if the application is taken further to the next levels
HTA is done by the Norwegian Knowledge Centre for the Health Services, and
they of course give their input to NoMA in many respects. It is very important
for the Knowledge Centre to keep an independent and transparent position
and not to be associated too closely to the priority decisions that
includes budgets and economic considerations. The reimbursement decisions
are always taken by NoMA and not by the Knowledge Centre. The centre
does not even give recommendations in the matter. Guidelines in Norway
are made by the Directorate for Health and Social Affairs. This represents the
authority’s guidelines which should reflect the priority decisions.
Division of Responsibilities
It is important that it is clearly stated which bodies have the responsibility to
convey the priority decisions (which inevitably must take economics into
consideration), and which body should only deal with the evidence basis.
In Norway we have put in place a system for information regarding pharmaceuticals
as shown in Figure 9:
NoMA give information regarding the authority decisions - the priority decisions,
economic considerations included. The Directorate for Health and
Social Affairs is giving the authority guidelines for disease areas. Use of
pharmaceuticals might constitute an important part in these. The guidelines
should also reflect the priority decisions that have been made. Finally we
have the Knowledge Centre which is an independent and transparent unit that
provides information needed in the system. When we have different entities
involved in information, it is important to have good coordination. The system
must give messages that are consistent, and at the strategically right
time. We have therefore established a point of cooperation between these
three entities and also included the Labour and Welfare Organisation who
represents the payer in the system.
Re-Evaluation of Reimbursement Decisions
Cost effectiveness evaluation must be regarded more or less as fresh goods.
Results are constantly changing. This might for instance be due to new
generic competition that brings dramatic price changes, publication of new
studies that change the basis for the evaluations or the introduction of new
competing measures. To keep a system based on cost effectiveness fairly up
to date means that you have to constantly re-evaluate. This is a process that
can be pre-scheduled and you do not need to have formal time limits. For this
reason it is easier to implement HTA by the Knowledge Centre. There are
many steps in a process like the re-evaluations, and the country specific
economic aspects are considered only towards the end. This means that the
main part of the first steps will be very similar for all the Nordic countries.
We are hoping for a Nordic corporation in this aspect and a suggestion for
corporation and facilitation of the process has been presented to the Nordic
Council of Ministers. The proposal is currently under evaluation and I hope
that this can come into place.
In a re-evaluation, we will have four possible outcomes in Norway. First, it
can be a status quo for the reimbursement status of a pharmaceutical. The
pharmaceutical stays in the list. Second, we can have new products accepted.
If a pharmaceutical is not regarded cost effective for its total indication in
Norway, we are trying to focus reimbursement towards subgroups of
patients for which the pharmaceutical can be regarded as cost effective.
Instead of only assessing the whole indication and maybe having to reject the
application, we are trying to define subgroups of patients who fulfill the
criteria. These restrictions are mediated as product specific conditions for
reimbursement. Third, there might be a change of the conditions for reimbursement
for the product. And finally fourth: If NoMA concludes that the
pharmaceutical no longer fulfills the criteria for any important subgroup of
patients, it is excluded from the list.
Condition for Reimbursement: “Preferred Product”
We have a system called preferred product which can be regarded as a special
condition for reimbursement. It can be used for therapeutically equivalent
products. Instead of going into therapeutic reference pricing and all the problems
that might occur in association with that, we have conditions set for
reimbursement under the system of preferred product. NoMA defines which
of the therapeutically equivalent pharmaceuticals is preferred. The condition
for reimbursement is that the preferred products are prescribed unless there
is a valid medical reason for using other products. If such reason exists, the
reason should be stated in the patient record. We have introduced this for
On the X axis in Figure 10 you have time, on the Y axis is market share measured
in defined daily doses.
The red line is atorvastatin, Lipitor, and the blue line is simvastatin. It is easy
to identify from the graph when generic competition occurred and marketing
activities for simvastatin stopped, while the marketing for atorvastatin kept
on. The graph also clearly illustrates the change that occurred when the system
of preferred product was introduced. More than 90% of new prescriptions
of statins in Norway today are for simvastatin. But still we have a lot of
patients left on 10 and 20 mg atorvastatin, so we have to obtain better results
when it comes to switching.
Up to this point, only reimbursement of pharmaceuticals through the social
security system has been mentioned. But we also have a hospital sector
where a lot of new and very expensive pharmaceuticals are being introduced.
It is the same basis of knowledge that is needed for making good priority
decisions in this sector as it is for general reimbursement. We do not currently
have a system in place to take care of this in the hospital sector. Setting
up a general system for making good priority decisions is probably even
more complex in hospitals because priorities should be made within the hospital’s
existing budget, but you also have to address the question of when it
is correct to introduce additional resources from the central health care
budget. A new National Health Plan was introduced last month. A National
Board on Quality and Priority Issues is proposed established to give advice
in difficult priority questions, especially when it comes to new technologies
like pharmaceuticals. Another challenge is to avoid prescribing influenced by
the wish to shift costs from hospital budgets to pharmaceuticals covered by
the social security. A typical example has been the TNF inhibitors. One of
them is a typical hospital product that has to be covered by the hospital,
while the others can be prescribed on the social security. This resulted in a
prescribing pattern that was influenced by the different budget situations.
Therefore, it was recently decided to take all financing of these drugs into the
same system and give the responsibility for financing to the hospitals.
As shown in Figure 12, in our opinion, the health care budget is definitely a
limited resource and priority decisions will of course become tougher and
tougher. The health gap will increase. This will make the need for good priority
decisions stronger and stronger. HTA and CEA are very important tools to
help us in making the right decisions, but documentation of a positive cost
effectiveness ratio is not necessarily enough to secure uptake in the reimbursement
system. We have to compare investment in reimbursement of
new pharmaceuticals to investments in other measures in society. But good
pharmaceuticals will always be needed and welcomed, and there has never
been more resources spent on pharmaceuticals as today.