Drug funding price negotiations: Towards achieving a balance between individual and population gains in health benefits.

Abstract

6641 Background: Drug price negotiation to lower cost to a cost-effectiveness threshold (λ) is a recognized approach to improve health care opportunities for the greater benefit of the population. Critics have raised concerns for this approach given the additional time required and speculated loss of quality-adjusted life-years (QALY) for patients. The current study aimed to quantify the incremental net health benefit (INHB) of publicly funded oncology drugs, if funding occurred at list prices without (w/o) negotiations. Methods: Pan-Canadian Oncology Drug Review submissions were reviewed to identify funded drugs with unique indications. For included drug indications economic guidance panel (EGP) reports were reviewed for incremental costs (ΔC) and ΔQALY from manufacturer’s base case cost-effectiveness analyses, EGP lower (LL) and upper limit (UL) re-analyzed estimates (based on list prices). Number of new cases in Ontario (most populous province in Canada) per indication (2017-18) was obtained from provincial databases. Annual QALY gain for each indication was determined by: (ΔQALY×cases). Provincial QALY gain/loss w/o price negotiations to reference λ was estimated by: (INHB= [ΔQALY− (ΔC/λ)] ×cases). Incremental net monetary benefit demonstrated annual monetary gain/loss w/o price negotiations to reference λ: (INMB= [(ΔQALY×λ) −ΔC] ×cases). Results: 34 drug indications including 4,629 new cases were identified. Annual QALY gain for funded indications using manufacturer, LL and UL estimates was 1,851, 1,617 and 1,301, respectively. At reference λ CAD$100,000/QALY, funding w/o negotiations resulted in loss of 2,176, 2,368, 2,451 QALY, representing budgetary diversions away from other health care interventions. This would result in a provincial net annual loss of 325, 751 and 1,150 QALY, respectively. INMB demonstrated provincial net monetary loss of CAD$32,472,389, $75,113,684 and $115,022,331, respectively. Conclusions: Despite an annual gain in QALY for funded drug indications, a net provincial loss in QALY w/o price negotiations was demonstrated. Thus, supportive evidence exists for drug price negotiations towards the promotion of health benefits for the population.