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Governments Need Better Guidance to Maximise Value for Money: The Case of Australia’s Pharmaceutical Benefits Advisory Committee

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Abstract

In Australia, the Pharmaceutical Benefits Advisory Committee (PBAC) makes recommendations to the Minister for Health on which pharmaceuticals should be subsidised. Given the implications of PBAC recommendations for government finances and population health, PBAC is required to provide advice primarily on the basis of value for money. The aim of this article is twofold: to describe some major limitations of the current PBAC decision-making process in relation to its implicit aim of maximising value for money; and to suggest what might be done toward overcoming these limitations. This should also offer lessons for the many decision-making bodies around the world that are similar to PBAC. The current PBAC decision-making process is limited in two important respects. First, it features the use of an implicit incremental cost-effectiveness ratio (ICER) threshold that may not reflect the opportunity cost of funding a new technology, with unknown and possibly negative consequences for population health. Second, the process does not feature a means of systematically assessing how a technology may be of greater or lesser value in light of factors that are not captured by standard measures of cost effectiveness, but which are nonetheless important, particularly to the Australian community. Overcoming these limitations would mean that PBAC could be more confident of maximising value for money when making funding decisions.

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Acknowledgments

The authors thank Suzanne Dyer for research assistance and Annette Braunack-Mayer, Jonathan Karnon and Tracy Merlin for formative discussion.

Author contributions

Drew Carter and Hossein Haji Ali Afzali made substantial contributions to the conception and plotting of the manuscript, to the analysis and interpretation of data, and to critical revision of the manuscript so as to contribute to its interpretation. Arlene Vogan made substantial contributions to the analysis and interpretation of data, and drafted and critically revised the manuscript so as to contribute to its interpretation.

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Authors and Affiliations

  1. School of Public Health, The University of Adelaide, Adelaide, SA, 5005, Australia

    Drew Carter & Hossein Haji Ali Afzali

  2. Adelaide Health Technology Assessment, School of Public Health, The University of Adelaide, Adelaide, SA, 5005, Australia

    Arlene Vogan

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Correspondence to Drew Carter.

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Funding

Drew Carter and Hossein Haji Ali Afzali are supported by the ‘Health Care in the Round’ Capacity Building Grant in Population Health (National Health and Medical Research Council Grant ID 565501).

Conflict of interest

Drew Carter has acted as a consultant to Adelaide Health Technology Assessment (AHTA) on assessments undertaken for PBAC and the Medical Services Advisory Committee (MSAC). Arlene Vogan is an employee of AHTA, an independent academic group contracted by the Department of Health to conduct or evaluate health technology assessments for the listing of pharmaceuticals and other health technologies on behalf of PBAC and MSAC. Hossein Haji Ali Afzali is a member of the Evaluation Sub-Committee (ESC) of MSAC. The opinions expressed in the article are those of the authors.

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Carter, D., Vogan, A. & Haji Ali Afzali, H. Governments Need Better Guidance to Maximise Value for Money: The Case of Australia’s Pharmaceutical Benefits Advisory Committee. Appl Health Econ Health Policy 14, 401–407 (2016). https://doi.org/10.1007/s40258-015-0220-3

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