International Experiences in Pharmacoeconomics: Australia

1
International Experiences in Pharmacoeconomics
Australia

• Andrew S Mitchell
• Department of Health Ageing
• AUSTRALIA

2
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

3
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

4
Public health system

• Primary objective
• improve health within a budget constraint
• Outcomes-based reward system
• pay more if gain more health
• Other relevant factors
• Interplay of levers and influences

5
Australian drug subsidy system

• The Pharmaceutical Benefits Scheme
• Federal government program
• All Australian residents eligible
• In community, not in public hospital
• Subsidised indications may be restricted

6
The PBS

• In operation gt50 years
• 593 different drugs (June 2002)
• 155 million scripts (01/02)
• 4.6 billion cost to government (01/02)
• 11 growth from 00/01 to 01/02

7
The PBS in operation
Patient (pays a fixed co-payment) consults
Doctor (about 30,000) prescribes
Pharmacist (about 5,000) dispenses
Health Insurance Commission reimburses and
authorises (and maintains database)
8
Choosing drugs for subsidy

• Prerequisite registered drug (TGA)
• efficacy, safety, quality
• PBAC recommends
• comparative effectiveness, comparative safety,
  comparative costs
• Minister declares

9
Compiling cost-effectiveness

• Identify (1992)
• what changes with the new intervention
• Measure (1995)
• direction and extent of change
• Value (current)
• acceptable reflection of communitys strength of
  preference across different patient-relevant
  health gains
• apply trial evidence to requested listing

10
Life cycle of a major submission

• Each major submission is
• prepared by a sponsor (consultant)
• evaluated in-depth (by PES and university-based
  groups under contract)
• reviewed by independent expert sub-committee
  (ESC)
• used by eminent committee (PBAC)
• A re-submission is
• prepared by a sponsor to resolve major disputes

11
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

12
Types of major submissions

• New drug
• Major change to current restriction
• Re-submission
• Referred/deferred submission

13
Major submissions 1991-2002
14
Types of economic evaluation
Number 38 67 47 62 58 61 61
48 51 46 539
Total
15
Supporting evidence

• Hierarchy of preferred evidence
• head-to-head randomised trial(s)
• two sets of randomised trials with common
  reference
• non-randomised studies
• expert opinion
• No minimum standard
• Minimise systematic and random error

16
Scientific basis
Number 57 88 84 79 76 84
468
Total
17
Usefulness of evidence

• Majority have relevant randomised trials
• other health services have fewer randomised
  trials
• Common reference prone to most errors of
  non-randomised studies
• Not reject submission if no randomised trials
• but more difficult for sponsor, evaluator and
  decision-maker

18
Synthesis of evidence

• All relevant evidence of most preferred level
• Assess scientific rigour
• Meta-analyse where appropriate
• narrows confidence intervals around estimate of
  differential treatment effect

19
Meta-analysis
Number 57 88 84 79 76
84 468
Total
20
Comments on meta-analysis

• Meta-analysis not always possible
• rare if non-randomised studies
• Increasing use of meta-analysis
• particularly in-house
• Cochrane Library increasingly relevant
• Shift from drug regulation based on pivotal
  studies

21
Preliminary evaluation

• Bridge evidence-based medicine and economic
  evaluation
• Based on relevant randomised trial(s)
• Common international basis
• extends basis of drug regulatory harmonisation
• extends basis of Cochrane Collaboration
• Sighting exercise for localised modelling

22
Basis of economic evaluation
Number 79 76 84
239
Total
23
Limitations of randomised trials

• Controlled environment
• protocols
• limited follow-up
• Surrogate rather than final outcome
• Applicability
• different populations
• different patterns of resource provision

24
Issues relating to evidence

• Pragmatic application and extension of EBM
• relate research design to research question
• no minimum standard, but loss of confidence
• Failure here often crucial (JAMA, 2000)
• Usually need to integrate into modelling

25
Economic modelling

• Essential role, but...
• Full transparency is insufficient
• Eliminating conflict of interest is insufficient
• Requires in-depth evaluation

26
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

27
Consistency of decision-making (1)

• Identify common outcomes
• life-years gained
• QALYs gained
• Locate all incremental evaluations with these
  outcomes
• 52 for life-years gained
• 27 QALYs gained

28
Consistency of decision-making (2)

• Arrange in ascending order of incremental
  cost-effectiveness
• Identify related decision
• recommend
• reject, including decrease price or defer
• League table

29
Caveats with league tables

• Retrospective observation
• not unconditional decision-makers rule
• Small (selected) sample (lt10)
• May not represent the basis of the decision
• several were considered unacceptable

30
Comments on league tables

• Generally consistent with an efficiency objective
• (maximise health while minimise cost)
• Consider influence of other factors

31
Relevant factors (objective)

• Accepted incremental cost-effectiveness ratio
• Patient affordability
• Financial implications to the PBS
• Incremental health gain/patient

32
Relevant factors (subjective)

• Risk of making wrong decision
• Assessment of rule of rescue
• Equity and access
• Capacity to target drug subsidy to those likely
  to benefit most

33
Insights from option appraisal

• Three pre-requisites
• identify all relevant factors
• assign relative weight to each factor
• score each factor for each option
• For each option, value
• sum of (weight x score) for all factors
• Not completely applicable to PBAC decision-making

34
Combining relevant factors
Low
High
Inc cost/effect
High
Low
Cost/pat/day
High
Low
Cost to PBS/yr
High
Low
Risk of error?
Subjective other?
Favours listing Not favour
listing
35
Implementation conclusions (1)

• Subsidising drugs in Australia
• adding systematic consideration of economic
  evaluations is established and sustainable
• Scientific basis of major submissions
• achieved scientific credibility

36
Implementation conclusions (2)

• Applicability and modelling
• economic credibility more elusive
• Use of economic evaluations is consistent with
• an efficiency criterion
• influence of other relevant factors
• Insights require further work

37
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

38
Primary PBAC activity

• Selecting drugs to be recommended for subsidy
• Two main approaches
• on a cost-minimisation basis
• as acceptably cost-effective
• Two main levers
• restrict to particular patients
• price of the proposed drug

39
Cost-minimisation link to policy

• No health-based reason to justify a price
  advantage for the proposed drug
• Evidence of similar dose-response and
  dose-tolerability profiles in a population
• no worse than not equivalence
• statistically significant, clinically important?
• swings and roundabouts
• default for indirect comparisons

40
Flow-on implications of c/ma

• Determine equi-effective doses
• Price set by the lowest in a group of
  cost-minimised drugs
• Generic price competition applies across the
  group
• Price premiums allowed across bioequivalent drugs
  and four therapeutic groups

41
Controversies with c/ma

• Generics compete with drugs still in patent
• Initial therapeutic relativity is imprecise
• annual review of prices by weighted average
  monthly treatment cost (WAMTC)
• variations gt15 subject to PBAC review
• sampling error tends to reduce prices
• independent review currently underway

42
Cost-effectiveness link to policy

• Health-based reason to justify a price advantage
  for the proposed drug
• Relate extent and nature of health gain to
  justify price increase
• including cost off-sets in health sector
• Pristine value judgement
• Common outcome measure for consistency?

43
Identifying sub-groups

• Identify treatment effect
• Identify treatment effect modifiers
• apply tests of interaction
• examine constant RRR, so varying ARR with varying
  baseline risk
• Preferable to post-hoc sub-group analyses

44
Controversies with c/ea

• Leakage
• reinforce unambiguous restrictions
• risk-sharing through price-volume agreements
• ICER crunch
• increasing RD /diminishing marginal health

45
Leakage

• Use beyond restriction leakage
• Imperfect ability to enforce restriction
• Financial incentives dont discourage leakage
• Company promotion complies with TGA-approved
  indications, not PBS restrictions
• industry-initiated reference to PBS restrictions

46
Price-volume agreements
47
ICER crunch
48
Overview

• Background in Australia
• Pharmacoeconomic information and issues
• Impact on drug subsidy decisions
• Application to policy levers
• Some current controversies

49
Other current controversies

• Skill resources and conflicts of interest
• Rigour and timeliness
• Transparency and accountability
• full information disclosure and international
  perspectives
• Cost-effectiveness versus total financial
  implications and cost growth rates

50
Skills and conflicts

• Skill resources scarcest commodity
• clinical epidemiology, biostatistics, health
  economics
• Preparers versus evaluators and users
• cannot be in both groups simultaneously
• if not for us, must be against us
• rely on the papers, ie evidence-based
• but value judgements, interpretation and multiple
  relevant factors

51
Rigour and timeliness

• Profit motive shareholder expectation
• highest price, biggest market, earliest launch
• Certainty predictability success rate
• More interaction?
• increase success rate, slower process
• Sequential considerations
• hunt the indication
• negotiation by treacle

52
Transparency and accountability

• PBAC publish reasons and decisions to other
  stakeholders (prescribers, patients)
• ve decisions now on website, -ve yet to come
• Applicants wider access to appeals
• international implications of rejections
• not provide all information
• not submit application

53
C/E vs total costs vs growth rates

• Cost-effectiveness mandated on PBAC
• Political perspectives
• 200 million/yr big picture implications
• 15 million/yr more politically palatable
• Central agencies (Finance, Treasury)
• 40-year projections unsustainable
• PBS now prime-time and centre-stage

54
Closing thoughts

• Much to learn, many challenges to meet
• C/E is defensible and useful
• is it enough?
• Feasible to implement C/E, but needs
• to be context-specific
• a thoughtful mix of rigour and pragmatism
• careful management of skills resources