HERC Seminar: Implications of non-marginal budgetary impacts in health technology assessment

Abstract

This paper introduces a framework with which to conceptualise 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 health care system is inappropriate. The implications of this for potential partial implementation, horizontal equity and pharmaceutical pricing are illustrated using this framework.

Under the condition of perfect divisibility and given an objective of maximising health, a large budgetary impact of a new treatment may imply that optimal implementation is partial rather than full, even at a given incremental costeffectiveness 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 ICER (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 ICER at which cost the entire potential population is treated, maximising health at an increased level, and with no contravention of the horizontal equity principle.

Biography

Dan is a Senior Research Fellow in the Academic Unit of Health Economics within the Leeds Institute of Health Sciences. He joined AUHE in May 2018 after two years as a Postdoc in Health Economics at the University of Groningen. Prior to this, he held various teaching and research fellow positions at University College London and the University of York. His research interests include the impact of early life circumstances on late life health outcomes and the distribution of healthcare expenditures late in life