TY - JOUR
T1 - A Transparent and Consistent Approach to Assess US Outpatient Drug Costs for Use in Cost-Effectiveness Analyses
AU - Levy, Joseph
AU - Rosenberg, Marjorie
AU - Vanness, David
N1 - Funding Information:
Our article provides a clear methodology that improves on current practice to specify metrics that do not rely on a particular NDC list price. Overall, our approach improves transparency in drug cost estimates, because we rely on two publicly available reasonable extremes. This is in contrast to the WAC, in which selection of a single NDC is hard to justify, and ranges for sensitivity analysis are frequently based on best guesses and arbitrary assumptions about uncertainty rather than on data. Our method is consistent with the 2016 recommendations of the Second Panel on Cost Effectiveness in Health and Medicine that advocate that all CEAs conduct analysis from two reference cases, the societal and the health care sector perspectives [5] . For each reference case, drug costs are meant to represent the costs most likely to be paid by various payers, but some consideration should be given to estimating the opportunity cost when using the societal perspective [16] . The panel further recommends the use of sensitivity analysis to account for uncertainty in this parameter estimate. This is exactly what our method has captured, with the ranges available for various types of sensitivity analyses. The true distribution of US drug costs is not known. Our approach relies on publicly available data. Although our method is not perfect, it is well defined and transparent. Embedding consistency and transparency in the definition of the base case and the bounds of drug costs bolsters the credibility of CEA findings and aids comparability between studies. Our approach represents the current best available recommendations to measure drug costs in the United States and provides consistency in computing results to inform decision makers. Source of financial support: This work was supported by the National Institutes of Health under Ruth L. Kirschstein (National Research Service Award No. T32 MH18029) from the National Institute of Mental Health. Appendix A
Publisher Copyright:
© 2018 International Society for Pharmacoeconomics and Outcomes Research (ISPOR)
PY - 2018/6
Y1 - 2018/6
N2 - Background: Assessment of drug costs for cost-effectiveness analyses (CEAs) in the United States is not straightforward because the prices paid for drugs are not publicly available and differ between payers. CEAs have relied on list prices that do not reflect the rebates and discounts known to be associated with these purchases. Objectives: To review available cost measures and propose a novel strategy that is transparent, consistent, and applicable to all CEAs taking a US health care sector perspective or a societal payer's perspective. Methods: We propose using the National Average Drug Acquisition Cost (NADAC), the Veterans Affairs Federal Supply Schedule (VAFSS), and their midpoint as the upper bound, lower bound, and base case, respectively, to estimate net drug prices for various payers. We compare this approach with wholesale acquisition cost (WAC), the most common measure observed in our literature review. The minimum WAC is used to provide the most conservative comparison. Results: Our sample consists of 1436 brand drugs and 1599 generic drugs. On average, the upper bound (NADAC) is 1% and 9.8% lower than the WAC for brand and generic drugs respectively, whereas the lower bound (VAFSS) is 48.3% and 54.2% lower than the WAC. The NADAC is less than the WAC in 89.6% of drug groups. The distributions of these relationships do not show a clear mode and have wide variation. Conclusions: Our study suggests that the WAC may be an overestimate for the base case because the minimum WAC is higher than the NADAC for most drugs. Our approach balances uncertainty and lack of data for the cost of pharmaceuticals with the need for a transparent and consistent approach for valid CEAs.
AB - Background: Assessment of drug costs for cost-effectiveness analyses (CEAs) in the United States is not straightforward because the prices paid for drugs are not publicly available and differ between payers. CEAs have relied on list prices that do not reflect the rebates and discounts known to be associated with these purchases. Objectives: To review available cost measures and propose a novel strategy that is transparent, consistent, and applicable to all CEAs taking a US health care sector perspective or a societal payer's perspective. Methods: We propose using the National Average Drug Acquisition Cost (NADAC), the Veterans Affairs Federal Supply Schedule (VAFSS), and their midpoint as the upper bound, lower bound, and base case, respectively, to estimate net drug prices for various payers. We compare this approach with wholesale acquisition cost (WAC), the most common measure observed in our literature review. The minimum WAC is used to provide the most conservative comparison. Results: Our sample consists of 1436 brand drugs and 1599 generic drugs. On average, the upper bound (NADAC) is 1% and 9.8% lower than the WAC for brand and generic drugs respectively, whereas the lower bound (VAFSS) is 48.3% and 54.2% lower than the WAC. The NADAC is less than the WAC in 89.6% of drug groups. The distributions of these relationships do not show a clear mode and have wide variation. Conclusions: Our study suggests that the WAC may be an overestimate for the base case because the minimum WAC is higher than the NADAC for most drugs. Our approach balances uncertainty and lack of data for the cost of pharmaceuticals with the need for a transparent and consistent approach for valid CEAs.
UR - http://www.scopus.com/inward/record.url?scp=85030839224&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85030839224&partnerID=8YFLogxK
U2 - 10.1016/j.jval.2017.06.013
DO - 10.1016/j.jval.2017.06.013
M3 - Article
C2 - 29909872
AN - SCOPUS:85030839224
SN - 1098-3015
VL - 21
SP - 677
EP - 684
JO - Value in Health
JF - Value in Health
IS - 6
ER -
