Kelvin Teo
So many bitter pills to swallow...
A healthcare system that strives to be one that is of first world standard is arguably one that provides timely, reliable and affordable access to necessary medicines required by members of the community. This is the raison d’être of the Pharmaceutical Benefits Scheme (PBS), a programme of the Australian government which was established in 1948 with the goal of providing life-saving and disease-preventing drugs to Australian residents.
The pertinent question that a drug subsidy policy planner faces is the design of the decision making system that determines whether one drug should be subsidised or not. Hence, this article will draw lessons from the implementation of the decision-making process of the PBS and integrate experiences of the British National Healthcare Service (NHS), proposing a workable decision-making process that determines whether a drug should be subsidised or not.
Results of drug trials
It is usually in the pharmaceutical company’s commercial interest to have its drug listed among those being subsidised by the state or/and healthcare system. Generally, cost of drugs to the patient may affect prescribing practices of physicians. The physician’s fear is that an expensive treatment may discourage the patient from following up with treatment, which in other words means the loss of patients.
Being an observer in a meeting between representatives of nephrology societies from various countries and a pharmaceutical company, when it came to the Q and A session where each representative presented any pertinent issue regarding the drug, one from a developing country asked upfront whether the company could reduce prices of the drug because the fear is that the clinics could lose patients due to the high cost of treatment.
If physicians aren’t in favour of prescribing the drugs, the commercial outlook for the company will appear bleaker. As such, companies will strive to have their drugs among those subsidised, and in the Australian PBS system, companies will make submissions to the Pharmaceutical Benefits Advisory Committee (PBAC) for consideration for drug subsidy listing under PBS.
Clinical trials provide evidence of the effectiveness of the drugs in the treatment of various diseases. A measure of effectiveness for anti-hypertensive medications is for example reduction of blood pressure after a period of time. When companies submit results of clinical trials that they have conducted, a requirement should be made of the latter to conduct quality of life studies among patients who have undergone treatment with the drugs. Certain drugs may have adverse effects on the patients, which could affect their quality of life.
What exactly is quality of life, especially in the medical context? Quality of life is an indicator of a person’s total well-being in physical, social and emotional aspects. Within a clinical study, a quality of life measure of a drug treatment known as the health-related quality of life (HRQoL) can be determined through a questionnaire done by patients.
Such questionnaires are multi-dimensional and cover physical, social, emotional, work or role-related aspects of a patient’s life, and are scored based on the patient’s responses. Thus, at the level of the submission by a drug company for a particular drug to be included into the list of subsidised drugs, a policy can be made that requires the company to conduct HRQoL assessments on its patients during the trials.
The HRQoL is an important measure in determining a parameter known as Quality-adjusted life year (QALY). QALY is the sum of the Quality of life measures and Quantity of life lived. Expressed in a number up till 1.0 which signifies perfect health and 0.0 means death, QALY represents the utility (i.e. benefits) of a treatment in terms of quality and quantity of life.
Other direct and indirect costs
In determining whether a treatment is worthwhile subsidising, other direct and indirect costs must be factored in. Direct costs are those directly consumed when the patient seeks treatment for his condition. Such can include costs of consultation, diagnostic tests, treatment from other members of the allied healthcare team and treatment sought for adverse effects of the drugs.
Indirect costs on the other hand tend to measure the impact of treatment on the economy. Thus, the question behind the indirect costs of treatment with a drug is the losses or on the brighter side, gains in productivity as a result of treatment sought. In simpler terms, what this question means is that if a population of patients are given a certain treatment for a certain condition, will their productivity be affected? Information on productivity can be garnered from duration of medical leave sought due to treatment or from patient surveys questioning the impact of treatment on their work performance, e.g. does their consumption of the drug affect their ability to perform in the work place?
The British NHS experience
When the British National Institute for Health and Clinical Excellence (NICE) recommended the bone marrow anti-cancer drug, bortezomib (Velcade), was not cost effective, the drug makers Janssen-Cilag offered to reimburse the British NHS the cost of the drugs in patients who did not respond to treatment. Patients who responded will continue treatment with the costs of the drug borne by the NHS whilst for those who failed to respond, costs of the drug are refunded to the NHS by the company.
It is worthwhile to have this fail-safe mechanism in the decision-making process for drug subsidy. Fail-safe in the sense that the cost of the drugs in cases where they have failed to treat patients will be borne by the pharmaceutical industry instead of having all of it borne by the healthcare system. Such is designed to prevent the healthcare system from funding the subsidy of drugs with no therapeutic effect in some patients, and is a more prudent approach, since not all patients will respond to drug treatment.
Decision-making process to subsidise a certain drug
Suppose a company submits a drug to treat a condition. Its submission will include the consumer price of the drug set by itself. Together with clinical effectiveness and safety, the company is also required to submit health-related quality of life measures amongst patients who received drug treatment in its studies. The utility of the drug in terms of QALY, the sum of the quality of life and quantity of life lived is then determined. The direct costs involved in administering treatment with the drug (diagnostics, consultation, etc) are then calculated. The indirect costs of drug treatment are also calculated in the form of costs on the non-healthcare sectors, and in the larger picture, on the economy in terms of productivity gains or losses.
The last element in the decision-making process is dependent on the drug company itself – whether it has made the commitment to reimburse the healthcare system the amount it has invested in treating patients who do not respond to the drug. Thus, in such a case, if two competitors submit similar drugs to treat a certain condition, and both have similar consumer costs, and incur similar direct and indirect costs, if one made the commitment to reimburse the healthcare system the costs in patients whose treatment has failed, then the latter would have be accorded high priority to be included into the drug subsidy list as compared with its rival who did not make the commitment.
The ultimate decision hinges on whether the benefits of the drug derived from QALY outweights the costs involved, which involved the costs of subsidy, direct costs and indirect costs. A cost-utility analysis can be performed to address this and it can be determined from the ratio of the cost of the drug to QALY.
Concluding remarks
It is said that the right to healthcare, and by its extension, medicines is a positive right, that means the state has a duty to enable this right to healthcare access and medicine. As such, some feel that it is incumbent on the society to provide quality healthcare and affordable medicines. The decision whether to subsidise a particular drug is by no means an easy one. Hence, this article aims to highlight a decision-making framework that is workable in deciding whether it is feasible to subsidise a particular drug. A good decision making framework has an important part to play in drug subsidy policies that aims to provide timely, reliable and affordable access to medicines for the community. Sound policies as such are crucial in the move towards a first-world healthcare system.
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Photo courtesy of Charlie Brown, Fickr Commons.
