Abstract
New discoveries are a critical priority for the pharmaceutical industry. However, the use of fixed incremental cost-effectiveness (ICER) thresholds for health technology assessment (HTA) may compromise incentives to innovate and affect future treatment options. This paper highlights the impact of generic drug price policies on pharmaceutical innovation in the context of fixed ICER thresholds and proposes a new consideration for the cost-effectiveness analysis (CEA).There is a direct causal relationship between HTA and the market price of a drug; in jurisdictions where HTA agencies apply fixed ICER thresholds as an important reimbursement listing criterion, the incremental cost of a new drug is expected to be proportional to its incremental benefit over the comparator. However, the comparator price is subject to market forces or sudden policies and may change markedly affecting the cost-effectiveness assessment (e.g. where the comparator patent has expired). Since recent generic price regulations increased the price gap between drugs’ generic and patented versions, it is harder to achieve a sufficient level of incremental benefits in order to offset incremental prices of new treatments. Consequently, even promising drugs may have challenges to show attractive ICERs and research and development (R&D) investments may become unattractive in certain disease area.In order to promote innovation in therapeutic fields with unmet medical needs, a compromise would be to include the comparator’s patented price in the CEA instead of the generic drug. By identifying the relevant disease areas, decision makers and HTA authorities could therefore convey the importance of investing in these therapeutic areas to manufacturers.
Highlights
Similar to many countries around the globe, the health technology assessment (HTA) process is widely used by national and provincial bodies in Canada
This paper proposes a new methodological aspect that could be considered in the cost-effectiveness analysis of certain drugs: the use of the “patented price” of the comparator after its patent expiry in the incremental cost-effectiveness ratio (ICER) calculation in order to promote innovation, in therapeutic areas with unmet medical needs
By identifying the relevant disease areas, decision makers and HTA authorities could convey the importance of investing in these diseases to manufacturers
Summary
Similar to many countries around the globe, the HTA process is widely used by national and provincial bodies in Canada. This paper proposes a new methodological aspect that could be considered in the cost-effectiveness analysis of certain drugs: the use of the “patented price” of the comparator after its patent expiry in the ICER calculation in order to promote innovation, in therapeutic areas with unmet medical needs. These incentives to innovate may produce potential societal gains and better treatment options for future patients This method is not applicable to every drug class; it is relevant in disease areas for which the generic versions of the standard of care have come into market when its effectiveness is far away from an Ed max state (i.e. disease area with considerable unmet needs when generics come into market) and the new drugs entering the market show incremental benefits yet have difficulty in achieving a level of benefits comparable to the magnitude of the price drop of the standard of care. After the commercialization of generic versions of imatinib, considering its patented price in the ICER calculation would be a way to support innovation in the CML therapeutic area if decision makers perceive a high level of unmet needs
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