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Informing a Cost-Effectiveness Threshold for Health Technology Assessment in China: A Marginal Productivity Approach

Author

Listed:
  • Jessica Ochalek

    (University of York)

  • Haiyin Wang

    (Shanghai Health Development Research Centre)

  • Yuanyuan Gu

    (Macquarie University)

  • James Lomas

    (University of York)

  • Henry Cutler

    (Macquarie University)

  • Chunlin Jin

    (Shanghai Health Development Research Centre)

Abstract

Background Health technology assessment has been increasingly used in China, having been legally mandated in 2019, to inform reimbursement decisions and price negotiations between the National Healthcare Security Administration and pharmaceutical companies around the price of new pharmaceuticals. The criteria currently used to judge cost effectiveness and inform pricing negotiations, 3 × GDP per capita, is based on the rule of thumb previously recommended by the World Health Organization rather than an estimate based on an empirical assessment of health opportunity costs. Objective The objective of this study was to inform a cost-effectiveness threshold for health technology assessment in China that accounts for health opportunity cost. Methods The elasticity of health outcomes with respect to health expenditure was estimated using variations across 30 provincial-level administrative divisions in 2017 controlling for a range of other factors and using an instrumental variable approach to account for endogeneity to assess robustness of results. The estimated elasticity was then used to calculate the cost per disability-adjusted life-year (DALY) averted by variations in Chinese health expenditure at the margin. Results The range estimated from this study, 27,923–52,247 (2017 RMB) (central estimate 37,446) per DALY averted or 47–88% of GDP per capita (central estimate 63%), shows that a cost per DALY averted cost-effectiveness threshold that reflects health opportunity costs is below 1 × GDP per capita. Conclusion Our results suggest that the current cost-effectiveness threshold used in China is too high; continuing to use it risks decisions that reduce overall population health.

Suggested Citation

  • Jessica Ochalek & Haiyin Wang & Yuanyuan Gu & James Lomas & Henry Cutler & Chunlin Jin, 2020. "Informing a Cost-Effectiveness Threshold for Health Technology Assessment in China: A Marginal Productivity Approach," PharmacoEconomics, Springer, vol. 38(12), pages 1319-1331, December.
    • Handle: RePEc:spr:pharme:v:38:y:2020:i:12:d:10.1007_s40273-020-00954-y
    DOI: 10.1007/s40273-020-00954-y
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 30th November 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-11-30 12:00:05

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    1. Siverskog, Jonathan & Henriksson, Martin, 2022. "The health cost of reducing hospital bed capacity," Social Science & Medicine, Elsevier, vol. 313(C).

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