A Tale of Two Ratios: Assessing
Value From the Perspectives of
Cost-Effectiveness and
Affordability
Disclosure
 Director of Evidence Synthesis & Health Technology
Assessment at Cornerstone Research
– Cornerstone Research Group Inc. consults for various
pharmaceutical and medical device companies
 Previously worked for CDR/pCODR and consulted
for ICER in the United States
Cornerstone Research Group Inc.
2
Cost effectiveness vs Budget Impact Analysis
 Cost effectiveness helps us assess whether a health
technology is worth the cost – provides good value for
money
 Cost effectiveness does not provide information on
affordability, i.e., can we afford it
 A health technology might be cost effective but the
financial impact to a drug plan may be such that it
cannot list the drug
 Affordability decisions are made by the participating
decision makers based on their budgets and priorities
Cornerstone Research Group Inc.
3
Cost effectiveness vs Budget Impact Analysis
CEA
BIA
Question
Is it good “value for money”?
Is it affordable?
Goal
Economic efficiency
(max. health with resources)
Plan financial impact
(cost containment)
Entire Population
Individual or groups
Usually broader
(health system costs)
Narrow perspective
(decision-maker costs)
Included
Excluded
Incr. cost per unit of outcome
Total expenditure ($)
Marketplace
dynamics
Usually not modeled
Usually included
Time Horizon
Usually longer (lifetime?)
Usually short (1 – 5 years)
Modelled patients
Scope of costs
Health Outcomes
Measure
Reimbursement Process in Canada and consideration of
budget impact analysis
Focus on role of budget
impact by HTA groups
in today’s presentation
such as CDR/pCODR
given process is more
transparent
Consideration of
budget Impact ?
Cornerstone Research Group Inc.
5
Role of Budget Impact Analysis at CDR/pCODR
 Budget Impact not considered by CDR
– BIMs and BIAs are Category 2 requirements and are not
considered as part of the review or recommendation
process of CDR (provided to CADTH at least 20
business days before the targeted CDEC meeting)
 Budget Impact considered by pCODR
– Part of pCODR Deliberative framework (Adoption
Feasibility)
 Budget Impact not considered as part of CADTH
Therapeutic Review Process
Cornerstone Research Group Inc.
6
How is budget impact considered by pCODR?
“The following budget impact analysis (BIA) information
is required in the Submission to pCODR:

one non-specific BIA model and report. The BIA
should be non-specific in that the model it is based
on should be flexible enough to be applied to the
context of any of the participating Federal drug
plans, P/T Ministries of Health or Provincial Cancer
Agencies, which may differ with respect to funding of
comparators or the design of the program
responsible for drug funding.

The following supporting documentation for the
non-specific BIA:
•
•
•
•
Cornerstone Research Group Inc.
all market research information used in the BIA
documents cited in the BIA
Disease prevalence — the prevalence or incidence of the
disease(s) or condition(s) for which the Drug is under review
should be provided for the Canadian population.
For Drugs which require reconstitution or dose preparation,
the method of dose preparation, dose stability and specifics
around potential drug wastage should be addressed.”
7
How is budget impact considered by pCODR?
Cornerstone Research Group Inc.
8
Options for incorporating budget impact within
CDR/pCODR deliberations
1. Do not consider budget impact in
submissions to CDR/pCODR
2. Consider budget impact in submissions to
CDR/pCODR without comparing against
current (and forecasted) expenditures in
Canada
3. Consider budget impact in submissions to
CDR/pCODR and compare against current
(and forecasted) expenditures in Canada
4. Consider budget impact in submissions to
CDR/pCODR by comparing against a
threshold
Cornerstone Research Group Inc.
9
Option 1: Do no consider budget impact
Cornerstone Research Group Inc.
10
Option 2: Consider budget impact but do not compare
current (and forecasted) expenditures in Canada
Cornerstone Research Group Inc.
11
Option 3: Consider budget impact but compare current
(and forecasted) expenditures in Canada
2013 Leading Pharmaceutical Products in Canada
New Drug
(Forecasted
budget impact
$190 million)
• Affordable?
• Reasonable
value
compared with
other drugs
with similar
expenditure?
Rank
Leading
Products
Therapeutic
Subclass
Total Sales
($ millions)
2012 Growth
(%)
Company
1
Remicade
Anti-arthritic
694.9
23.1
Schering
2
Humira
Anti-arthritic
434.9
18.2
AbbVie
3
Lucentis
Vision loss
402.2
40.4
Novartis
4
Enbrel
Anti-arthritic
332.9
5.4
Amgen
5
Cipralex
Antidepressant
250.0
16.1
Lundbeck
6
Rituxan
Autoimmune
217.6
8.7
Roche
7
Cymbalta
Depression
204.7
19.2
Lilly
8
Advair
Asthma Therapy
204.5
0.2
Abbott
9
Spiriva
Brochodilators
204.3
6.3
Boehringer
10
Ezetrol
Cholesterol
reduction
185.0
6.4
Merck
Source: IMS Health Pharmafocus through 2018 &
https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html
Cornerstone Research Group Inc.
12
Option 4: Consider budget impact by comparing against a
threshold
Parameter
Growth in Canadian GDP, 2016 (est.) + 1%
2
3
Total health care spending ($)
Contribution of drug spending to total
healthcare spending (%)
15.70%
CIHI 2015
4
Contribution of drug spending to total
healthcare spending ($) (Row 2 x Row 3)
34.4 billion
CIHI 2015
5
Annual threshold for net healthcare cost
growth for all new drugs (Row 1 x Row 4)
825.6
million
6
Average number of new molecular entities or
approvals, 2009-2012
26
8
Annual threshold for average cost growth per
individual new molecular entity
(#5 divided by #6)
Annual threshold for estimated budget
impact for each individual new molecular
entity (doubling of row 7)
2.40%
219.1
billion
Source
Bank of Canada,
2016
1
7
Cornerstone Research Group Inc.
Estimate
(Drugs)
CIHI 2015
Calculation
Canada’s
Research-Based
Pharmaceutical
Report
Companies (Rx&D)
2015
31.8
million
Calculation
63.5
million
Calculation
13
Advantages & Disadvantages of Each Option
Advantages
Disadvantages
Option 1
(Do not consider budget
impact)
•
•
•
Simple
Requires limited resources by CDR/pCODR to appraise
Allows payers to be responsible for consideration of budget
impact
•
•
Not transparent
No consideration of affordability
Option 2
(Simple budget impact analysis
that does not compare with
expenditure data)
•
•
Simple
Considers budget impact, albeit against no expenditure
data
Simple budget impact model from manufacturer is
sufficient
Require limited resources by CDR/pCODR to appraise
•
Not transparent consideration of budget
impact
Only allows crude budget impact
statements to be made, e.g., “Drug A will
be associated with high budget impact”
Considers budget impact and current expenditures on
drugs in Canada
More precise budget impact conclusion can be made, e.g.,
“Drug A will be associated with a forecasted budget impact
of 190 million per annum potentially ranking it among the
top 10 expenditures by public drug plans ”
•
•
•
Option 3
(Detailed BIA which compares
against current (and
forecasted) expenditures in
Canada)
•
•
•
•
•
•
Option 4
(Detailed BIA which compares
against a threshold)
•
•
Mechanism to link budget impact to a maximum price
Does not require better access to up-to-date expenditure
data
•
•
•
Cornerstone Research Group Inc.
Requires better access to up-to-date
expenditure data
Requires high quality budget impact
analysis from manufacturer
Requires additional resources by
CDR/pCODR to appraise
Does not link budget to price
Relies on GDP
Requires high quality budget impact
analysis from manufacturer
Requires additional resources by
CDR/pCODR to appraise
14
Breakfast Session Voting
Which option do you think CADTH should
use when it comes to considering budget
impact of pharmaceuticals in Canada?
•
Option 1: Do not consider budget
impact – leave it to payers
•
Option 2: Consider simple budget
impact analysis but do not compare
current (and forecasted) expenditures
in Canada
•
Option 3: Consider detailed budget
impact and compare current (and
forecasted) expenditures in Canada
•
Option 4: Consider detailed budget
impact analysis and compare against
a threshold
Cornerstone Research Group Inc.
15