Slide 1

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 2

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 3

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 4

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 5

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 6

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 7

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 8

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 9

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 10

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 11

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 12

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 13

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 14

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 15

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 16

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 17

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 18

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 19

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 20

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 21

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 22

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 23

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 24

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 25

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 26

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 27

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 28

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 29

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 30

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 31

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 32

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 33

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 34

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 35

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 36

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 37

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 38

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 39

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 40

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 41

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 42

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 43

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 44

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 45

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations


Slide 46

ACCES AU MEDICAMENT
EFFICIENCE ET
CRISE ECONOMIQUE
Marc Czarka, MD, FBCPM
Collaborateur Scientifique
Département d’économie de la Santé
ESP-ULB

AGENDA
1. INTRODUCTION
2. THE FOURTH HURDLE
3. EFFICIENCY AND PHARMACOECONOMICS
4. FINANCIAL CRISIS IMPACT ON
HEALTHCARE AND MEDICINES
5. CONCLUSION

CHANGING HEALTHCARE
ENVIRONMENT
+ Advances in technology

+ Political forces (growing public
expectations vs. budget control)

+ Economical forces (competition
through innovation)
+ Aging population
= Raising health care expenditures

THE FOURTH HURDLE
• To get a marketing authorization, a
drug has to show:
– Quality
– Safety
– Efficacy
– (Risk/benefit ratio)

THE FOURTH HURDLE
• Four widely accepted “global
principles” governing the
planning, funding and provision
of healthcare services:
–
–
–
–

fair access,
efficiency,
responsiveness to society and
innovation.

EFFICIENCY?

HEALTH ECONOMICS
• Health economics is applying economic
principles and economic theories to health
and health care
• Or, the comparative analysis of alternative
courses of action in terms of both costs and

outcomes

PHARMACO-ECONOMICS
• Pharmaco-economics
– Is health economics applied to drugs
– Viewed by pharma as the 4th hurdle to
get the product on the market
– Now requested by authorities all

around the world before granting
reimbursement

EFFICIENCY
• The different steps of evidence
– Can it work ? = Efficacy (“Efficacité”)
– Does it work in reality ? =
Effectiveness (“Effectivité”)
– Is it worth doing it, compared to other
things we could do with the same
money = Efficiency (“Efficience”)

EFFICIENCY
• Budgets are limited, needs are
unlimited
• Safety, efficacy and quality are not
enough anymore
• In a world with scare resources,
efficiency becomes important

EFFICIENCY
• So authorities
– request pharmaco-economic
evaluation to be added to
reimbursement file
– to allocate budgets to interventions
that offers most health gain per unit
of money

EFFICIENCY
“Give us more

The evidence dilemma…

evidence that your
drug is efficient
and leads to
savings in real life”

Allow us first to the
market (reimbursed) and
then we will be able to
show real life evidence

Adapted from Annemans L.

EFFICIENCY

Other dilemma’s
• “According to your study, you are
cost-effective. Now, lower your price
by 20%, and you will even be more
cost-effective”
• “You claim that you can save money
elsewhere (hospitals…). But a
hospital bed is filled anyway. So, you
don’t really save”

WHAT IS THE RELATIONSHIP BETWEEN
COSTS AND OUTCOMES?
Outcomes
Is it worth spending
that much money ???

?

Costs

ECONOMIC EVALUATION

Costs

Outcomes

ECONOMIC EVALUATION
Type of Costs :
• Direct medical costs
(hospital, drugs, labs,
doctors, …)
• Direct non medical
costs (transportation,
diet, …)
• Indirect costs
(premature death, time
lost from work)
• Intangible costs (pain,
suffering)

Costs

Outcomes

ECONOMIC EVALUATION
Type of outcomes:
• clinical parameters
(reduction in blood pressure,
normalization of cholesterol
level, …)
• morbidity / mortality
endpoints (events avoided,
survival)

• quality of life improvements
• patient satisfaction or
preferences

Costs

Outcomes

ECONOMIC EVALUATION

Outcome is

• Longer Life
Costs

• Better Life

Outcomes

WHICH YARDSTICK?
• Multiple yardsticks:
– Perinatal or neonatal mortality
– Life expectancy at birth, later
– Disease or handicap free years expectancy
– Do the best you can with a certain
percentage of GDP
– Contribution to GDP growth

• Alphabet soup of LYG, LOS, NNT, NNH,
DALY, QALY…
• Let’s use QALY as an example

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
Basic idea underlying the QALY?
(Quality-Adjusted Life Years)

• Combination of quality of life and length
of life into one measure - a kind of index
• Facilitates comparisons between
different kind of treatments and
diagnoses

QUANTITY AND QUALITY
OF LIFE AS OUTCOME
The concept of the QALY
• If the health state “blind” gives a quality
weight of 0.4, then one year as blind gives
0.4 QALY
• …or 0.4 years in full health gives the same
number of QALYs (0.4) as 1 year as blind
Adapted from Jonsson B.

LET’S COMPARE
Utility (Weights)
New Medical Treatment

1

QALY gained,
adding life to years

0

Existing Medical Treatment

Quantity of Life (Years)

COMPARING COSTS
AND CONSEQUENCES
additional
costs

additional
effects

COMPARING COSTS
AND CONSEQUENCES
additional
costs

1%

Innovative products
most often cost
more and do more
95%

additional
effects
1%

3%
Innovative products
are rarely cost-saving

IS THIS DRUG
COST-EFFECTIVE ?
Unaffordable?

additional
costs

Bargain?

E
D

C

B

A

additional
effects

THRESHOLD
RECOMMENDATIONS
Country

Threshold/QALY

Reference

Australia

AUD 42-76,000

George et al

Canada

CAD 20-100,000

Laupacis

Netherlands

EUR 20,000

Rutten

New Zealand

NZD 20,000

Pritchard

UK

GBP 30,000

Nice

US

USD 50-100,000

Earle

Sweden

SEK 500,000

Johannesson

QALYs in Decision-Making:
Issues and Prospects

• The use of measures, such as the
QALY, relate to social decisions
• An improvement in health outcomes
might not be the only reason to use the
QALY
• Other reasons are
– overall improvement of societal welfare
– indicator of society’s care and
compassion.
Smith MD, Drummond M, Brixner D. Moving the QALY Forward: Rationale for Change. Value in Health, 2009; 12,S1-4

QALYs in Decision-Making:
Issues and Prospects
• In the conventional concept of QALYs,
a health state that is more desirable is
more valuable.
• Value is equated with preference or
desirability.
• A critical question is: desirable to
whom, self and/or community?
Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

QALYs :
UNDERLYING ASSUMPTIONS

Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health, 2009; 12,S5-9

MERITS?
• There are merits in the use of the QALY within the
mainstream of decision-making concerned with
questions of resource allocation within patient
populations
Kind P et al. The Use of QALYs in Clinical and Patient Decision-Making: Issues and Prospects. Value in Health, 2009; 12,S27-30

• To conclude, it is important to recognize that, at either
pole, we have to make social decisions -implicit, if not
explicit- about resource allocation. In my view, the use of
cost-utility models that use the QALY can be a pragmatic
and necessary tool to improve these complex decisions
often made under conditions of considerable uncertainty
and bias.
Garrison LP Jr, Editorial: Using QALYs for Societal Resource Allocation. Value in Health, 2009; 12,S36-37

WELL KNOWN
MEDICAL THRESHOLDS
Reference

Intervention

€/LYG (1999)

Lombaert ,1997

Pneumococcal
vaccination 65+

Cost saving

Deltenre, 1997

H pylori eradication in
patients with GD ulcer

Cost saving

Beutels et al., 1996

Universal hepatitis B
vaccination

500 €/LYG
1,500 €/LYG

Lombaert ,1997

Influenza vaccination
65+

Muls et al., 1994

Secondary prevention
of CHD with statins vs.
no treatment

9,700-19,700 €/LYG

Annemans, 1998

Primary prevention of
CHD with statins vs.
no treatment (hi-risk
patients)

21,000-26,000 €/LYG

Van Doorslaer, 1994

Hepatitis A vaccination
of travelers

27,000 €/LYG

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Smoking cessation physician counseling

1,300 – 3,900

B-blocker post-MI, high-risk

5,900

Statins (4S)

9,800

AIDS drug cocktails

15,000-20,000

B-blocker post-MI, low-risk

20,200

Driver’s-side air bag

27,000

Kidney dialysis

50,000
Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

COST PER LYG WITH
VARIOUS INTERVENTIONS
Treatment

Cost per LYG (USD)

Annual mammography
for women aged 55-64

110,000

Exercise ECG for
asymptomatic man
aged 40 years

124,000

Cox-2 inhibitors Celebrex or
Vioxx for arthritis patients at
average risk for ulcers

185,000

Annual helical CT scan of
former heavy smokers to
detect lung cancer

2,300,000

Source: J Probstfield, Am J Cardiol 2003: 91 (suppl): 22G – 27G Johannesson et al.
N Engl J Med 1997; 336: 332–336; T O Tengs, Risk Analysis 1995: 15, 3, 369-389;

SELECTED RISK REGULATIONS
AND THEIR COST PER LIFE SAVED
Regulation (year issued)

Cost per life saved (USD)

Child-proof lighters (1993)

100,000

Respiratory protection (1998)

100,000

Logging safety rules (1998)

100,000

Electrical safety rules (1990)

100,000

Steering-column standard (1967)

200,000

Hazardous-waste disposal (1998)

1,100,000,000

Hazardous-waste disposal (1994)

2,600,000,000

Drinking-water quality (1992)

19,000,000,000

Formaldehyde exposure (1987)

78,000,000,000

Landfill restrictions (1991)

100,000,000,000
The price of prudence, The Economist, January 22, 2004

VIAGRA CAN BE SHOWN TO
BE VERY COST-EFFECTIVE …
Incremental
Cost/QALY (GBP)
25,000
20,000

‘appropriate’ for NHS
funding < £25,000

15,000
10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

… BUT WHAT IS THE SOCIAL
AND THERAPEUTIC NEED?
Incremental
Cost/QALY (GBP)
25,000
20,000
15,000

‘appropriate’ for NHS
funding < £25,000

10,000
5,000

£3,369

£3,017

£2,803

£2,695

£2,329

Year 1

Year 2

Year 3

Year 4

Year 5

0

Time Horizon
Source: Stolk et al, BMJ 2000:320

EFFICIENCY
So, is it an efficient drug ?
• Not a Yes / No answer
• Depends on many factors :
– compared to what ?
– health care system
– cost structure
– population considered

EFFICIENCY
• Other factors are also important to
consider in resource allocation :
– are there alternatives ?
– budget impact ?
– affordability ?

PHARMACO-ECONOMIC
EVALUATION
• A tool for efficient resource allocation
– Value for money

• Does not replace decision making
• Other goals also important

CRISIS IMPACT ON
HEALTHCARE
• The drivers of the sector are relatively independent
of the wider economy :
– prevalence of the disease
– unmet medical needs
– population growth and aging population

• Demand
– continues to grow over time and
– is relatively inelastic compared to demand of other goods
like cars, holidays…

• However, tougher economic conditions will have an
impact on society’s ability and willingness to pay
• Hence, impact will be a collateral damage
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRESSURE FACTORS
• As GDP growth slows, consumer spending will fall
and unemployment will rise, leading to
– decrease in tax revenues
– increase in demand on social services budgets
– significant increase in pressure on public finance

• The cost of various government bailing out the
financial sector will
• exacerbate these pressures.
• As the gap between growth of health care
expenditures and growth of GDP widens, the specific
pressure for cut in health care spending will grow.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

PRICE PRESSURE
• Increasing use of generic drugs
• Higher rebates in tender business
• The Oslo conference « Health in times of
global economic crisis: implications for the
WHO European Region (February 2009) »:
Get all stakeholders ready to rationalize and
do better with less money. More specifically,
explore options and implement measures to
reduce the cost of medicines and medical
devices.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

INCREASING REQUIREMENT
FOR EVIDENCE
• Health Technology Assessment (HTA)
Bodies will assess more rigorously efficiency
which will likely lead to more restrictive
reimbursement
• Site of Care and Local Payers may require
more formal data (« mini HTA ») before paying
or covering for a new technology

Increasing Importance of
Non Clinicians Stakeholders

CONSUMERS’ BEHAVIOUR
• Consumers themselves may limit their
access to treatment
• Patients in the US start skipping doses,
cutting pills in half and falling to fill
prescription
• The effect are even more apparent where
spending is more discretionary in
cosmetic-related medicine and surgery for
instance.
The Boston Consulting Group : Implications of the Financial Crisis for the Bio-Pharmaceutical Sector. November 2008

IMPACT ON
HEALTH OUTCOMES?
• Impact on mortality
– Russian Federation in the early 1990s : major
increase in adult male mortality
– Thailand 1996-1999 : increase in adult mortality

• No Impact on mortality
– Data from the US and Europe show that recession
have been accompanied by falling mortality rate
• reduction of smoking
• Reduction in alcohol use
• more time available for child care
The Financial Crisis and Global Health WHO – 21 January 2009 Report of a high-level Consultation

CONCLUSION
• Substantial uncertainty still exist but some
fundamental drivers will remain :
– Industry’s innovative drive
– Demographic shock
– Downward pressure on prices and more
restrictive reimbursement decisions :
• Cost-containment measures
• Cost-utility evaluations