2023 Australasian Actuarial Education and Research Symposium

Zachary Tirrell

Macquarie University (Centre for the Health Economy)

Bring out your dead: A review of the cost minimisation approach in Health Technology Assessment submissions to the Australian Pharmaceutical Benefits Advisory Committee

This is joint work with Alicia Norman, Martin Hoyle, Sean Lybrand, Bonny Parkinson

BACKGROUND: Health technology assessment considers the cost-effectiveness of new medicines. There are different approaches to economic evaluation when considering cost-effectiveness. The most common approach to support the listing of new medicines for public subsidy in Australia is cost-minimisation analysis (CMA). However, over the past two decades, published literature has levied criticism against CMA, including declaring its 'death'.
AIMS: This research aims to identify factors that influence recommendations made by the Pharmaceutical Benefits Advisory Committee (PBAC) and assess whether the PBAC's recommendations adhere to the appropriate application of CMA reflected in the PBAC Methodology Guidelines.
METHODS: Relevant information was extracted from Public Summary Documents of submissions to the PBAC that included CMA and were assessed between 2005 and 2022. A generalised linear model was fitted, with control variables selected through an iterative feature selection process using the Bolasso Method.
RESULTS: While the potential for inferior safety or efficacy reduces the likelihood of a recommendation (p<0.01), the PBAC Methodology Guidelines suggest these submissions should be excluded from using CMA and instead use cost-effectiveness analysis.
CONCLUSION: The findings suggest that the Guidelines define a process not strictly adhered to in practice. Consequently, key stakeholders should consider whether aspects of the PBAC process or Methodology Guidelines require revision. Non-adherence to the Guidelines increases the uncertainty for pharmaceutical companies considering sponsoring a submission, which may lead to reduced access. Further, an inappropriate application of CMA may lead to the subsidy of inferior medicines at equivalent costs, thereby increasing costs due to suboptimal patient outcomes.