Do Health Technology Assessment organisations consider manufacturers' costs in relation to drug price? A study of reimbursement reports.

INTRODUCTION: Drug reimbursement decisions are often made based on a price set by the manufacturer. In some cases, this price leads to public and scientific debates about whether its level can be justified in relation to its costs, including those related to research and development (R&D) and manufacturing. Such considerations could enter the decision process in collectively financed health care systems. This paper investigates whether manufacturers' costs in relation to drug prices, or profit margins, are explicitly mentioned and considered by health technology assessment (HTA) organisations. METHOD: An analysis of reimbursement reports for cancer drugs was performed. All relevant Dutch HTA-reports, published between 2017 and 2019, were selected and matched with HTA-reports from three other jurisdictions (England, Canada, Australia). Information was extracted. Additionally, reimbursement reports for three cases of expensive non-oncolytic orphan drugs prominent in pricing debates in the Netherlands were investigated in depth to examine consideration of profit margins. RESULTS: A total of 66 HTA-reports concerning 15 cancer drugs were included. None of these reports contained information on manufacturer's costs or profit margins. Some reports contained general considerations of the HTA organisation which related prices to manufacturers' costs: six contained a statement on the lack of price setting transparency, one mentioned recouping R&D costs as a potential argument to justify a high price. For the case studies, 21 HTA-reports were selected. One contained a cost-based price justification provided by the manufacturer. None of the other reports contained information on manufacturer's costs or profit margins. Six reports contained a discussion about lack of transparency. Reports from two jurisdictions contained invitations to justify high prices by demonstrating high costs. CONCLUSION: Despite the attention given to manufacturers' costs in relation to price in public debates and in the literature, this issue does not seem to get explicit systematic consideration in the reimbursement reports of expensive drugs.

Mixed evidence for the compression of morbidity hypothesis for smoking elimination-a systematic literature review.

BACKGROUND: There is debate around the composition of life years gained from smoking elimination. The aim of this study was to conduct a systematic review of the literature to synthesize existing evidence on the effect of smoking status on health expectancy and to examine whether smoking elimination leads to compression of morbidity. METHODS: Five databases were systematically searched for peer-reviewed articles. Studies that presented quantitative estimates of health expectancy for smokers and non-/never-smokers were eligible for inclusion. Studies were searched, selected and reviewed by two reviewers who extracted the relevant data and assessed the risk of bias of the included articles independently. RESULTS: The search identified 2491 unique records, whereof 20 articles were eligible for inclusion (including 26 cohorts). The indicators used to measure health included disability/activity limitations (n=9), health-related quality of life (EQ-5D) (n=2), weighted disabilities (n=1), self-rated health (n=9), chronic diseases (n=6), cardiovascular diseases (n=4) and cognitive impairment (n=1). Available evidence showed consistently that non-/never-smokers experience more healthy life years throughout their lives than smokers. Findings were inconsistent on the effect of smoking on the absolute number of unhealthy life years. Findings concerning the time proportionally spent unhealthy were less heterogeneous: nearly all included articles reported that non-/never-smokers experience relatively less unhealthy life years (e.g. relative compression of morbidity). CONCLUSIONS: Support for the relative compression of morbidity due to smoking elimination was evident. Further research is needed into the absolute compression of morbidity hypothesis since current evidence is mixed, and methodology of studies needs to be harmonized.

How do combinations of unhealthy behaviors relate to attitudinal factors and subjective health among the adult population in the Netherlands?

BACKGROUND: Health behaviours like smoking, nutrition, alcohol consumption and physical activity (SNAP) are often studied separately, while combinations can be particularly harmful. This study aims to contribute to a better understanding of lifestyle choices by studying the prevalence of (combinations of) unhealthy SNAP behaviours in relation to attitudinal factors (time orientation, risk attitude) and subjective health (self-rated health, life expectancy) among the adult Dutch population. METHODS: In total 1006 respondents, representative of the Dutch adult population (18-75 years) in terms of sex, age, and education, were drawn from a panel in 2016. They completed an online questionnaire. Groups comparisons and logistic regression analyses (crude and adjusted) were applied to analyse (combinations of) SNAP behaviours in relation to time orientation (using the Consideration of Future Consequences scale comprising Immediate (CFC-I) and Future (CFC-F) scales) and risk attitude (Health-Risk Attitude Scale; HRAS-6), as well as subjective health (visual analogue scale and subjective life expectancy). RESULTS: In the analyses, 989 respondents (51% men, average 52 years, 22% low, 48% middle, and 30% high educated) were included. About 8% of respondents engaged in four unhealthy SNAP behaviours and 18% in none. Self-rated health varied from 5.5 to 7.6 in these groups, whilst subjective life expectancy ranged between 73.7 and 85.5 years. Logistic regression analyses, adjusted for socio-demographic variables, showed that smoking, excessive drinking and combining two or more unhealthy SNAP behaviours were significantly associated with CFC-I scores, which increased the odds by 30%, 18% and 19%, respectively. Only physical inactivity was significantly associated with CFC-F scores, which increased the odds by 20%. Three out of the four SNAP behaviours were significantly associated with HRAS-6, which increased the odds between 6% and 12%. An unhealthy diet, excessive drinking, and physical inactivity were significantly associated with SRH, which decreased the odds by 11%. Only smoking was significantly associated with subjective life expectancy, which decreased the odds by 3%. CONCLUSION: Our findings suggest that attitudinal factors and subjective health are relevant in the context of understanding unhealthy SNAP behaviours and their clustering. This emphasizes the relevance of a holistic approach to health prevention rather than focusing on a single unhealthy SNAP behaviour.

Severity-Adjusted Probability of Being Cost Effective.

BACKGROUND: In the context of priority setting, a differential cost-effectiveness threshold can be used to reflect a higher societal willingness to pay for quality-adjusted life-year gains in the worse off. However, uncertainty in the estimate of severity can lead to problems when evaluating the outcomes of cost-effectiveness analyses. OBJECTIVES: This study standardizes the assessment of severity, integrates its uncertainty with the uncertainty in cost-effectiveness results and provides decision makers with a new estimate: the severity-adjusted probability of being cost effective. METHODS: Severity is expressed in proportional and absolute shortfall and estimated using life tables and country-specific EQ-5D values. We use the three severity-based cost-effectiveness thresholds (€20.000, €50.000 and €80.000, per QALY) adopted in The Netherlands. We exemplify procedures of integrating uncertainty with a stylized example of a hypothetical oncology treatment. RESULTS: Applying our methods, taking into account the uncertainty in the cost-effectiveness results and in the estimation of severity identifies the likelihood of an intervention being cost effective when there is uncertainty about the appropriate severity-based cost-effectiveness threshold. CONCLUSIONS: Higher willingness-to-pay thresholds for severe diseases are implemented in countries to reflect societal concerns for an equitable distribution of resources. However, the estimates of severity are uncertain, patient populations are heterogeneous, and this can be accounted for with the severity-adjusted probability of being cost effective proposed in this study. The application to the Netherlands suggests that not adopting the new method could result in incorrect decisions in the reimbursement of new health technologies.

Rational expectations? An explorative study of subjective survival probabilities and lifestyle across Europe.

BACKGROUND: Subjective survival probabilities (SSPs) are considered relevant in relation to lifestyle as lifestyle improvements may improve health and lower mortality risk. OBJECTIVE: To study individuals' SSP in a population of elderly (i.e. 60 years and older) from 15 European countries. METHODS: Data from the second wave of the Survey of Health, Ageing and Retirement in Europe (SHARE) were used. Individuals were asked about their chances to live up to age [T] or more. These SSPs were related to general characteristics, health and lifestyle. In addition, cross-country comparisons were made. The validity of the probabilistic elicitation format used for collecting SSPs was also addressed. RESULTS: The average subjective probability of surviving the next 9-15 years was around 57%. Mean SSPs varied significantly across age, with lower means at higher ages. Cross-country comparisons showed lowest mean in the Czech Republic (42%) and the highest in Denmark (64%). SSPs correlated with socio-demographic, socio-economic and also strongly with (objective) health characteristics except for obesity. Smokers reported significantly lower SSPs compared to non-smokers, but no difference was found between non-smokers and quitters. Excessive alcohol consumers reported significantly higher SSPs than moderate consumers and abstainers, but this only held for female excessive drinkers. Physical inactivity was negatively associated with SSPs, but this relation was attenuated at higher ages. In this context, important cross-country differences were found. CONCLUSIONS: Subjective survival probabilities are informative and relevant in relation to lifestyle decisions and can be validly obtained in elder people. The results from this study provide interesting implications for health policy, health communication strategies and future research.

A new prevention paradox: the trade-off between reducing incentives for risk selection and increasing the incentives for prevention for health insurers.

The Dutch risk equalization scheme has been improved over the years by including health related risk adjusters. The purpose of the Dutch risk equalization scheme is to prevent risk selection and to correct for predictable losses and gains for insurers. The objective of this paper is to explore the financial incentives for risk selection under the Dutch risk equalization scheme. We used a simulation model to estimate lifetime health care costs and risk equalization contributions for three cohorts (a smoking; an obese; and a healthy living cohort). Financial differences for the three cohorts were assessed by subtracting health care costs from risk equalization contributions. Even under an elaborate risk equalization system, the healthy living cohort was still most financially attractive for insurers. Smokers were somewhat less attractive, while the obese cohort was least attractive. Lifetime differences with healthy living individuals (revenues minus costs) were modest: €4840 for obese individuals and €1101 for smokers. Under a simple form of risk equalization these differences were higher, €8542 and €4620 respectively. Improvement of the risk equalization scheme reduced the gap between costs and revenues. Incentives for undesirable risk selection were reduced, but simultaneously incentives for health promotion were weakened. This highlights a new prevention paradox: improving the level playing field for health insurers will inevitably limit their incentives for promoting the health of their clients.

Productivity cost calculations in health economic evaluations: correcting for compensation mechanisms and multiplier effects.

Productivity costs related to paid work are commonly calculated in economic evaluations of health technologies by multiplying the relevant number of work days lost with a wage rate estimate. It has been argued that actual productivity costs may either be lower or higher than current estimates due to compensation mechanisms and/or multiplier effects (related to team dependency and problems with finding good substitutes in cases of absenteeism). Empirical evidence on such mechanisms and their impact on productivity costs is scarce, however. This study aims to increase knowledge on how diminished productivity is compensated within firms. Moreover, it aims to explore how compensation and multiplier effects potentially affect productivity cost estimates. Absenteeism and compensation mechanisms were measured in a randomized trial among Dutch citizens examining the cost-effectiveness of reimbursement for smoking cessation treatment. Multiplier effects were extracted from published literature. Productivity costs were calculated applying the Friction Cost Approach. Regular estimates were subsequently adjusted for (i) compensation during regular working hours, (ii) job dependent multipliers and (iii) both compensation and multiplier effects. A total of 187 respondents included in the trial were useful for inclusion in this study, based on being in paid employment, having experienced absenteeism in the preceding six months and completing the questionnaire on absenteeism and compensation mechanisms. Over half of these respondents stated that their absenteeism was compensated during normal working hours by themselves or colleagues. Only counting productivity costs not compensated in regular working hours reduced the traditional estimate by 57%. Correcting for multiplier effects increased regular estimates by a quarter. Combining both impacts decreased traditional estimates by 29%. To conclude, large amounts of lost production are compensated in normal hours. Productivity costs estimates are strongly influenced by adjustment for compensation mechanisms and multiplier effects. The validity of such adjustments needs further examination, however.

The evaluation of lifestyle interventions in the Netherlands.

Current investments in preventive lifestyle interventions are relatively low, despite the significant impact of unhealthy behaviour on population health. This raises the question of whether the criteria used in reimbursement decisions about healthcare interventions put preventive interventions at a disadvantage. In this paper, we highlight the decision-making framework used in the Netherlands to delineate the basic benefits package. Important criteria in that framework are 'necessity' and 'cost-effectiveness'. Several normative choices need to be made, and these choices can have an important impact on the evaluation of lifestyle interventions, especially when making these criteria operational and quantifiable. Moreover, the implementation of the decision-making framework may prove to be difficult for lifestyle interventions. Improvements of the decision-making framework in the Netherlands are required to guarantee sound evaluations of lifestyle interventions aimed at improving health.

Economic evaluation and the postponement of health care costs.

The inclusion of medical costs in life years gained in economic evaluations of health care technologies has long been controversial. Arguments in favour of the inclusion of such costs are gaining support, which shifts the question from whether to how to include these costs. This paper elaborates on the issue how to include cost in life years gained in cost effectiveness analysis given the current practice of economic evaluations in which costs of related diseases are included. We combine insights from the theoretical literature on the inclusion of unrelated medical costs in life years gained with insights from the so-called 'red herring' literature. It is argued that for most interventions it would be incorrect to simply add all medical costs in life years gained to an ICER, even when these are corrected for postponement of the expensive last year of life. This is the case since some of the postponement mechanism is already captured in the unadjusted ICER by modelling the costs of related diseases. Using the example of smoking cessation, we illustrate the differences and similarities between different approaches. The paper concludes with a discussion about the proper way to account for medical costs in life years gained in economic evaluations.

Healthcare costs and obesity prevention: drug costs and other sector-specific consequences.

BACKGROUND: Obesity is a major contributor to the overall burden of disease (also reducing life expectancy) and associated with high medical costs due to obesity-related diseases. However, obesity prevention, while reducing obesity-related morbidity and mortality, may not result in overall healthcare cost savings because of additional costs in life-years gained. Sector-specific financial consequences of preventing obesity are less well documented, for pharmaceutical spending as well as for other healthcare segments. OBJECTIVE: To estimate the effect of obesity prevention on annual and lifetime drug spending as well as other sector-specific expenditures, i.e. the hospital segment, long-term care segment and primary healthcare. METHODS: The RIVM (Dutch National Institute for Public Health and the Environment) Chronic Disease Model and Dutch cost of illness data were used to simulate, using a Markov-type model approach, the lifetime expenditures in the pharmaceutical segment and three other healthcare segments for a hypothetical cohort of obese (body mass index [BMI] >or=30 kg/m2), non-smoking people with a starting age of 20 years. In order to assess the sector-specific consequences of obesity prevention, these costs were compared with the costs of two other similar cohorts, i.e. a 'healthy-living' cohort (non-smoking and a BMI >or=18.5 and <25 kg/m2) and a smoking cohort. To assert whether preventing obesity results in cost savings in any of the segments, net present values were estimated using different discount rates. Sensitivity analyses were conducted across key input values and using a broader definition of healthcare. RESULTS: Lifetime drug expenditures are higher for obese people than for 'healthy-living' people, despite shorter life expectancy for the obese. Obesity prevention results in savings on drugs for obesity-related diseases until the age of 74 years, which outweigh additional drug costs for diseases unrelated to obesity in life-years gained. Furthermore, obesity prevention will increase long-term care expenditures substantially, while savings in the other healthcare segments are small or non-existent. Discounting costs more heavily or using lower relative mortality risks for obesity would make obesity prevention a relatively more attractive strategy in terms of healthcare costs, especially for the long-term care segment. Application of a broader definition of healthcare costs has the opposite effect. CONCLUSIONS: Obesity prevention will likely result in savings in the pharmaceutical segment, but substantial additional costs for long-term care. These are important considerations for policy makers concerned with the future sustainability of the healthcare system.

Unrelated medical costs in life-years gained: should they be included in economic evaluations of healthcare interventions?

Which costs and benefits to consider in economic evaluations of healthcare interventions remains an area of much controversy. Unrelated medical costs in life-years gained is an important cost category that is normally ignored in economic evaluations, irrespective of the perspective chosen for the analysis. National guidelines for pharmacoeconomic research largely endorse this practice, either by explicitly requiring researchers to exclude these costs from the analysis or by leaving inclusion or exclusion up to the discretion of the analyst. However, the inclusion of unrelated medical costs in life-years gained appears to be gaining support in the literature.This article provides an overview of the discussions to date. The inclusion of unrelated medical costs in life-years gained seems warranted, in terms of both optimality and internal and external consistency. We use an example of a smoking-cessation intervention to highlight the consequences of different practices of accounting for costs and effects in economic evaluations. Only inclusion of all costs and effects of unrelated medical care in life-years gained can be considered both internally and externally consistent. Including or excluding unrelated future medical costs may have important distributional consequences, especially for interventions that substantially increase length of life. Regarding practical objections against inclusion of future costs, it is important to note that it is becoming increasingly possible to accurately estimate unrelated medical costs in life-years gained. We therefore conclude that the inclusion of unrelated medical costs should become the new standard.

Lifetime medical costs of obesity: prevention no cure for increasing health expenditure.

BACKGROUND: Obesity is a major cause of morbidity and mortality and is associated with high medical expenditures. It has been suggested that obesity prevention could result in cost savings. The objective of this study was to estimate the annual and lifetime medical costs attributable to obesity, to compare those to similar costs attributable to smoking, and to discuss the implications for prevention. METHODS AND FINDINGS: With a simulation model, lifetime health-care costs were estimated for a cohort of obese people aged 20 y at baseline. To assess the impact of obesity, comparisons were made with similar cohorts of smokers and "healthy-living" persons (defined as nonsmokers with a body mass index between 18.5 and 25). Except for relative risk values, all input parameters of the simulation model were based on data from The Netherlands. In sensitivity analyses the effects of epidemiologic parameters and cost definitions were assessed. Until age 56 y, annual health expenditure was highest for obese people. At older ages, smokers incurred higher costs. Because of differences in life expectancy, however, lifetime health expenditure was highest among healthy-living people and lowest for smokers. Obese individuals held an intermediate position. Alternative values of epidemiologic parameters and cost definitions did not alter these conclusions. CONCLUSIONS: Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.

Cost-effectiveness of neonatal surgery: first greeted with scepticism, now increasingly accepted.

Mortality rates in neonatal surgery have dropped markedly, illustrating the enormous progress made. Yet, new questions have arisen. To mention one, health care budgets have tightened. It follows that the effects of medical interventions should be weighted against their costs. As evidence was particularly sparse, we set out to analyse cost-effectiveness of neonatal surgery. The purpose of this article is to summarise our findings and to review recent studies. Moreover, this article explains the relevance of cost-effectiveness analysis and explores how cost-effectiveness interacts with other determinants of health care priority setting. Our research revealed that treatments for two common diagnostic categories in neonatal surgery (congenital anorectal malformations and congenital diaphragmatic hernia) produce good cost-effectiveness. Other groups also published cost-effectiveness studies in the field of neonatal surgery, although their number is still small. Contemporaneously, the economic aspects of health care have captured the interest of policy makers. Importantly, this is not to say that there are no other factors playing a role in priority setting, foremost among which are ethical questions and arguments of equity. This article concludes that, according to present evidence, neonatal surgery yields good value for money and contributes to equity in health.

Increasing tobacco taxes: a cheap tool to increase public health.

INTRODUCTION: Several studies have estimated health effects resulting from tobacco tax increases. However, studies on the cost effectiveness of tobacco taxes are scarce. The aim of this study was to estimate the cost effectiveness of tobacco tax increases from a health care perspective, explicitly considering medical costs in life years gained. METHODS: The effects of a tax increase were translated into effects on smoking quit rates. A dynamic population model then projected incidence, prevalence and health care costs of the major chronic diseases conditional on smoking status over time. Comparing to a current practice scenario, the differences in healthcare costs, tax revenues, life years and QALYs from a tobacco tax increase resulting in a price increase of 10% increase were estimated. RESULTS: Including effects on health care costs in life years gained, the tax increase costs about 2500 euro per QALY gained. Only 3% of additional tax revenues are enough to compensate additional health care costs in life years gained. CONCLUSIONS: Even if the health care costs in life years gained are taken into account and even if additional tax revenues do not flow to the health care sector a tax increase is a cost-effective intervention to increase public health from a health care perspective.

Unrelated medical care in life years gained and the cost utility of primary prevention: in search of a 'perfect' cost-utility ratio.

An important subject of debate in cost-utility analysis of health care programmes is whether to include costs of unrelated medical care in life years gained. The inclusion of such costs is likely to be of consequence in the case of primary prevention. This paper presents different strategies regarding the inclusion not only of the costs, but also of the health effects of unrelated medical care in economic evaluations. Four different cost-utility ratios are presented and related to the criterion of internal consistency. In addition, the possibility to relate the ratios to a well-posed decision problem is analysed. An example computes the different ratios for smoking cessation interventions in different age groups. Including health care costs of unrelated medical care in life years gained increases cost utility ratios, but excluding unrelated medical costs favours smoking cessation interventions targeted at older smokers over those at younger smokers. We conclude that for primary prevention only a cost utility ratio that includes both the costs and effects of unrelated medical care meets the criterion of internal consistency and is related to a meaningful decision problem. Therefore, this type of cost-utility ratio should be preferred even if the data requirements may be substantial.

Process utility from providing informal care: the benefit of caring.

Though economics is usually outcome-oriented, it is often argued that processes matter as well. Utility is not only derived from outcomes, but also from the way this outcome is accomplished. Providing care on a voluntary basis may especially be associated with such process utility. In this paper, we discuss the process utility from providing informal care. We test the hypothesis that informal caregivers derive utility not only from the outcome of informal care, i.e. that the patient is adequately cared for, but also from the process of providing informal care. We present empirical evidence of process utility on the basis of a large sample of Dutch caregivers (n=950). We measure process utility as the difference in happiness between the current situation in which the care recipient is cared for by the caregiver and the hypothetical situation that someone else takes over the care tasks, all other things equal. Other background characteristics on patient and caregiver characteristics, objective and subjective caregiver burden and quality of life are also presented and related to process utility. Our results show that process utility exists and is substantial and therefore important in the context of informal care. Almost half of the caregivers (48.2%) derive positive utility from informal care and on average happiness would decline if informal care tasks were handed over to someone else. Multivariate regression analysis shows that process utility especially relates to caregiver characteristics (age, gender, general happiness, relation to patient and difficulties in performing daily activities) and subjective caregiver burden, whereas it also depends on the number of hours of care provided (objective burden). These results strengthen the idea of supporting the use of informal care, but also that of keeping a close eye on the position of carers.