Cost effectiveness analysis and the consistency of decision making - Evidence from pharmaceutical reimbursement in Australia (1991 to 1996)

Objective: The principle aim of this study was to generate a league table o f drugs considered by the Australian Pharmaceutical Benefits Advisory Commi ttee (PBAC) for reimbursement. The table was used to test the hypothesis th at decisions made by the PBAC are consistent with the maxim of economic eff iciency. In addition, we explored whether the past decisions by the PBAC re vealed a threshold incremental cost-effectiveness ratio beyond which the PB AC is not prepared to recommend reimbursement of a drug. Methods: All 355 submissions made to the PBAC between January 1991 and June 1996 were reviewed. Submissions using cost per life-year gained (26 submis sions) or the cost per quality adjusted life-year (QALY) gained (9 submissi ons) were ranked in a league table and compared with advice given by the PB AC about that drug, The confidentiality restrictions for the submissions re quire that the individual drug details cannot be revealed in this article. Results: There was a statistically significant difference between the cost per life-year gained for drugs that were recommended for listing and those that were not, suggesting that the PBAC has been broadly consistent with th e use of economic efficiency as a criterion for decision making. We did not find an explicit threshold beyond which the PBAC was unwilling to pay for additional life years gained. However, between 1992 and 1996 the PBAC appea rs to have been unlikely to recommend a drug for listing if the additional cost per life-year exceeded 76 000 Australian dollars [$AU] (1998/1999 valu es) and was unlikely to reject a drug for which the additional cost per lif e-year gained was less than $AU42 000. The cost-effectiveness ratio was not the only factor determining the reimbursement decision. Conclusions: The results of this preliminary study indicate that decisions to recommend a drug for listing by the PBAC in the last few years have, by and large, been consistent with the notion of economic efficiency.