Prescription for Pharmacoeconomic Analysis

Methods for cost-utility analysis



1      Background

1.1       PHARMAC’s Role and Functions in the New Zealand Health System
1.2       Purpose of the Prescription for Pharmacoeconomic Analysis
1.3       History of the PFPA
1.4       PFPA Version 2.2
1.5       Decision making and the PFPA

2      Health Economic Analysis at PHARMAC

2.1       What is Economic Analysis?
2.2       Why Does PHARMAC Use Economic Analysis?
2.3       Types of Economic Analysis
2.4       What is the Process for Undertaking and Reviewing Cost-Utility Analyses at PHARMAC?
2.5       When is a Pharmaceutical Considered to be ‘Cost-Effective’?

3      Economic Modelling and Scope of Analysis

3.1       Models
3.2       Time Horizon and Cycle Length
3.3       Perspective and Decision Problem
3.4       Target Population
3.5       Comparator(s)

4      Evidence for Relative Clinical Effect

4.1       Data Sources
4.2       Obtaining Data
4.3       Presentation of Evidence
4.4       Assessing Data Quality

5      Transformation of Evidence

5.1       Transformation of Clinical Evidence
5.2       Extrapolation of Data
5.3       Subgroup Analyses
5.4       Assessment of Vaccines|
5.5       Transition Probabilities
5.6       Mortality Rates

6      Estimating Health Benefits

6.1       Measures of Health-Related Benefit
6.2       Health-Related Quality of Life Instruments

7      Estimating Costs

7.1       Costs Included in PHARMAC Analyses
7.2       Pharmaceutical Costs
7.3       Hospital Inpatient Costs
7.4       Other Health System Costs
7.5       Direct Patient Health Care Costs
7.6       Direct Non-Health Care Costs
7.7       Indirect Health Care Costs
7.8       Indirect Patient Costs
7.9       Sourcing and Reporting of Cost Data

8      Discounting

8.1       Approaches to Determining the Discount Rate
8.2       Recommended Discount Rate
8.3       Discount Rate for Budget Impact Analysis

9      Results of Cost-Utility Analysis

9.1       Cost-utility and utility-cost ratios
9.2       Weighting of results from multiple models
9.3       Interpretation of Results
9.4       Presentation of Results

10      Sensitivity Analysis

10.1     Parameter Uncertainty
10.2     Model Structure Uncertainty

11      Presentation of Data and Results

11.1     Checklist

Appendix 1 – PHARMAC Guidelines for Reviewing CUAs

Appendix 2 – Discounting

     Discounting Costs and Benefits at the Same Rate

     Approaches to Determining the Discount Rate

     Formula to adjust nominal discount rate for inflation



The Prescription for Pharmacoeconomic Analysis (PFPA) is a guide for anyone assessing the value for money of pharmaceuticals in New Zealand.

The intention is that funding proposals can be assessed to common standards, to support the best possible comparison between proposals. The PFPA may be useful for applicants submitting funding applications to PHARMAC, whether for medicines (which includes vaccines and some haemophilia treatments) or medical devices. PHARMAC follows the PFPA’s recommendations when reviewing applications or undertaking its own assessments. While it forms an important part of PHARMAC’s decision making processes the PFPA is only a guide – PHARMAC is not bound to adhere to it in every detail, or in every case.

The PFPA was first developed in 1999, when PHARMAC published its internal guidelines for cost-utility analysis for valuing medicines. The PFPA has grown and developed along with PHARMAC’s expanding role. At its foundation, PHARMAC was responsible for community medicines. PHARMAC’s scope has since broadened to include hospital medical devices, hospital medicines, some haemophilia treatments, and vaccines.

This version 2.2 of the PFPA includes explicit guidance for assessing medical devices and vaccines. The Pharmaceutical Schedule has always included some medical devices, and now includes the National Immunisation Schedule. In 2013 and 2014, PHARMAC consulted on its management of hospital medical devices. Stakeholders gave a clear message that while devices and medicines have much in common, there are also important differences in how they are researched, developed, and used. As a result, there may be differences in the availability of good quality evidence, and in the range and type of costs that should be routinely considered. Assessment methodologies need to be flexible enough so they can be applied to the full range of health interventions that PHARMAC considers.

The second important difference between this version 2.2 and the previous version 2.1 of the PFPA is that it supports PHARMAC’s move from Decision Criteria to Factors For Consideration. The economic assessments described in this Prescription for Pharmacoeconomic Analysis can help to inform PHARMAC’s consideration of many, but not all, of the Factors.

PHARMAC will continue to review and update its methods for assessing pharmaceuticals, and the Prescription for Pharmacoeconomic Analysis will continue to be updated to remain a useful resource for the New Zealand health system.

next >