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Models therefore make it possible to estimate the long-term QALYs and cost. This raises the question of how to evaluate the cost-effectiveness of pharmaceuticals and medical devices.
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For example, consider the case of assessment of new drug B compared with existing drug A for a certain disease (see Figure 7). If drug B has a lower total cost (meaning not only the pharmaceutical cost but also all related costs generated over the long term) and higher QALYs than drug A, it is easy to reach a conclusion - drug B is the obvious preference. Conversely, there would be no reason to select drug B over drug A if the former entailed a higher total cost but delivered a lower QALYs.
The such decisions become more difficult when drug B entails a higher total cost but also affords a higher QALYs than drug A (although the reverse situation, i.e., a lower total cost but also a lower QALYs, is also possible, but we omit it because delivery of an equivalent or higher QALYs by the new drug would be the more realistic premise). In other words, drug B would be more effective (QALYs) than drug A, but also carry a proportionately higher expense. |
Figure 7 Cost-effectiveness Matrix
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In such a case, analysts would evaluate the cost-effectiveness of drug B with reference to the additional cost required for a 1-QALY extension from drug A. This is termed the incremental cost-effectiveness ratio (ICER). Figure 8 presents an example. In this case, the new drug B would deliver a 2-QALYs extension from the existing drug A, but also entail a cost increase of two million yen. The ICER would be calculated as follows.
| * 2 million yen/2 QALYs = 1 million yen/1-QALY extension |
Figure 8 Concept of ICER
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The question is whether to consider this 1-million-yen ICER high or low. In several countries, pharmacoeconomics is already being applied for official policy-making in the medical field. For example, the ceiling value for an ICER to be deemed cost-effective is set at about 30,000 pounds in the United Kingdom and 50,000 dollars in the United States of America. This would be equivalent to five to six million yen in Japan. Although there has not been much discussion yet on the subject in Japan, some researchers have reported that the ceiling value in Japan is basically in line with these other countries.
At any rate, while an increase in medical costs is often treated as if it were an unequivocally negative aspect during discussions in Japan, none of the countries officially practicing pharmacoeconomic methods have this kind of outlook. In contrast, they are prepared to accept pharmaceuticals that cost more, provided that they deliver value commensurate with the increase. This approach forms the very basis of pharmacoeconomics.
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