Pharmacoeconomic analyses a tool in private-payer decision-making process

A recent Telus Health comparison of a drug’s cost effectiveness when calculated from the private versus the public-payer perspective demonstrated clearly that the private-payer perspective matters when assessing the value of a medication, explained Dr Nina Lathia, pharmacist, and health economist, at Benefits Canada’s Face to Face Drug Plan Management Forum on Dec. 9, 2020.

“With so many new high-cost innovative drugs coming to market, private drug plan managers health technology assessment is an evaluation process to support decision making by assessing clinical and cost effectiveness. Pharmacoeconomics is a tool that allows an economic evaluation of treatment options by identifying, measuring and evaluating the cost and effects, such as efficacy and health outcomes of a drug. Whereas a budget impact analysis looks solely at the cost of adopting a drug, a pharmacoeconomics analysis considers its value.

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When conducting a pharmacoeconomics analysis, the costs considered must be relevant to the payer who is the decision maker. Lathia said that public decision makers consider health-care system costs, such as hospitalization, physicians, diagnostics and screening, whereas private payers are more concerned about the cost of the drug, productivity, sick days and long-term disability.

“When private payers rely on a public drug plan’s drug review, they use a cost-effectiveness evaluation done through a public-payer lens that does not factor in costs that are important to plan sponsors” said Lathia. “Looking at the value of a drug from a private-payer perspective would better inform private drug plan coverage decisions.”

The use of an economic analysis to evaluate drugs is relatively new for private payers and as a result, there are still some bumps to work out, Lathia noted. “Currently, there does not appear to be a systemic or consistent process for private payers to assess cost effectiveness in their decision-making,” she added.  Some private payers don’t share their submission requirements or review processes and often don’t publish the outcomes of their drug reviews.

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Unfortunately, Lathia said, “the net effect is that the overall lack of transparency doesn’t allow for feedback or collaboration with stakeholders to better understand or improve the drug submission and review process.”

Lathia noted she’d like to see industry stakeholders work together to foster a greater understanding of factors that influence private-payer formulary reimbursement decisions, which would lead to improved efficiencies and consistencies in the submission, review and formulary management processes. “Ideally, these improvements would lead to faster access to treatments that keep plan members happy, healthy and productive.”

Read more stories from the 2020 Face to Face Drug Plan Management Forum.