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Future drug prices and cost-effectiveness analyses
1Peninsula Medical School, Peninsula Technology Assessment Group (PenTAG), Universities of Plymouth and Exeter, Exeter, UK. martin.hoyle@pms.ac.uk
Pharmacoeconomics
|June 20, 2008
Summary
Drug prices generally decrease over time, making them more cost-effective than previously assumed. This finding suggests many past health technology assessments may need re-evaluation, particularly for chronic conditions.
Area of Science:
- Health Economics
- Pharmaceutical Pricing
- Pharmacoeconomics
Background:
- Cost-effectiveness analyses (CEAs) traditionally assume drug prices rise with inflation.
- New Zealand's Pharmaceutical Management Agency suggests incorporating future generic prices into CEAs.
- Sensitivity analyses often deflate drug prices to account for inflation.
Purpose of the Study:
- To challenge the assumption of rising drug prices in UK cost-effectiveness analyses.
- To assess the impact of realistic future drug pricing on the incremental cost-effectiveness ratio (ICER).
Main Methods:
- Analyzed the real price changes of 373 UK drugs between 1980-2006.
- Included drugs launched after 1984 with over 500 annual prescriptions.
- Used a linear model incorporating launch year, prescription volume, and BNF section.
Main Results:
- Found a mean annual decrease of 3.8% in real drug prices (SD 2.5%).
- Calculated that drugs generally appear more cost-effective, with a falling ICER.
- Demonstrated substantial ICER reductions for chronic condition drugs (e.g., 15% for cinacalcet).
Conclusions:
- Most appraised drugs are more cost-effective than previously stated by NICE.
- Drugs for chronic conditions are significantly more cost-effective than reported.
- UK CEAs should assume a typical annual real cost decrease of 4% for drugs.
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