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Apr 27, 2009
 |  BioCentury  |  Regulation

One Size doesn't fit all

NICE is not the only government agency that caps the cost of drugs to the healthcare system, but its cost per QALY threshold approach to cost containment differs from systems in France, Germany, New Zealand and the U.S. Department of Veterans Affairs, where agencies often negotiate directly with the drug manufacturer using reference prices for drugs within the same class and efficacy data for new drugs.

France's Haute Autorite de Sante (HAS), the French Health Technology Assessment agency, has used price caps for several years. HAS only reimburses drugs with a proven medical benefit over available treatments. If the drug does not demonstrate such a benefit, it is unlikely that the company will be permitted to sell the product at anything more than a slight premium to generics.

If a benefit is demonstrated or the treatment is a novel therapy for an unmet medical need, the company still must negotiate the price and a volume cap with the agency. The volume cap is based on the patient population for the approved indication and prevents the company from selling the drug off label. The practical result is a cap on costs to the system and on the income a company can receive for a particular drug.

Germany uses a reference pricing system for "me too" drugs. The scheme imposes a price limit on all drugs in a particular compound class, using the lowest-priced drug in the class as a starting point. If a drug exceeds the price limit, patients have to pay the excess out of their own pockets.

An exception is made for drugs that provide superiority over existing drugs in terms of efficacy or safety.

The job of assessing the benefits of novel therapies, including cost effectiveness assessments, is the domain of the Institute fuer Qualitaet und Wirtschaftlichkeit (IQWiG, Institute for Quality and Cost Effectiveness in the Healthcare System).

In 2009, IQWiG instituted a new process for evaluating novel drugs and devices that address unmet medical needs. Under the new process, IQWiG assesses economic benefits based on a set of estimates of the beneficial impacts of the treatment. The agency uses these estimates to set a ceiling price for the product.

According to Jaime Caro, SVP of health economics for pharmaceutical consultancy United BioSource Corp., IQWiG does not use QALYs to measure the benefits...

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