The efficiency-frontier approach for health economic evaluation versus cost-effectiveness thresholds and internal reference pricing: combining the best of both worlds?

ABSTRACT

Introduction: The efficiency-frontier approach (EFA) to health economic evaluation aims to benchmark the relative efficiency of new drugs with the incremental cost-effectiveness ratios (ICERs) of non-dominated comparators. By explicitly considering any differences in health outcomes and costs, it enhances the internal reference pricing (IRP) policy that was officially endorsed by Germany as the first country worldwide in 1989. However, the EFA has been repeatedly criticized since its official endorsement in 2009.

Areas covered: This perspective aims to stimulate the debate by discussing whether the main objections to the EFA are technically valid, irrespective of national contextual factors in Germany with reservations towards using cost-per-quality-adjusted life year (QALY) thresholds. Moreover, we comparatively assessed whether the objections are truly unique to the EFA or apply equally to IRP and cost-effectiveness thresholds.

Expert commentary: The plethora of objections to the EFA (n = 20) has obscured that many objections are neither technically valid nor unique to the EFA. Compared with cost-effectiveness thresholds, only two objections apply uniquely to the EFA and concern intended key properties: (1) no external thresholds are needed and (2) the EFA is sensitive to price changes of comparators. Combining these policies and developing them further are under-utilized research areas.

KEYWORDS:

• Reference pricing
• cost effectiveness
• health technology assessment
• economic evaluation
• decision making

Acknowledgments

The authors thank Consuela Jacobi-Yniguez and Natalie McGauran for the English editing. We thank Siw Waffenschmidt for devising the search strategy and performing the search.

Declaration of interest

F Sandmann, S Lhachimi, and A Gerber-Grote are all former employees of IQWiG. S Mostardt is a current employee of IQWiG. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed. Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Additional information

Funding

This manuscript was not funded.