Governments Need Better Guidance to Maximise Value for Money: The Case of Australia’s Pharmaceutical Benefits Advisory Committee

Abstract

In Australia, the Pharmaceutical Benefits Advisory Committee (PBAC) makes recommendations to the Minister for Health on which pharmaceuticals should be subsidised. Given the implications of PBAC recommendations for government finances and population health, PBAC is required to provide advice primarily on the basis of value for money.The aim of this article is twofold: to describe some major limitations of the current PBAC decision-making process in relation to its implicit aim of maximising value for money; and to suggest what might be done toward overcoming these limitations. This should also offer lessons for the many decision-making bodies around the world which are similar to PBAC.The current PBAC decision-making process is limited in two important respects. First, it features the use of an implicit incremental cost-effectiveness ratio (ICER) threshold that may not reflect the opportunity cost of funding a new technology, with unknown and possibly negative consequences for population health. Second, the process does not feature a means of systematically assessing how a technology may be of greater or lesser value in light of factors that are not captured by standard measures of cost effectiveness, but which are nonetheless important, particularly to the Australian community. Overcoming these limitations would mean that PBAC could be more confident of maximising value for money when making funding decisions. Key Points for Decision Makers: The current decision-making process of Australia's Pharmaceutical Benefits Advisory Committee (PBAC) is limited in relation to its implicit aim of maximising value for money.2  The decision-making process features the use of an implicit incremental costeffectiveness ratio threshold that may not reflect the opportunity cost of funding a new technology; moreover, it does not feature a means of systematically assessing how the value of a technology may differ in light of important factors not captured by standard measures of cost effectiveness.  Some attempts have been made outside of Australia to overcome such limitations, and if similar attempts were undertaken in Australia, PBAC could be more confident of maximising value for money when making funding decisions. Submissions for government subsidy serve to provide PBAC with evidence about the proposed pharmaceutical. Ideally, this evidence speaks to the criteria that PBAC members use to determine whether government subsidy is warranted. But for PBAC members to meaningfully apply criteria, they require standards. The evidence can then be used to determine whether a technology meets the standards. In other words, the evidence submitted may indicate how 'good' a proposed pharmaceutical is, but a decision maker needs some notion of when a technology is 'good enough' [4]. There is simply no other way to make a decision. Compliance with Ethical StandardsThe aim of this article is twofold: to describe some major limitations of the current PBAC decision-making process in relation to its implicit aim of maximising value fo...

An Ethical Analysis of Coverage With Evidence Development

“…This norm is alive in Australia and the United Kingdom, among other countries, where government funds are legitimately set aside for the express purpose of availing health technologies to the public. Funds are set aside with the implicit aim of maximizing value for money across the population 26 or at least avoiding outrageous opportunity costs, which is to say achieving some reasonable level of value for money. The aim of avoiding outrageous opportunity costs is the less demanding and suffices for our argument.…”

Modelling the impact of multiple sclerosis on life expectancy, quality-adjusted life years and total lifetime costs: Evidence from Australia

“…3 In Australia, all new medications that are considered for public reimbursement go through a process of economic evaluation by the Pharmaceutical Benefits Advisory Committee (PBAC). 4 The evaluation of policies for the treatment of chronic illnesses such as MS pose significant challenges, as health and economic consequences accrue over long periods, while evidence on the effectiveness of interventions is usually obtained from clinical trials or epidemiological studies of limited duration. Thus, outcomes that are typically calculated in health economic evaluations and relevant to many stakeholders, including lifetime risks of progression, life expectancy (LE), quality-adjusted life years (QALYs), and total lifetime costs of disease, must be projected over many years.…”

The development of funding recommendations for health technologies at the state level: A South Australian case study

“…They must then consider information (evidence) on how well the technology performs with respect to those criteria. Clearly, however, evidence on its own is not enough to inform funding decisions, and standards are required to judge when a technology is good enough to be recommended for funding . For example, when considering economic evidence, decision makers may apply a standard in the form of a threshold of cost‐effectiveness representing the additional cost imposed on the health system (if a new technology is used instead of the comparator) to forgo 1 unit of the health outcome (eg, quality‐adjusted life‐year) …”

“…These committees also consider other important factors such as equity . However, standards used by these committees have not been explicitly acknowledged in their guidelines, although an implicit cost‐effectiveness standard, for instance, has been inferred from past PBAC decisions and can be glimpsed in recommendations citing “unacceptably high” cost‐effectiveness profiles …”