The Evolution of HTA in Emerging Markets Health-Care ... - TREE

OHE Consulting Report for PhRMA
5 January 2011
according to economic theory. The sellers are, in fact, concerned the government has the upper
hand, and that this will push down prices in face-­‐to-­‐face negotiation. Hence, the idea of
international reference pricing becomes appealing, because it also reduces the costs of negotiation.
And if international prices are related to “value” to the customer based on willingness to pay for
health gain (reflecting also ability to pay, i.e., income levels), then the reference price could roughly
be based on value.
Thus, the reference price used to set the reimbursement level acts a ceiling on what manufacturers
can obtain in their negotiation with hospitals, clinics, and other providers. Without knowledge of
these discounts, it will not be possible to assess the actual cost-­‐effectiveness of drugs in real-­‐world
practice. However, once a health care system is operating in a “second-­‐best world”, where some
prices different substantially from opportunity costs, economic theory suggests that it will not be
straightforward to determine optimal prices.
Smaller high-­‐income countries like Taiwan have substantial segments of well-­‐off individuals who
expect access to the latest innovative medicines. If the US Food and Drug Administration (FDA) and
the European Medicines Agency (EMA) have approved a drug, there is usually little reason to
question access or spend substantial resources re-­‐reviewing it. Basically, the Taiwanese government
and NHI will provide access, but try to balance cost containment and access in order to maintain
citizen support.
Similarly, if the price is in alignment with similar countries, the government will have limited need to
do a formal or very sophisticated HTA analysis. “Free-­‐riding” or “piggy-­‐backing” on other, similar
countries’ assessments is the efficient and logical thing to do. Furthermore, when price is
established by negotiation rather than by rule and transparency, then there is a greater potential for
side deals and corruption. Nonetheless, if the international reference prices were too low (i.e.,
suboptimal) to support global R&D efforts, then the result would be dynamically inefficient (in the
long run for all countries).
On the other hand, the lack of a tight linkage between the government-­‐established reimbursement
level for new drugs and the acquisition cost (i.e., what manufacturers receive) means that Taiwan’s
contribution to global R&D will be less than would be expected from the reference price. In a recent
review of four European nations, Drummond, et al. (2010) reach a conclusion of potential relevance
to Taiwan.
Compared with HTA, reference pricing is a relatively blunt instrument for obtaining value for money
from pharmaceuticals. Thus, its role in making reimbursement decisions should be limited to drugs
which are therapeutically equivalent. HTA is a superior strategy for obtaining value for money
because it addresses not only price but also the appropriate indications for the use of the drug and
the relation between additional value and additional costs. However, given the relatively higher
costs of conducting HTAs, the most efficient approach might be a combination of both policies.
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