IDEAS home Printed from https://ideas.repec.org/a/spr/pharme/v38y2020i12d10.1007_s40273-020-00954-y.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40273-020-00954-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s40273-020-00954-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ryota Nakamura & James Lomas & Karl Claxton & Farasat Bokhari & Rodrigo Moreno-Serra & Marc Suhrcke & Peter Berman, 2020. "Assessing the Impact of Health Care Expenditures on Mortality Using Cross-Country Data," World Scientific Book Chapters, in: Paul Revill & Marc Suhrcke & Rodrigo Moreno-Serra & Mark Sculpher (ed.), Global Health Economics Shaping Health Policy in Low- and Middle-Income Countries, chapter 1, pages 3-49, World Scientific Publishing Co. Pte. Ltd..
    2. Niek Stadhouders & Xander Koolman & Christel van Dijk & Patrick Jeurissen & Eddy Adang, 2019. "The marginal benefits of healthcare spending in the Netherlands: Estimating cost‐effectiveness thresholds using a translog production function," Health Economics, John Wiley & Sons, Ltd., vol. 28(11), pages 1331-1344, November.
    3. Filmer, Deon & Pritchett, Lant, 1999. "The impact of public spending on health: does money matter?," Social Science & Medicine, Elsevier, vol. 49(10), pages 1309-1323, November.
    4. Karl Claxton & Steve Martin & Marta Soares & Nigel Rice & Eldon Spackman & Sebastian Hinde & Nancy Devlin & Peter C Smith & Mark Sculpher, 2013. "Methods for the estimation of the NICE cost effectiveness threshold," Working Papers 081cherp, Centre for Health Economics, University of York.
    5. Beth Woods & Paul Revill & Mark Sculpher & Karl Claxton, 2015. "Country-level cost-effectiveness thresholds: initial estimates and the need for further research," Working Papers 109cherp, Centre for Health Economics, University of York.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    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

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Revill & Simon Walker & Valentina Cambiano & Andrew Phillips & Mark J Sculpher, 2018. "Reflecting the real value of health care resources in modelling and cost-effectiveness studies—The example of viral load informed differentiated care," PLOS ONE, Public Library of Science, vol. 13(1), pages 1-13, January.
    2. Peter J. Neumann & David D. Kim & Thomas A. Trikalinos & Mark J. Sculpher & Joshua A. Salomon & Lisa A. Prosser & Douglas K. Owens & David O. Meltzer & Karen M. Kuntz & Murray Krahn & David Feeny & An, 2018. "Future Directions for Cost-effectiveness Analyses in Health and Medicine," Medical Decision Making, , vol. 38(7), pages 767-777, October.
    3. Pieter van Baal & Meg Perry‐Duxbury & Pieter Bakx & Matthijs Versteegh & Eddy van Doorslaer & Werner Brouwer, 2019. "A cost‐effectiveness threshold based on the marginal returns of cardiovascular hospital spending," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 87-100, January.
    4. Guglielmo Maria Caporale & Luis A. Gil-Alana, 2015. "Infant mortality rates: time trends and fractional integration," Journal of Applied Statistics, Taylor & Francis Journals, vol. 42(3), pages 589-602, March.
    5. Andrew J. Mirelman & Miqdad Asaria & Bryony Dawkins & Susan Griffin & Richard Cookson & Peter Berman, 2020. "Fairer Decisions, Better Health for All: Health Equity and Cost-Effectiveness Analysis," World Scientific Book Chapters, in: Paul Revill & Marc Suhrcke & Rodrigo Moreno-Serra & Mark Sculpher (ed.), Global Health Economics Shaping Health Policy in Low- and Middle-Income Countries, chapter 4, pages 99-132, World Scientific Publishing Co. Pte. Ltd..
    6. Micheal Kofi Boachie & K. Ramu & Tatjana Põlajeva, 2018. "Public Health Expenditures and Health Outcomes: New Evidence from Ghana," Economies, MDPI, vol. 6(4), pages 1-25, October.
    7. Eldon Spackman & Stewart Richmond & Mark Sculpher & Martin Bland & Stephen Brealey & Rhian Gabe & Ann Hopton & Ada Keding & Harriet Lansdown & Sara Perren & David Torgerson & Ian Watt & Hugh MacPherso, 2014. "Cost-Effectiveness Analysis of Acupuncture, Counselling and Usual Care in Treating Patients with Depression: The Results of the ACUDep Trial," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-12, November.
    8. Christopher H. Herbst & Monique Vledder & Karen Campbell & Mirja Sjöblom & Agnes Soucat, 2011. "The Human Resources for Health Crisis in Zambia : An Outcome of Health Worker Entry, Exit, and Performance within the National Health Labor Market," World Bank Publications - Books, The World Bank Group, number 5938, December.
    9. Lay, Jann, 2010. "MDG Achievements, Determinants, and Resource Needs: What Has Been Learnt?," GIGA Working Papers 137, GIGA German Institute of Global and Area Studies.
    10. Besstremyannaya, Galina, 2015. "Measuring the effect of health insurance companies on the quality of healthcare systems with kernel and parametric regressions," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 3-20.
    11. Farrukh Iqbal & Youssouf Kiendrebeogo, "undated". "The Reduction of Child Mortality in the Middle East and North Africa: A Success Story," Economics Working Papers 20-06/2014, School of Business Administration, American University of Sharjah.
    12. Aidan Hollis, 2016. "Sustainable Financing of Innovative Therapies: A Review of Approaches," PharmacoEconomics, Springer, vol. 34(10), pages 971-980, October.
    13. Hareth Al-Janabi & Job van Exel & Werner Brouwer & Joanna Coast, 2016. "A Framework for Including Family Health Spillovers in Economic Evaluation," Medical Decision Making, , vol. 36(2), pages 176-186, February.
    14. Arne Bigsten & Jörgen Levin, 2001. "Growth, Income Distribution, and Poverty," WIDER Working Paper Series DP2001-129, World Institute for Development Economic Research (UNU-WIDER).
    15. Sonia Bhalotra & Samantha Rawlings, 2013. "Gradients of the Intergenerational Transmission of Health in Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 660-672, May.
    16. Dhrifi, Abdelhafidh, 2018. "Health-care expenditures, economic growth and infant mortality: evidence from developed and developing countries," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    17. Fay, Marianne & Leipziger, Danny & Wodon, Quentin & Yepes, Tito, 2005. "Achieving child-health-related Millennium Development Goals: The role of infrastructure," World Development, Elsevier, vol. 33(8), pages 1267-1284, August.
    18. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
    19. Ken Willis & Bob Crabtree & Liesl M. Osman & Kirsty Cathrine, 2016. "Green space and health benefits: a QALY and CEA of a mental health programme," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 5(2), pages 163-180, July.
    20. Philip Stevens, 2010. "Engaging The Private Sector To Improve Health In Africa," Economic Affairs, Wiley Blackwell, vol. 30(3), pages 18-21, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:pharme:v:38:y:2020:i:12:d:10.1007_s40273-020-00954-y. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.