THE IRISH COST-EFFECTIVENESS THRESHOLD:
DOES IT SUPPORT RATIONAL RATIONING OR MIGHT IT LEAD TO
SYSTEMATIC DAMAGE OF IRELAND’S HEALTH SYSTEM?
1
2
James O’Mahony & Diarmuid Coughlan
[email protected]
1. Department of Health Policy & Management, Trinity College Dublin, Dublin, Ireland
2. Institute of Health & Society, Newcastle University, Newcastle upon Tyne, UK
1. Introduction: Irish Law and the Threshold
2.3 The Threshold has no Empirical Basis
The principle that the opportunity cost of providing new interventions in terms of other services
foregone be considered when adopting novel treatments is recognised in Irish law as part of the
2013 Pricing and Supply of Goods Act [1]. While the Act does not detail how the opportunity
cost should be considered common practice in cost-effectiveness analysis (CEA) is to use a costeffectiveness threshold as a proxy for the opportunity cost of reimbursement.
None of the thresholds applied in Ireland to date have been supported by empirical evidence.
Therefore it is difficult to sustain any claim that the threshold represents a valid proxy for the opportunity cost of health services foregone. Consequently, CEA cannot be truly considered to support evidenced-based policy making in Ireland as the evidence of the opportunity cost is absent.
Ireland has suffered a profound fiscal crisis since 2008. Years of rapid health expenditure growth
came to an abrupt end. Figure 1 shows the profound reduction in overall health and pharmaceutical spending since 2008.
Prior to 2012 Ireland did not have an explicit cost-effectiveness threshold. Instead, a “notional”
threshold was used by Irish cost-effectiveness advisory bodies. Initially this threshold was
€45,000/QALY, but was revised down to €20,000 in 2009, apparently due to concerns of budget
sustainability.
In October 2012 a pricing and supply agreement between the Irish Pharmaceuticals Healthcare
Association, a pharmaceutical industry representative body, the Irish Department of Health and
the Health Service Executive, the body responsible for delivering public healthcare in Ireland,
made the threshold explicit for the first time[2]. The agreement revised the threshold back up to
€45,000/QALY.
This poster examines the current Irish threshold and details four reasons why it might not support the rational allocation of health resources.
Figure 1 Real GDP and Health Expenditure Index, 1990 = 100
The lack of an empirically informed threshold also means that the current CEA decision framework in Ireland does not meet the needs of current legislation, as the current threshold has no
meaningful relationship with the opportunity cost of reimbursement.
The lack of a sound empirical basis for the threshold calls into doubt whether reimbursement
decisions based on current CEA evidence actually improves health outcomes overall. This in turn
presents a challenge to the ethical claims in favour of applying CEA.
2.4 A €45,000 Threshold is Probably too High
Table 1. Recently approved interventions in
While the current Irish threshold is not supported by any empirical evidence, recent work
to estimate an appropriate threshold for the
UK based on actual services displaced found a
threshold of £13,000/QALY [3]. Assuming that
Ireland’s threshold should be broadly comparable, this suggests that the current threshold is
too high. Further evidence regarding the appropriateness of the current Irish threshold
could be found by investigating the costeffectiveness of services in that are either subject to long waiting lists or being curtailed due
to current spending cuts. While such work is
yet to be done, it seems likely that at least
some of the currently curtailed services are
more cost-effective than the current threshold.
Ireland with ICERs at initial appraisal
Intervention
Ipilimumab
Initial ICER at Review
(Yervoy®)
Sunitinib
(Stutent®)
Abiraterone acetate
(Zytiga®)
Eculizumab
Ivacaftor
(Kalydeco™)
Cabazitaxel
(Jevtana®)
Vemurafenib
(Zelboraf®)
Axitinib
(Inlyta®)
Mifamurtide
(Mepact®)
€147,900/QALY
€57,280/QALY
€135,000/QALY
€0.6-€1.1M/LYG
€449,035/QALY
€120,084/QALY
€131,883/QALY
Not reviewed
Not reviewed
Source: www.NCPE.ie
3. Conclusions
Source: http://stats.oecd.org/index.aspx?DataSetCode=HEALTH_STAT#
Although thresholds have recognised flaws as decision rules [4], they offer a simple and transparent means of prioritising care. If the threshold is too high then newly adopted interventions
may displace more care than they provide, thereby reducing the overall effectiveness of the
health system. While the most obvious and commonly voiced moral concern with the application
of cost-effectiveness is a worry that care is denied on the basis of cost, the concern of an excessive threshold is that insufficient rationing is taking place.
2. Four Reasons for Concern:
2.1 The Threshold as a Price Floor not Ceiling
The 2012 agreement states that all interventions reaching the threshold will be adopted. It also
states that those exceeding the threshold will not necessarily be rejected, but referred on for
further negotiations, presumably to be adopted with incremental cost-effectiveness ratios
(ICERs) above the threshold. As such, there is no explicit upper reimbursement limit and the Irish
threshold operates in principle not as a price ceiling, but rather as a price floor.
In practice some reimbursement applications are made below the threshold, possibly reflecting a
need to achieve a rapid reimbursement decision or pricing constraints from other markets. Conversely, many applications are made at ICERs above the threshold and have subsequently been
adopted. The extent of agreed reductions on the initial application price are not disclosed. Table
1. reports the ICERs on application of a number of recently accepted intervention in Ireland.
Note both the high ICERs and that some interventions have been adopted without assessment.
The function of the threshold as a price floor and the lack of a binding ceiling means it may only
be a weak control on the adoption of cost-ineffective interventions.
2.2 The Threshold only Applies to Drugs
The 2012 threshold only applies to drugs. It is therefore unclear if the previous €20,000 threshold applies to non-drug interventions or if the €45,000 threshold applies to all interventions. The
application of two different thresholds would clearly result in inefficiencies and inequities in the
allocation of healthcare resources between drug and non-drug uses.
The drug-only scope of the current threshold, its function as a price floor and its more than doubling at a time of ongoing profound fiscal difficulty all contribute to a sense that it may put the
interests of manufacturers ahead of patients. Therefore, it is important that Irish costeffectiveness experts reconsider the current threshold and work to establish a new threshold
that more accurately reflects the opportunity cost of interventions displaced or under-provided.
Restoring the balance between existing services and new candidate interventions is essential for
the efficient and equitable function of the Irish health system.
References
1. Oireachtas Éireann. Health (Pricing and Supply of Medical Goods) Act 2013, Schedule 3: Part
3.b. 2013; Available from: http://www.irishstatutebook.ie/pdf/2013/en.act.2013.0014.pdf.
2. IPHA DOE & HSE, Framework Agreement Between the Irish Pharmaceutical Healthcare Association Ltd and the Department of Health and the Health Service Executive on the Supply Terms,
Conditions and Prices of Medicines 2012.
3. Claxton, K., et al., Methods for the Estimation of the NICE Cost Effectiveness Threshold: Final
Report, in University of York Centre for Health Economics Research Paper. 2013.
4. Birch, S. and A. Gafni, Cost effectiveness/utility analyses: Do current decision rules lead us to where we want to be? Journal of health economics,
1992. 11(3): p. 279-296.
This research is supported by the Health Research Board of Ireland