Incorporating Affordability Concerns Within Cost-Effectiveness Analysis for Health Technology Assessment.

BACKGROUND: Recent policy developments and journal articles have emphasized a divergence: when interventions are found to be cost-effective but unaffordable. This apparent paradox reflects a conventional practice of cost-effectiveness analysis that does not properly evaluate the opportunity costs of an intervention that imposes non-marginal costs on the healthcare system. OBJECTIVE: Taking the perspective of an exogenously resource constrained decision maker, this paper presents a framework by which concerns for affordability can be appropriately incorporated within cost-effectiveness analysis. METHODS: A net benefit framework is proposed where health opportunity costs are estimated for each simulation iteration within each time period. The framework is applied to a hypothetical case study based on the recent experience of the English NHS with new hepatitis C drugs. RESULTS: Under the proposed framework, but not under conventional cost-effectiveness analysis, estimates of health opportunity costs differ between scenarios involving different profiles of budget impact even when their net present value, or expected value, are the same. CONCLUSIONS: The framework presented here reflects the importance of the scale of budget impacts along with their uncertainty distribution and time profile. In doing so it resolves issues with the conduct of conventional cost-effectiveness analysis where affordability concerns are not explicitly incorporated.

Implications of Nonmarginal Budgetary Impacts in Health Technology Assessment: A Conceptual Model.

OBJECTIVES: This paper introduces a framework with which to conceptualize the decision-making process in health technology assessment for new interventions with high budgetary impacts. In such circumstances, the use of a single threshold based on the marginal productivity of the healthcare system is inappropriate. The implications of this for potential partial implementation, horizontal equity, and pharmaceutical pricing are illustrated using this framework. RESULTS: Under the condition of perfect divisibility and given an objective of maximizing health, a large budgetary impact of a new treatment may imply that optimal implementation is partial rather than full, even at a given incremental cost-effectiveness ratio that would nevertheless mean the decision to accept the treatment in full would not lead to a net reduction in health. In a one-shot price-setting game, this seems to give rise to potential horizontal equity concerns. When the assumption of fixity of the incremental cost-effectiveness ratio (arising from the assumed exogeneity of the manufacturer's price) is relaxed, it can be shown that the threat of partial implementation may be sufficient to give rise to an incremental cost-effectiveness ratio at which cost the entire potential population is treated, maximizing health at an increased level, and with no contravention of the horizontal equity principle.