Changing health environment: The challenge to demonstrate cost-effectiveness of new compounds

Abstract

With the development and introduction of costly new technologies and restrictive drug budgets, health economic evaluation has gained increasing importance. Health economic evaluation is now mandatory as part of reimbursement decisions in many countries. Cost-effectiveness analysis, which relates to a defined alternative and indication, and for a specific patient group and specific perspective, is the preferred health economic analysis used to make valued judgements about the efficiency of a new treatment. The costs of the new treatment are assessed relative to its potential benefits in terms of improved health, measured as increased survival and impact on quality of life. The cost per quality-adjusted life-year (QALY), an index combining quality of life and length of life, facilitates comparisons between treatments for different diseases. Governments are increasingly using QALYas an outcome measure in economic evaluation. The QALY provides an estimate, which is then used to make a decision dependent on the willingness to pay for the treatment, based on a certain threshold value. Current thresholds, usually in the range of approximately US$50 000 a year (comparable with the annual cost of renal dialysis), vary between different countries. However, these thresholds are not absolute limits; choices about the allocation of healthcare resources are also influenced by other factors, including considerations of equity and the severity of the disease.