Applying economic evaluation to drug subsidy decisions: an Australian perspective

1
Applying economic evaluation to drug subsidy
decisionsan Australian perspective

• Adriana Platona
• Director
• Pharmaceutical Evaluation Branch
• adriana.platona_at_health.gov.au

2
Australian system

• Universal access through Pharmaceutical Benefits
  Scheme for over 50 years
• Cost-effectiveness evaluation mandatory for
  decisions about funding of pharmaceuticals since
  1993
• Experience from gt1,150 PBAC decisions involving
  economic evaluation
• Is the system it perfect?

3

• NO, JUST THE BEST!
• To provide timely, reliable and affordable access
  for the Australian community to necessary and
  cost-effective medicines
• Equity of access AND value for money

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Australian health care system

• Federal government - Canberra
• subsidises community-based services
• State/territory governments
• provide public hospital services (partially
  funded by federal government via transfer
  payments)
• Coordinated care?
• Coordinated policies for drug purchasing ?
  Tendering occurs in hospitals, nationally for
  vaccines, but not for PBS

5
Major community programs

• Medicare Benefits Schedule
• medical, pathology, diagnostic, imaging services
• Medical Services Advisory Committee (MSAC)
• Pharmaceutical Benefits Scheme (PBS)
• National Immunisation Schedule
• Pharmaceutical Benefits Advisory Committee (PBAC)
• Current work improve coordination
• In decisions eg for hybrid technologies, drugs
  requiring molecular testing
• In processes MSAC 12-18 months PBAC 17 weeks

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The 17 week PBAC cycle

• Manufacturer prepares application
• Submission is evaluated 10 weeks
• Technical sub-committees Economics, Drug
  Utilisation
• Occasional PBAC initiates reviews
• ATRAs vs ACE
• Herceptin metastatic breast cancer
• Clopidogrel for stable angina in patients
  undergoing stenting
• Current work rheumatoid arthritis
• No fee currently charged for evaluation
  proposal to introduce cost-recovery
• Independent review of PBAC decisions

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Forecast DoHA Expenditure
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(No Transcript)
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PBS cost to government
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Volume of PBS prescriptions
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Regulatory and reimbursement

• 1. Marketing approval from TGA registers drug
• efficacy, safety, quality
• 2. PBAC recommends
• comparative effectiveness, comparative safety,
  comparative costs
• www.health.gov.au or www.pbs.gov.au
• PBAC Outcomes and Public Summary Documents
  PBAC agenda published 6 weeks prior to meeting
• Minister declares

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Current work

• Strategic collaboration between regulatory
  clinical evaluation and reimbursement clinical
  evaluation
• For methodological issues eg. surrogate
  outcomes, molecular targeting
• Processes
• Better use of scarce evaluation resources

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All major submissions have an economic analysis

• New drug
• Major change to current restriction

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Major submissions 1991-2008
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Types of economic evaluation in manufacturers
initial submissions
Number 38 67 47 62 58 61 61 47
51 46 36 36 49 49 52 49 809
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• PBAC does not have a single threshold for the
  incremental cost-effectiveness ratio (ICER)
• Strength of economic evaluation depends on
  quality of clinical data!
• Weak clinical data means uncertain ICER

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Activity Indicators for the Pharmaceutical
Benefits Scheme
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Activity indicators
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• Uncertain ICER can be managed through
• better data and/or lower price
• frequently backed up by legal contracts (deed of
  agreement) between government and drug company
  about jointly managing the risks in financial
  expenditure
• a few examples of CED in practice

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Cost-Effectiveness benefits

• Outcomes-based reward system buy health
  outcomes
• Cost-justification - not legal to pay a higher
  price unless a drug has better efficacy or better
  safety over the comparator
• Robust, consistent decision-making
• Basis for greater transparency
• BUT not always a cost-containment tool

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Current PBAC Guidelines

• Current PBAC Guidelines URL
• http//www.health.gov.au/internet/main/publishing.
  nsf/Content/pbacguidelines-index
• 2008 (version 4.3)
• No minimum standard for clinical data
• (Complex decisions for drugs for orphan
  indications)
• Promote comparability across submissions
• Transparent inputs and methods of analysis

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6 sections to a major submission

• A context
• restriction and comparator
• B clinical evaluation
• C details of inputs into economic evaluation
• D economic evaluation structure and results
• E utilisation and financial implications
• F quality use of medicines, risk-sharing
  arrangements and other relevant factors

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A context of submission

• Requested restriction
• aim is to identify and restrict in those likely
  to benefit most
• Problematic when discordance between regulatory
  and reimbursement indications arise
• Main comparator
• pragmatic the therapy prescribers would most
  replace in practice
• can be a product which is generic

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B clinical evaluation EBM approach

• Hierarchy of preferred sources of evidence
• direct randomised trial(s)
• indirect comparisons two sets of randomised
  trials involving common reference
• non-randomised studies
• expert opinion
• Minimise systematic and random error

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Issues with cost-minimisation

• Usually based on indirect comparison which
  introduces uncertainty
• Trials not always comparable
• Minimum clinical important differences not always
  justified (partly related to lack of coordination
  and insufficient details for decisions made by
  regulatory authorities)
• See expert reports on www.pbs.gov.au
• The new products simply asks for the same price
  of the comparator, not a reduced price
• Although applications claim that one product
  replaces another with small financial expenditure
  often not true

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Superiority vs noninferiority
Treatment effect over comparator
Treatment effect over comparator
Better
Better
Superior
?
Noninferior
x
?
x
x
0
0
x
Drug B
Drug A
MCID
Drug D
Drug C
Worse
Worse
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C Translating trial evidence

• New section in the Guidelines
• Request a more explicit set of connections
  between the clinical and economic evaluations
• Identify and investigate whether translation
  issues arise and the impact on ICER
• applicability, extrapolation or transformation
• Facilitate independent verification
• Relate results to the economic evaluation

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Guidance on translation

• Applicability of trial results to Australian
  patients
• critical issue for HIV drugs, diabetes drugs
• subgroup analyses where justified
• Extrapolation beyond trial horizon
• What assumption is made about the treatment
  effect beyond the trial
• Transformation of trial outcomes
• surrogate to final outcomes
• utility valuation

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Surrogate to final outcomes

• 3 steps to a more convincing transformation
• Association between surrogate and final
• typically epidemiological (longitudinal) studies
• plus biological reasoning
• TE on surrogate predicts TE on final
• requires randomised trials
• eg vit D analogues for renal disease
• Rationale to accept this prediction given the
  mechanism of action of the proposed drug

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Association what we get
Final outcome
Association Eg Framingham in CVD
Projected (inferred) difference in final outcome
Detected difference in surrogate outcome
Surrogate outcome
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Trial-based predictions what we would like to
get capture uncertainty
Prediction bound
Difference in final outcome
Relationship
Prediction bound
95 CI of relationship
95 CI of relationship
Difference in surrogate outcome
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Surrogate to final outcomes

• Extremely complex technical area
• Large area of uncertainty for ICER
• Need randomised controlled trials
• Enthusiasm for biomarkers as surrogate outcomes
• Smaller, faster trials
• But quantification of benefits uncertain
• Implications for safety assessment?
• Needs early and strategic engagement of
  regulatory and reimbursement agencies

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D economic evaluation

• Select between noninferiority and superiority
• for noninferiority
• select between cost-minimisation and cost
  analysis
• for superiority
• purely trial-based or
• stepped evaluation each step is linked with
  an area of section C
• More extensive sensitivity analyses
• broad assessment of uncertainty REMAINS AN
  ISSUE
• probabilistic sensitivity analysis has a role
  (new)

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Valuation of outcomes

• CUA preferred
• Utilities from the same trials as the treatment
  effect using MAUI
• No preference for a particular MAUI rare to
  have trial based
• Choice experiments SG, TTO accepted
• Critical issue framing bias in scenarios,
  interpretation of utility gain
• QALYs not always useful - paucity of reliable
  research about the trade-offs individuals are
  prepared to make for children, end-of-life

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Other supplementary analyses

• Not accepted in the base case only in
  sensitivity analyses
• production changes
• carer impacts

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Summary of current issues

• Early and strategic engagement of regulatory and
  reimbursement agencies
• Better coordination for drug-device/drug-test
  products
• Economic evaluation is only one component for
  pharmaceutical policy in Australia
• Published prices vs real effective prices
• High costs medicines
• Risk sharing arrangements
• CED

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Pricing policies

• For brand medicines or vaccines, after positive
  PBAC recommendation that drug is cost-effective
  consideration by PBPA
• PBPA Health, Industry, consumer, pharma
  industry
• Declaration about cost of production
• Profit margin approx 25-30 acceptable
• Lower uptake of generics than in most other OECD
  countries remains an issue
• Until 2006, through cost-minimisation, generics
  entrant had the same price as the already
  available branded product
• Financial benefit of generics accrued to pharmacy
  not federal government

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Pricing policies

• Mandatory 12.5 price reduction when generic
  becomes available
• 1 August 2007, two separate formularies
• F1 single brand medicines
• F2 multiple brands price reductions from 1
  August 2009
• F2A 2 price reduction for three years
• F2T one-off 25 price reduction
• No links between the F1 and F2 some anomalies
• Alendronate risedronate SSRI but not
  venlafaxine simvastatin but not atorvastatin or
  rosuvastatin
• Price disclosure aims to claw-back discounts by
  manufacturers to pharmacy