Estimating cost-effectiveness thresholds under a managed healthcare system: experiences from Colombia

Area of Science:

• Health Economics
• Health Technology Assessment
• Public Health Policy

Background:

• Low- and middle-income countries face increasing demand for new health technologies amidst budget constraints.
• Effective decision-making requires real-world evidence to optimize population health outcomes within limited financial resources.
• Colombia's healthcare system, managed by multiple insurers under capitation, necessitates tools for efficient resource allocation.

Purpose of the Study:

• To estimate the supply-based cost-effectiveness elasticity in Colombia.
• To determine the cost-effectiveness threshold for the Colombian healthcare system.
• To provide a data-driven instrument for health technology decisions in a middle-income country.

Main Methods:

• Utilized administrative data to analyze variations in health expenditures and outcomes across insurers, regions, diagnoses, and years.
• Employed a two-way fixed-effects model to address endogeneity.
• Instrumented health expenditures using health system characteristics, such as drug-price regulation.

Main Results:

• Estimated the cost-effectiveness threshold at US$4487.5 per year of life lost avoided (14.7 million COP).
• Estimated the cost-effectiveness threshold at US$5180.8 per quality-adjusted life-year gained (17 million COP).
• The determined thresholds are approximately one times the gross domestic product per capita.

Conclusions:

• This study presents the first estimation of a supply-based cost-effectiveness threshold elasticity in a middle-income country with a managed healthcare system.
• The findings offer valuable insights for resource allocation and health technology assessment in similar healthcare settings.
• The established thresholds can guide decision-making to maximize population health impact within budgetary limitations.