Why has the use of health economic evaluation in Japan lagged behind that in other developed countries?

The aging population and the increasing availability of new medical technologies, particularly pharmaceuticals, have led to growing pressure on governments worldwide to contain healthcare costs. Increasingly, economic evaluation is used to aid decisions on the reimbursement and formulary access of drugs, and pharmaceutical companies are often required to demonstrate the cost effectiveness of their products. Canada and the UK are examples of countries that have successfully incorporated mandatory requirements for economic evaluations into the decision-making process in healthcare. Japan faces cost-containment issues for its health and welfare system similar to those seen elsewhere in the world. Despite this, economic assessments are not currently used in the allocation of drug budgets. Reasons why economic evaluations for healthcare have not yet been used routinely in Japan include governmental approaches to healthcare cost containment, the pricing of pharmaceuticals, the organisation of the healthcare system, attitudes of the medical profession, and limited knowledge and expertise. However, small but encouraging steps are now being taken towards the introduction of economic evaluations in Japanese medicine.     

Introducing economic evaluation as a policy tool in Korea: will decision makers get quality information? : a critical review of published Korean economic evaluations

Interest in the use of economic evaluations in Korea as an aid for healthcare decision makers has been growing rapidly since the financial crisis of the Korean National Health Insurance fund and the separation in 2000 of the roles of prescribing and dispensing drugs. The Korean Health Insurance Review Agency (HIRA) is considering making it mandatory for pharmaceutical companies to submit the results of an economic evaluation when demanding reimbursement of new pharmaceuticals. The usefulness of the results of economic evaluations depends highly on the quality of the studies. The purpose of this paper, therefore, is to provide a critical review of economic evaluations of healthcare technologies published in the Korean context.Our results show that many studies did not meet international standards. Study designs were suboptimal, study perspectives and types were often stated incompletely, time periods were often too short, and outcome measures were often less than ideal. In addition, some articles did not distinguish between measurement and valuation of resource use. Capital, overhead and productivity costs were often omitted. Only half of the studies performed sensitivity analyses.In order to further rationalise resource allocation in the Korean healthcare sector, the quality of the information provided through economic evaluations needs to improve. Developing clear guidelines and educating and training researchers in performing economic evaluations is necessary.     

Pricing and reimbursement of pharmaceuticals in Belgium

The Belgian healthcare system has a tradition of access and equity at affordable prices. As in other countries, the system becomes pressured by increasing healthcare costs. This paper describes the actual situation in Belgium with special focus on pharmaceutical products and the potential role of pharmacoeconomics in decision making on price and reimbursement. Nearly all people in Belgium are covered by compulsory health insurance. The system is paid for by social security, the patients and the federal and regional authorities. The part of the consumption of pharmaceuticals that is charged to insurance was about 62.1 billion Belgian francs (BeF), i.e. about 50% of the pharmaceutical market in 1994. Price setting in Belgium has been rather low due to the positive reimbursement list, where the price of a new drug is compared to existing drugs in a comparable therapeutic class (so-called reimbursement criteria). The expenditure on pharmaceuticals is increasing faster than global funding for public health. In order to control drug budgets, different cost-containment measures have been or are being taken, i.e. a mix of price, reimbursement and volume controls. These cost-containment measures are not necessarily in accordance with a health economic approach. This paper suggests the scope for better implementation of pharmacoeconomic evaluation, which can lead to more flexible reimbursement systems in specific indications. Therefore, a formal recognition of the role of objective economic evaluations is needed for both hospital and ambulatory care. This process should be proceeded by improving the understanding and robustness of pharmacoeconomic evaluations.     

Design, analysis and presentation of multinational economic studies: the need for guidance

Over the last decade, there has been a proliferation in the number of economic evaluations of pharmaceuticals to meet the growing demand for information about the economic benefits of healthcare technologies. The majority of these studies have been commissioned by pharmaceutical companies for the purposes of drawing attention to the resource and quality-of-life aspects of new or existing products. Such information has become important in overcoming a new obstacle, namely the demonstration of cost effectiveness (the so-called 'fourth hurdle'), in addition to the three well-established criteria of quality, tolerability and efficacy. To ensure the maintenance of standards, guidance for economic evaluations has emerged lately in the form of guidelines, regulations, principles, policies and positions. Drummond outlined three purposes of these guidelines, as follows: as a requirement prior to reimbursement, as statements of methodological standards, and as a statement of ethical standards. Such guidelines are designed to assist both the economic analyst and the decision-maker. In laying out the state of the art regarding the methodology of economic evaluation, guidelines assist the analyst in performing high-quality, scientifically valid studies, and assist the decision-maker in properly interpreting and assessing their quality. In response to these growing requirements for cost-effectiveness data globally, it has become increasingly common for economic evaluations to be conducted on an international scale. However, the recommendations in pharmacoeconomics guidelines regarding the manner in which these multinational economic evaluations should be designed, analysed and presented are too limited to be of any real value. This article examines the various issues that must be taken into consideration when conducting multinational studies, and provides a review of the techniques and approaches that have been suggested to date. It concludes with recommendations for potential inclusion in future sets of pharmacoeconomic guidelines.     

Penny and pound wise: pharmacoeconomics from a governmental perspective

Because of growing pressure on the healthcare budget in The Netherlands, appropriate justification of current expenditures and future investments in public healthcare are becoming increasingly important. Therefore, the Dutch Ministry of Health, Welfare and Sport is expanding its use of pharmacoeconomic evaluation in informed reimbursement decision-making of new pharmaceuticals. Since June 2002, pharmaceutical companies have been invited to submit a pharmacoeconomic dossier with their reimbursement applications of innovative drugs. As of January 2005 submission of a pharmacoeconomic dossier is mandatory for all drugs claiming to have therapeutic value. Currently, several European governmental and non-governmental organisations are making efforts to harmonise pharmacoeconomic research guidelines at the EU level. Ultimately, this may facilitate a more efficient way of conducting pharmacoeconomic research and encourage the use of pharmacoeconomic data by national assessment agencies and governments. It is anticipated that international pharmaceutical companies will increasingly invest in pharmacoeconomics while government staff will become more experienced in appraising the dossiers, thus resulting in an upward momentum in the quality and usability of pharmacoeconomic data. From the Dutch government's perspective, the use of pharmacoeconomic evaluation in reimbursement decision-making should offer a true opportunity for pharmaceutical companies to present the added value for money of new drugs. Using pharmacoeconomic data, costs, benefits and effects of pharmaceuticals are increasingly being considered from a societal perspective, thus going beyond the sole consideration of the impact on the pharmaceutical budget.     

Principles of pharmacoeconomics and their impact on strategic imperatives of pharmaceutical research and development

The importance of evidence-based health policy is widely acknowledged among health care professionals, patients and politicians. Health care resources available for medical procedures, including pharmaceuticals, are limited all over the world. Economic evaluations help to alleviate the burden of scarce resources by improving the allocative efficiency of health care financing. Reimbursement of new medicines is subject to their cost-effectiveness and affordability in more and more countries.There are three major approaches to calculate the cost-effectiveness of new pharmaceuticals. Economic analyses alongside pivotal clinical trials are often inconclusive due to the suboptimal collection of economic data and protocol-driven costs. The major limitation of observational naturalistic economic evaluations is the selection bias and that they can be conducted only after registration and reimbursement.Economic modelling is routinely used to predict the cost-effectiveness of new pharmaceuticals for reimbursement purposes. Accuracy of cost-effectiveness estimates depends on the quality of input variables; validity of surrogate end points; and appropriateness of modelling assumptions, including model structure, time horizon and sophistication of the model to differentiate clinically and economically meaningful outcomes. These economic evaluation methods are not mutually exclusive; in practice, economic analyses often combine data collection alongside clinical trials or observational studies with modelling.The need for pharmacoeconomic evidence has fundamentally changed the strategic imperatives of research and development (R&D). Therefore, professionals in pharmaceutical R&D have to be familiar with the principles of pharmacoeconomics, including the selection of health policy-relevant comparators, analytical techniques, measurement of health gain by quality-adjusted life-years and strategic pricing of pharmaceuticals.     

Practical aspects of designing and conducting pharmacoeconomic studies in Japan

The advent of simultaneous global clinical trials and drug registration strategies has increased the demand for global pharmacoeconomic strategies. Outcomes researchers in pharmaceutical companies are faced with the challenge of assessing at a strategic level what pharmacoeconomic data are most useful in Japan and when, and then deciding at a tactical level what type of study designs are feasible. This paper is written mainly for the benefit of researchers working outside of Japan in the pharmaceutical/medical device industry or academia who are interested in conducting research in Japan.We reviewed the existing pharmacoeconomic literature in Japan, and found that the number of studies per year has been steadily increasing. The majority of studies have been cost-effectiveness and cost-consequence analyses. Typical data sources available in Japan are somewhat limited compared with other Western countries. However, charge data can be easily accessed through the national uniform reimbursement fee system and these data are particularly relevant for pharmaceutical pricing negotiations with the Ministry of Health, Labor and Welfare (MHLW). The present use of pharmacoeconomic data by pharmaceutical companies is mainly for pricing negotiations but recent reforms make certain types of data useful for marketing strategies too. The demand for pharmacoeconomic data may increase because of upcoming MHLW pharmaceutical pricing and/or recent health insurance system reforms.Economic evaluation of medical technologies in Japan, though lagging behind North America, Australia and Europe, has the potential to rapidly gather momentum as increasing cost-escalation worries contribute to a growing interest in pharmacoeconomic data.     

Recommended structure for reporting economic evaluation on pharmaceuticals in Belgium

Pharmacoeconomic evaluations become more important for the reimbursement of pharmaceuticals, and will be obligatory for new pharmaceutical drugs for which an added therapeutic value is claimed and a price premium is proposed by the manufacturer. Therefore, it is important to guide purchasers and providers of pharmaceutical care in their efforts related to the evaluation process. Standard Report Format can support the quality, transparency and exhaustiveness of the data submitted. A multidisciplinary task force developed a Standard Report Format for pharmacoeconomic evaluations in Belgium.     

The pros and cons of a single 'Euro-price' for drugs

Parallel trade in pharmaceuticals has become a major European Union policy issue with several 'solutions' being considered by the European Commission, Member State governments and the pharmaceutical industry in the 'Bangemann Process'. This paper discusses the issues from an economic and public policy perspective--considering the economic cases for differential pricing and for 'Euro-prices', concluding that the economic case for parallel trade--to achieve convergence of prices--is not applicable to pharmaceuticals. It argues that health economic evaluation is not an appropriate tool to set 'Euro-prices' because of differences in clinical practice and in resource use and cost across countries. Pricing rules should reflect local willingness to pay for innovation. It concludes, however, that in the absence of policy changes there is a strong likelihood of companies refusing to supply new innovative products at low prices to traditionally 'low price' countries in order to avoid parallel trade undermining prices obtained elsewhere in Europe, with significant implications for the welfare of patients in those countries.     

Economic evaluation of drugs and its potential uses in policy making

Interest in the economic evaluation of drug treatments is steadily increasing, but the impact of such evaluations on decisions concerning the use of drugs is unclear. In this article I examine different decision and policy situations where economic evaluations of drug treatments could potentially be used. Economic evaluations may be used as an aid to the development of treatment guidelines, decisions within healthcare organisations, and decisions relating to approval, reimbursement and pricing. Economic evaluations appear to be most useful in the development of treatment guidelines and as an aid to reimbursement decisions. The incentive to use economic evaluations embodied in the healthcare system is also important. It is argued that it is too early to introduce regulations that require the use economic evaluations in, for example, reimbursement decisions. A more cautious approach might be preferred, where economic evaluations are used more selectively until the methodology and the field have developed further.     

The Danish approach to standards for economic evaluation methodologies

Standards for economic evaluation have now been proposed in several countries. The background for this article is a report commissioned in 1994 by the Danish health authorities (the National Board of Health and the Danish Ministry of Health) on the state of the art of economic evaluation: are the methods ready to be used for systematic decision-making in the Danish healthcare sector? The themes of this article are the attitude towards economic evaluation of medical technologies and healthcare services in Denmark, the areas for application and the desirability and feasibility of a standard set of methods for conducting economic evaluations. In addition, the current state of methodologies in economic evaluation is briefly outlined. On the background of a roundtable discussion of interested parties, the Danish health authorities have decided to introduce economic evaluation of new pharmaceutical products, on a voluntary basis for 2 to 3 years, when application has been made for public reimbursement.     

Information barriers to the implementation of economic evaluations in Japan

With increasing cost-containment pressures within healthcare systems worldwide, economic evaluations of medical technologies, particularly pharmaceuticals, are used to aid the allocation of expenditure and resources. Facing similar pressures, Japan will probably also introduce economic evaluation of health technology. However, the structure of the healthcare system in Japan does not lend itself naturally to the collection of the epidemiological and cost data required for economic evaluations in medicine. In addition, there are no formal methodological guidelines in place for these analyses. To overcome these information barriers in Japan, progress may be aided by the adoption of approaches used in other countries for data collection and guideline development.     

A case for the adoption of pharmacoeconomic guidelines in Japan

In recent years, more and more Japanese pharmaceutical companies have been submitting pharmacoeconomic data to the government, following the official request that such data may help in setting pharmaceutical prices. The companies have cooperated because, by doing so, they could influence pricing decisions for new products. However, the quality of these data at present is considered to be poor and heavily biased. The introduction of pharmacoeconomic guidelines that outline a set of standardised factors to be included in evaluations are necessary, so that an appropriate comparison of the cost effectiveness of the many new drugs that are introduced into the Japanese market each year can be made. In addition to supporting the development of standardised guidelines, the Ministry of Health and Welfare should clarify how pharmacoeconomic data are to be used to aid policy decisions and also mandate the publication of pharmacoeconomic data.     

Canadian guidelines for economic evaluation of pharmaceuticals. Canadian Collaborative Workshop for Pharmacoeconomics

In 1994, Canada became the second country to release national guidelines for the economic evaluation of pharmaceuticals. The guidelines were developed over a period of 18 months through an elaborate process of broad consultation with a wide variety of relevant stakeholders. The intent of the guidelines is to provide guidance to doers and users of studies, by laying out the general 'state of the art' regarding methods, and by providing specific methodological advice on many matters. The aim is to improve the scientific quality and integrity of studies, and to enhance consistency and comparability across studies. This article presents the Canadian guidelines, both in summary and in detail. Because the techniques of economic evaluation are widely applicable beyond pharmaceuticals, the guidelines will be of interest to researchers and decision makers in all fields of healthcare. Because the methods are not country specific, the guidelines will be of interest to those in other countries as well as in Canada.     

The 1996 pricing and reimbursement policy in The Netherlands

In The Netherlands, the government operates a reference price system in which medicines are categorised into groups of interchangeable drugs. The reimbursement within groups is limited. In addition, since drug prices in The Netherlands are currently among the highest in Western Europe, a law was implemented in March 1996 to lower the prices of drugs in The Netherlands to the mean of pharmacy buying prices in 4 surrounding countries (UK, France, Belgium and Germany). Maximum prices for oral formulations will be in force from 1 June 1996, and maximum prices for other formulations will be operational soon thereafter. Reducing the price level will lead to a substantial decrease in discounts for pharmacists. Lower discounts will also mean weaker 'golden chains' between wholesalers, the industry, and pharmacists, and will therefore create business opportunities for companies wishing to compete on the basis of price. Liberalising the distribution of pharmaceuticals and creating a cost-conscious demand side will stimulate price competition in the pharmaceutical market and make it easier for new participants to enter the Dutch market. Price competition will lead to lower prices and, consequently, to lower costs. Further exemptions from the reimbursement list will be recognised. Considerable efforts are also being made to rationalise the prescribing behaviour of physicians and the dispensing behaviour of pharmacists. Through this programme, which has many components, The Netherlands hopes to restrain and effectively control its expenditures on pharmaceuticals.     

The emerging government requirement for economic evaluation of pharmaceuticals

With the advent of government guidelines for the provision of cost-effectiveness data, economic evidence has been elevated to a status similar to that of evidence of efficacy and safety, which is required before licensing of pharmaceutical products. Whilst the precise nature of government requirements is likely to vary from place to place, they pose a number of practical problems for pharmaceutical companies, in the funding of studies and in the need to modify the clinical trials programme to facilitate economic data collection. Economic evaluation requirements have been viewed by various parties as a basis for pricing and reimbursement, as a form of cost containment and as a way of securing more value for money in the healthcare system. It is unlikely that economic evidence could ever form the sole basis for setting price, since both industry and government often seek to introduce other factors into the price negotiations. Requirements for economic evidence may also be an inefficient form of cost containment, compared with other methods such as budgetary caps. These offer some potential as a way of securing more value for money, but they should be applied equally across all health technologies. In the future there needs to be much more clarity of purpose in government guidelines, and methodological standards for economic analysis need to be refined.     

Pricing and reimbursement of pharmaceuticals in the Czech Republic and Sweden

Objectives To describe and compare price regulation and reimbursement in the Czech Republic and Sweden. Methods Legal documents, government reports, statutory information, annual reports and scientific articles were searched using the keywords: pharmaceutical market regulation, drug policy, drug pricing, drug reimbursement and patients’ participation in costs concerning both countries. Approaches to regulation and regulatory steps concerning prices were compared between the countries. Main outcome measure (i) Institutional responsibilities in pricing and reimbursement of pharmaceuticals; (ii) principles of patients’ participation in costs on pharmaceuticals. Results Substantial differences were found in terms of pricing. In the Czech Republic, the Ministry of Finance sets maximal prices for pharmaceuticals whereas in Sweden there is a process of price regulation combined with reimbursement decisions taken by the Pharmaceutical Benefits Board. Together with a system of state-owned pharmacies, this ensures that drug prices in Sweden are fixed at the same level throughout the country. In the Czech Republic, prices may differ, since only maximal price levels are set. In both countries, decisions about reimbursement are taken at the national or state level whereas insurance funds or county councils are responsible for covering costs. The private share of pharmaceutical expenditures is substantially lower in the Czech Republic, even though there is no maximal level for patient’s co-payment, as there is in Sweden. Conclusion Differences in price setting and some other regulations of the pharmaceutical market were found. Both systems are designed to promote rational use of pharmaceuticals; and are based on social solidarity.     

Assessment of the pharmaceutical expenditure in Hungary

Scarcity of health care resources draws attention to the expenditure on pharmaceuticals, as drugs are considered to be one of the major growth drivers of health care spending. This article assesses the Hungarian expenditure on pharmaceuticals by taking into account the economic status of the country and benchmarks from other OECD countries with special focus on indicators of Visegrad V4 countries (Czech Republic, Slovakia, Poland and Hungary). Our results highlight the heterogeneity of pharmaceutical expenditure data derived from different indicators among observed countries. Pharmaceutical spending is relatively higher in middle-income countries, mainly due the price convergence of innovative drug's, on contrary manpower cost of health care services are adjusted to local price levels, therefore the price differential of health care services between middle income and developed countries is greater. International trends of the global pharmaceutical market are also valid in Hungary. Increased private funding, mainly out of pocket payments above the average of V4 countries, has been the major growth driver of pharmaceutical expenditure recently in Hungary. Increased private pharmaceutical expenditure was mainly derived from the severe cost-containment measures in 2006. The annual growth rate of the National Health Insurance Fund's pharmaceutical budget for drug reimbursement was 1.37% in real terms between 1994 and 2009. This is much beneath the expansion of global pharmaceutical market. Consequently, cost-containment of public pharmaceutical spending was very successful in the last fifteen years, and the burden of market growth has been shifted to households. Public health programmes, investment into preventive care, with consideration on unfavourable Hungarian morbidity and mortality indicators, however, necessitate the increase of public pharmaceutical budget. In order to improve the allocative efficiency of health care spending, available resources should be spent only on effective, cost-effective, economically affordable medicines.     

Costs, innovation and efficiency in anti-infective therapy

This paper provides an overview of issues related to the emerging discipline of pharmacoeconomics and its relationship to the outcomes movement. The focus is upon the evolving Management Care Organisation (MCO) and the demands placed upon the pharmaceutical industry as it attempts to provide new innovative anti-infective treatments. Similarly, the challenge is to meet the ever increasing requirements for approval and reimbursement of new anti-infective pharmaceutical products. Outcomes research is playing an increasingly important role in such decisions throughout the world, including the United States. Unfortunately, most decisions and analysis at the national level and within MCOs regarding the adoption and utilisation of pharmaceuticals are rather unsophisticated in terms of the proper utilisation of pharmacoeconomic data. There is a prevalent need to better utilise this information to develop cost-effective disease and therapy intervention models and guidelines. Also, information on the application of pharmacoeconomics for the evaluation of pharmaceutical care services that enhance the cost effectiveness of drug therapy needs to be seriously considered. Specifically, this should include a consideration of the economic consequences of drug-related problems and the potential impact of pharmaceutical care on drug-related morbidity/mortality associated with the treatment of infectious disease.