Economic Evaluation of Drug Subsidy

Question: We had talked to you about providing subsidies for medicines. We have found a drug (called Tresiba®), which comes on the market in 2013 with conditional reimbursement, ie. that only some consumers have access to the subsidy. In 2016, the drug receives a general subsidy, i.e., all consumers have access to the subsidy. 

We have found data on this and we see a very large increase in sales after general subsidies. In addition, we also see that other drugs within the same disease, begin to decline when Tresiba receives general reimbursement. 

We therefore have the following research question, which we would like to investigate: What effect does a change in reimbursement status from conditional reimbursement to general reimbursement of the drug Tresiba® have on the number of consumers of the drug? 

Our effect measure is the number of consumers. We are thinking of calculating the C/E ratio, where we look at what are the extra costs per extra patient? 

What do you think of our research question? And our whole idea?

Answer: In CBA or CEA, the ultimate goal is to make some policy recommendations. In other words, at the end of the analysis, you can recommend whether it is better to have conditional reimbursement or general reimbursement. Therefore, you should be able to decide the threshold C/E ratio above which switching to general reimbursement is not worthwhile (and below which it is worthwhile). This is something you should keep in mind. 

In order to determine the threshold C/E ratio, you should consider what benefits does the increase in consumption of Tresiba® bring. For example, if the cost of 100 kroner increases the consumption by 1, while the increase is only worth 60 kroner as benefits to the consumers and the producers, the reimbursement is not worthwhile. In other words, in your CEA, you still need to have an idea of the approximate monetary value of each unit of effectiveness in order to make a policy recommendation. 

In most cases when we talk about CBA or CEA, we focus on whether a program/intervention is socially worthwhile. Your research question focuses on the increase in consumption and the number of consumers. It seems that your focus is on the benefit to the company selling Tresiba®?

One thing to think about when you choose a project for economic evaluation is whether the project is realistic – in other words, whether the corresponding policy can be approved without strong resistance from the residents. You should be able to provide a good justification for the project/intervention.