On November 3, 2022, the ISPOR Latin America Consortium Industry Committee hosted the first ISPOR Latin America Health Policy Update in a virtual format to discuss the use of cost-effectiveness thresholds and managed entry agreements (MEAs) in Latin America and their implications in patient access to innovative medicines.
The session was moderated by Dr Diego Guarin, Executive Director, Regional Market Access at MSD and co-chair of FIFARMA’s Health Policies working group and had 3 experts (1) Dr. Victor Palacios, Executive Director, Cancer Prevention and Control at Peru’s Ministry of Health (MoH), (2) Dr. Leonardo Arregoces, former Director Medicines and Health Technologies at Colombia’s MoH and (3) Dr. Jaime Caro, Scientific Chief at Evidera and Professor at McGill, LSE and the National University of Singapore.
Dr Victor Palacios highlighted that the approval of a regulation pertaining to Cancer treatment in Peru had enabled the pathway to implement MEAs and multicriteria decision analysis for health technology assessment (HTA). Some objectives of deploying cost-effectiveness thresholds are to define the health benefit plan and ensure financial sustainability in the health system. Unfortunately, in Peru’s case, potentially subjective decisions were made before implementing the threshold that restricted the health benefit plan, resulting in limited access for innovative medicines.
In March 2022, the cost-effectiveness threshold was estimated using econometric criteria with endogenous variables in healthcare expenditure. The threshold considered life expectancy, healthcare expenditure per capita, and the variation of healthcare expenditure per capita. The period analyzed was between 2002 and 2019 due to economic stability, allowing for a better analysis. During this period, healthcare expenditure per capita increased from 4.2% to 5%, and life expectancy increased by 5 years. The estimated cost-effectiveness threshold ranges from U$2,400 to U$4,800 corresponding to 41% to 81% of the GNP per capita of 2019, respectively.
Determining the cost-effectiveness threshold will allow the government to define which technologies should be included and covered. In addition, the threshold is a reference for the recommendations made by the HTA agency. It was acknowledged, the econometric formula has problems with the endogenous variable, healthcare expenditure as out-of-pocket expenditure represents 1/3 of the total healthcare expenditure and has significantly impacted non-communicable diseases with late diagnosis and higher mortality.
Regarding MEAs, there is a new and independent process from the HTA process, defined by the MoH and executed by the procurement agency. Innovative medicines must complete the HTA process to be eligible. As a first step for implementation, the emphasis has been on financial agreements to reduce uncertainty in the budget impact of a new technology and financial sustainability. It is expected MEAs would lead to a better cost benefit ratio and efficiency in resource utilization.
Dr Leonardo Arregoces presented that improving access to drugs through regulation aims not only to provide access to health technologies that are safe and effective but also to ensure that prices do not compromise the economic and financial sustainability of the healthcare system. The regulation drafted in Colombia included the initial market authorization assessment in terms of safety and efficacy by INVIMA and a concomitant health technology assessment by IETS to inform the price setting at launch. However, due to political and practical challenges it has not been implemented.
Colombia has established a cost-effectiveness threshold using a similar methodology to the United Kingdom. The Ministry of Finance and Academia financed the study, and the data have high reliability. However, it is worth noting that the Ministry of Health did not participate in the study, which is controversial because it decides on coverage. The threshold in Colombia was estimated at U$4,488 USD per years of potential life lost (YPLL) and U$5,181 per QALY. However, if these amounts are updated to 2022, these figures would decrease due to the currency exchange rate fluctuations.
In Colombia, there is a framework to prioritize which health technologies should be covered in the national benefit plan including unmet needs, severity of the condition, clinical benefit gains, willingness to pay (cost-effectiveness analysis) and ability to pay (budget impact analysis). The short-listed technologies are presented in a committee and the recommendations issued are then debated in a public consultation. New technologies must undergo assessments for safety, efficacy and HTA to determine whether their benefits are better than other available technologies and their cost are reasonable in terms of willingness and ability to pay.
Regarding MEAs, there is a draft regulation that addresses financial and performance-based agreements to reduce the economic and clinical uncertainty. The implementation process is outlined from prioritization to impact assessment and was developed with technical assistance from the World Bank and MSH and socialized with key stakeholders. However, in this case as in the value-based price, there are issues not tackled by the regulation that need to be solved for a successful implementation, including the key stakeholder’s capacity and capabilities.
Dr Jaime Caro posited that the threshold approach is mistaken because there is no direct causality between investment and health benefits. For instance, if there is an investment of U$1 million, it can be used to fund salaries of healthcare workers or improve the facilities, the health subsequent improvement could be zero or very low. Therefore, the threshold concept needs to be revised. Using an illustrative figure with the Y axis showing different thresholds and the X axis the total cost, the cost per QALY of different health interventions was displayed and limitations discussed for each, with some preventive programs such as neonatal and maternal care not deemed cost effective.
The theory behind this argument assumes that new technologies displace existing technologies and there is a fixed budget, thus the opportunity cost is the health loss from those technologies displaced. The new technology will be deemed value for money if generates more QALYs at or below the threshold. However, health systems are complex in their funding sources, provision (sub-systems) with a budget that is decentralized and not fixed. Although thresholds are useful in assessing value for money, they should be contextualized considering societal values and stakeholder buy-in.
Finally, Dr Caro mentioned that MEAs can be negotiated according to the health system priorities and budget. If the main uncertainty or concern is regarding financial sustainability, financial agreements are preferred and had been preferred by different countries, being the most implemented form of MEA.