The Official News & Technical Journal Of The International Society For Pharmacoeconomics And Outcomes Research

Are We There Yet? - The Impact of Pharmacoeconomics and Outcomes Research on Decision Making

Michael Drummond PhD, 2006-2007 ISPOR President and Professor of Health Economics, University of York, York, UK

Much has changed since ISPOR came into being in 1995. At that time, only Australia and a handful of Canadian provinces were using pharmacoeconomics and outcomes research in decisions about the reimbursement of medicines. Nowadays, the studies conducted by the Society’s members are being used by several reimbursement agencies in Europe and there are signs that the authorities in several Asian and Latin American countries are beginning to request these analyses.

Of course, just because an economic evaluation or quality of life study has been submitted to the authorities, it does not necessarily mean that it has had a major impact on the decision. Indeed, in the past, several commentators have questioned the impact of pharmacoeconomic studies [1, 2]. Nevertheless, data from Australia [3] and the UK [4] does show that the incremental cost-effectiveness ratio is linked to the reimbursement decision. Indeed, in the UK, where the basis of NICE’s guidance is in the public domain, it is clear that the impact of the medicine on clinical and cost-effectiveness is a major driver of the decision.

However, before we pat ourselves on the back, what about those parts of the world where pharmacoeconomics and outcomes research is having very little impact? In most countries in Southern Europe the emphasis seems to be on negotiating a low price, often by reference to prices of the medicine in other countries. Coupled with this, there appears to be few attempts to encourage the cost-effective use of medicines once launched. The role of pharmacoeconomics and outcomes research appears to be limited, at least for the present.

Also, in the world’s largest market, the United States, pharmacoeconomics and outcomes research is struggling to establish a toe-hold. Here, the place of a medicine on the formulary can depend more on the size of the accompanying rebate than the size of the incremental cost-effectiveness ratio. In addition, rather than deciding on inclusion or exclusion of a product based on a cost-effectiveness assessment, a common way of dealing with medicines of questionable cost-effectiveness is to put them on a higher tier of the formulary, thereby increasing patient co-pays. This helps the health plan manage its budget, but the final assessment of value for money rests with patients, either alone or in conjunction with their physicians.

Of course, the situation is not as bad as I have painted. The Center for Medicare and Medicaid Services (CMS) is taking a serious interest in costeffectiveness, the FDA now has an official view on the role of patient reported outcomes (PROs) and several health plans (large and small) are asking for cost-effectiveness data, in line with the AMCP format, to inform their decision-making.

I doubt whether ISPOR alone can bring about reform of those health care systems that currently fail to use pharmacoeconomics and outcomes research to any great extent (although, it could be a target for ISPOR’s Vision 2015!). Neither do I think it is worthwhile blindly promoting our standard forms of analyses in systems that have found it difficult to accommodate them. Rather I think we need to understand better the current objectives and concerns of decision makers in these systems in order to assess how we can become more useful. For example, at the level of the national or local payer, should pharmacoeconomic analyses be focused more on assisting price negotiations, or the determination of discounts? Should such analyses become an integral part of risk-sharing schemes? In settings where patients have to assess value for money, should our analyses be directed more towards them? This would put much more emphasis on the description and measurement of outcomes, than on standard assessments of costeffectiveness?


Clearly we aren’t there yet. Therefore I welcome the recent initiative of the Society to hold sessions in our meetings run by decision makers, for decision makers. Perhaps we will learn something.



  1. Anis AH, Gagnon Y. Using economic evaluations to make formulary coverage decisions: so much for guidelines? Pharmacoeconomics 2000;18: 55-62.

  2. Laupacis A. Inclusion of drugs in provincial drug benefit programs: who is making these decisions, and are they the right ones? Can Med Assoc J 2002;166:44-7.

  3. George B, Harris A, Mitchell A. Cost-effectiveness and the consistency of decision-making: evidence from pharmaceutical reimbursement in Australia (1991 to 1996). Pharmacoeconomics 2001;19:1103-9.

  4. Devlin N, Parkin D. Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis. Health Econ 2004;13:437-52.

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