Principles of selecting cost-effectiveness thresholds in price-taker countries

Countries with relatively small market size lack the bargaining power to influence the prices set by pharmaceutical companies, so they function as price-taker rather than price-maker. For price-taker countries, carefully established cost-effectiveness thresholds (CETs) are essential tools to assess local economic value of new medicines.

This perspective paper provides an overview of how pharmaceutical price-taker countries may reconsider their CETs. Key aspects of selecting appropriate CETs in price-taker countries include i) the methodology for establishing the main CETs, ii) the selection of factors to modify the baseline CET, if higher spending for one unit of health gain seems justified, and iii) the process of using CETs in policy decisions.

Many academic approaches described in scientific articles are not implemented; the majority of countries establish or make changes in their CETs without strong theoretical foundation. In the next years. several price-taker countries will introduce or update CETs. Lower-income countries, who linked their CETs to the GDP per capita and whose economy has been growing significantly, may reduce their baseline thresholds. There will be significant pressure on higher-income countries to increase their CETs, who did not adjust their CETs for economic growth and/or inflation in recent years.