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A Tale of Two Ratios: Assessing Value From the Perspectives of Cost-Effectiveness and Affordability

Disclosure

Director of Evidence Synthesis & Health Technology Assessment at Cornerstone Research – Cornerstone Research Group Inc. consults for various

pharmaceutical and medical device companies

Previously worked for CDR/pCODR and consulted for ICER in the United States

2Cornerstone Research Group Inc.


Cost effectiveness vs Budget Impact Analysis

Cost effectiveness helps us assess whether a health technology is worth the cost – provides good value for money

Cost effectiveness does not provide information on affordability, i.e., can we afford it

A health technology might be cost effective but the financial impact to a drug plan may be such that it cannot list the drug

Affordability decisions are made by the participating decision makers based on their budgets and priorities

Cost effectiveness vs Budget Impact AnalysisCEA BIA

Question Is it good “value for money”? Is it affordable?

Goal Economic efficiency (max. health with resources)

Plan financial impact (cost containment)

Modelled patients Entire Population Individual or groups

Scope of costs Usually broader (health system costs)

Narrow perspective(decision-maker costs)

Health Outcomes Included Excluded

Measure Incr. cost per unit of outcome Total expenditure ($)

Marketplace dynamics

Usually not modeled Usually included

Time Horizon Usually longer (lifetime?) Usually short (1 – 5 years)


Reimbursement Process in Canada and consideration of budget impact analysis

Consideration of budget Impact ?

Focus on role of budget impact by HTA groups

in today’s presentation such as CDR/pCODR

given process is more transparent


Role of Budget Impact Analysis at CDR/pCODR

Budget Impact not considered by CDR– BIMs and BIAs are Category 2 requirements and are not

considered as part of the review or recommendation process of CDR (provided to CADTH at least 20 business days before the targeted CDEC meeting)

Budget Impact considered by pCODR – Part of pCODR Deliberative framework (Adoption

Feasibility)

Budget Impact not considered as part of CADTH Therapeutic Review Process


How is budget impact considered by pCODR?

“The following budget impact analysis (BIA) information is required in the Submission to pCODR: one non-specific BIA model and report. The BIA

should be non-specific in that the model it is based on should be flexible enough to be applied to the context of any of the participating Federal drug plans, P/T Ministries of Health or Provincial Cancer Agencies, which may differ with respect to funding of comparators or the design of the program responsible for drug funding.

The following supporting documentation for the non-specific BIA:

• all market research information used in the BIA• documents cited in the BIA • Disease prevalence — the prevalence or incidence of

the disease(s) or condition(s) for which the Drug is under review should be provided for the Canadian population.

• For Drugs which require reconstitution or dose preparation, the method of dose preparation, dose stability and specifics around potential drug wastage should be addressed.”


How is budget impact considered by pCODR?


Options for incorporating budget impact within CDR/pCODR deliberations

1. Do not consider budget impact in submissions to CDR/pCODR

2. Consider budget impact in submissions to CDR/pCODR without comparing against current (and forecasted) expenditures in Canada

3. Consider budget impact in submissions to CDR/pCODR and compare against current (and forecasted) expenditures in Canada

4. Consider budget impact in submissions to CDR/pCODR by comparing against a threshold


Option 1: Do no consider budget impact


Option 2: Consider budget impact but do not compare current (and forecasted) expenditures in Canada


Option 3: Consider budget impact but compare current (and forecasted) expenditures in Canada

New Drug (Forecasted budget impact $190 million)

• Affordable? • Reasonable

value compared with other drugs with similar expenditure?

RankLeading Products

Therapeutic Subclass

Total Sales ($ millions)

2012 Growth (%) Company

1 Remicade Anti-arthritic 694.9 23.1 Schering

2 Humira Anti-arthritic 434.9 18.2 AbbVie

3 Lucentis Vision loss 402.2 40.4 Novartis

4 Enbrel Anti-arthritic 332.9 5.4 Amgen

5 Cipralex Antidepressant 250.0 16.1 Lundbeck

6 Rituxan Autoimmune 217.6 8.7 Roche

7 Cymbalta Depression 204.7 19.2 Lilly

8 Advair Asthma Therapy 204.5 0.2 Abbott

9 Spiriva Brochodilators 204.3 6.3 Boehringer

10 Ezetrol Cholesterol reduction

185.0 6.4 Merck

Source: IMS Health Pharmafocus through 2018 & https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html

2013 Leading Pharmaceutical Products in Canada

https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html

https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html


Option 4: Consider budget impact by comparing against a threshold

Parameter Estimate (Drugs) Source

1 Growth in Canadian GDP, 2016 (est.) + 1% 2.40%Bank of Canada,

2016

2 Total health care spending ($)219.1 billion CIHI 2015

3Contribution of drug spending to total

healthcare spending (%) 15.70% CIHI 2015

4Contribution of drug spending to total

healthcare spending ($) (Row 2 x Row 3) 34.4 billion CIHI 2015

5Annual threshold for net healthcare cost growth for all new drugs (Row 1 x Row 4)

825.6 million Calculation

6Average number of new molecular entities or

approvals, 2009-2012 26

Canada’s Research-Based Pharmaceutical

ReportCompanies (Rx&D)

2015

7

Annual threshold for average cost growth per individual new molecular entity

(#5 divided by #6)31.8

million Calculation

8

Annual threshold for estimated budget impact for each individual new molecular

entity (doubling of row 7)63.5

million Calculation


Advantages & Disadvantages of Each Option

Advantages Disadvantages

Option 1 (Do not consider budget

impact)

• Simple • Requires limited resources by CDR/pCODR to appraise• Allows payers to be responsible for consideration of budget

impact

• Not transparent • No consideration of affordability

Option 2(Simple budget impact analysis

that does not compare with expenditure data)

• Simple • Considers budget impact, albeit against no expenditure

data• Simple budget impact model from manufacturer is

sufficient • Require limited resources by CDR/pCODR to appraise

• Not transparent consideration of budget impact

• Only allows crude budget impact statements to be made, e.g., “Drug A will be associated with high budget impact”

Option 3 (Detailed BIA which compares

against current (and forecasted) expenditures in

Canada)

• Considers budget impact and current expenditures on drugs in Canada

• More precise budget impact conclusion can be made, e.g., “Drug A will be associated with a forecasted budget impact of 190 million per annum potentially ranking it among the top 10 expenditures by public drug plans ”

• Requires better access to up-to-date expenditure data

• Requires high quality budget impact analysis from manufacturer

• Requires additional resources by CDR/pCODR to appraise

• Does not link budget to price

Option 4 (Detailed BIA which compares

against a threshold)

• Mechanism to link budget impact to a maximum price • Does not require better access to up-to-date expenditure

data

• Relies on GDP • Requires high quality budget impact

analysis from manufacturer • Requires additional resources by

CDR/pCODR to appraise


Breakfast Session Voting

Which option do you think CADTH should use when it comes to considering budget impact of pharmaceuticals in Canada?

• Option 1: Do not consider budget impact – leave it to payers

• Option 2: Consider simple budget impact analysis but do not compare current (and forecasted) expenditures in Canada

• Option 3: Consider detailed budget impact and compare current (and forecasted) expenditures in Canada

• Option 4: Consider detailed budget impact analysis and compare against a threshold

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