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How to promote quality use of cost-effective medicines Using economic evaluation to inform health policy and reimbursement: making it happen and making it.
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Costs incurred by various promotional activities may be passed on to both consumers and NHI in higher prices. NHI was second in the world in reviewing twenty-five new drugs out of sixty-one, A picture was similar for , although the number of new drugs reviewed was lower. In principle, A7-country prices are the starting point. This leads to the concern that with few countries adopting a certain new drug, not enough pricing and clinical data are available to guarantee reasonable pricing of the corresponding drug in Korea.

For example, for the twenty-five new drugs in , we could find only one A7 price available, because only one of the A7 countries had adopted the drug for reimbursement.

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The South Korean price of each of those twenty-five drugs had to be assessed based on a single A7 price as a reference. Consequently, early adoption of newly introduced drugs could be seen as a problem from the current pricing perspective. Moreover, drugs are entered on the reimbursement list with little consideration of their budget impact or cost-effectiveness.

Under these circumstances, the value for money could hardly be optimized in drug spending. Rational use would encompass 1 cost-effective use of resources, and 2 making decisions based upon value-for-money considerations.


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These stipulated use of economic evaluations for decisions on pricing, relative values, and the extent of insurance coverage of new medical technologies, encompassing pharmaceuticals, equipment, and diagnostic technology. Although this law has been in existence since , it has not been implemented, for several practical reasons.


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  • First, there were few professionals with experience in using economic evaluation and limited scholarship on this topic in South Korea. Second, unsatisfactory or incomplete evaluation methods and guidelines made it difficult to move ahead with the use of economic evaluation in practice. Third, government authorities lacked the capacity to judge whether the submitted economic data were appropriate. Last, corporations needed to develop the capacity to conduct research using economic evaluation. Since then, a somewhat different perspective has been adopted.

    The new DPRC looked into economic evidence in nearly every decision, and changes in decisions became evident in and The number of new drugs approved in declined sharply. Submission of economic data is still voluntary, because decisionmakers often look at economic data for fear of receiving unfavorable decision on their applications for reimbursement.

    However, many companies feel pressure to submit economic data. With the objective of seeking appropriateness in rising drug spending, based on the NHIC Act, use of economic data in drug reimbursement decisions has been seriously pursued by the health authority. To review the cost-effectiveness and budget impacts of newly entering drugs, the Health Insurance Review Agency HIRA in prepared the South Korean version of pharmacoeconomic guidelines. Their more specific objective is to give more consideration to cost-effectiveness in adopting new drugs into the health insurance domain.

    In drawing up the guidelines, HIRA invited expert reviews, held public hearings, and held a parliamentary discussion session in the first half of Unlike the previous negative system that specified which drugs were not covered by the insurance, the PLS lists covered drugs with economic evaluation as one of the selection criteria. Although decision-makers in the South Korean government claim that the purpose of using economic data for drug reimbursement decisions is to cut spending, it is unclear whether drug spending in real terms will be reduced.

    Experiences from early adopters of economic evaluation Australia, Canada, and the United Kingdom indicate that a spending cut might not be realized. Rather, Korean researchers in the field agree that the primary objective is to achieve more rational use of scarce health care resources.

    An emphasis on cost-effectiveness and use of scarce resources for greater value will make consumers better off as they gain access to more effective pharmaceuticals, within a given budget.


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    • Population health will be better in the long run as a result. By considering the cost-effectiveness of drugs, the insurance authority pursues maximum health outcomes for a given set of resource constraints. Scarce financial resources will be allocated more efficiently in the end.

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      The South Korean drug industry will improve overall since only efficient firms will survive, and there will be less reliance on undesirable methods of product advertising and promotion. If the government regards growth of the pharmaceutical industry as a strategy for a prosperous national economy in the twenty-first century, use of economic data for reimbursement decisions will contribute to such a national goal in the long run.

      A proper data-submission guideline is a necessary condition for successful implementation of the proposed reform, but hardly a sufficient one. Furthermore, as the policy has become an important agenda item in recent U. The following issues have emerged. Ewa Orlewska and Piotr Mierzejewski, based upon international experiences with accepted cost-utility ratios, suggest a ratio of 0. This is based on the notion that there may be a linear relationship between GDP and willingness to pay for an additional quality-adjusted life-year QALY.

      If not, how can we set a range of incremental cost-effectiveness ratios for decision making? Although there are some objections to specifying such a threshold, South Korea might need some kind of criteria for these decisions. What would they be?

      It is also difficult for a party to carry out separate clinical experimentation to get such data from its own people. Under these circumstances, the responsible party government, research institute, or pharmaceutical company often relies on foreign outcome data for domestic economic evaluation data construction.

      The evolution of Taiwan’s National Health Insurance drug reimbursement scheme

      However, it would not be safe to use foreign out-come-related clinical data without modifications, considering possible variations stemming from genetic differences. Differences in medical practice patterns among countries would also result in a different scale of effectiveness. To circumvent this difficulty, the South Korean pharmacoeconomic guidelines recommend the following to analysts: First, compare foreign data with local clinical and epidemiological data to cross-check for data transferability; and second, solicit expert opinions when published clinical or epidemiological data are not available.

      However, under the highly likely constraints that sources of local epidemiological data are not well secured, or expert opinions are hardly generalizable, would this secondary-source approach be a suitable way to get closer to true local effectiveness and efficacy information? Could we to some degree overcome outcome variations attributable to varying genetic, geographic, cultural, and medical practice patterns through such means? It is evident that having reasonable health outcome data is an a priori condition for preparing sound economic evaluation data. However, a constraint one often faces is the lack of final intended outcome data, which often requires long-term follow-up.

      To estimate final outcomes, one often uses modeling techniques. However, information such as transition probabilities is often lacking, thus forcing one to rely on various assumptions, which can mean a high level of uncertainty in estimated health outcomes. Australia requests that the industry do preliminary economic evaluation based on comparative randomized trials in principle and do modeled economic evaluation, if necessary, thereafter. To reduce the level of uncertainty with modeling, would it be better or necessary to ask the industry to perform and submit both preliminary and modeled economic evaluation?

      The evolution of Taiwan’s National Health Insurance drug reimbursement scheme | SpringerLink

      This could be too burdensome for the industry. However, if a fair judgment with lowered uncertainty is a good thing for both the health system and the industry, should such a requirement be considered? Because most new drugs target improving quality of life as an ultimate outcome, cost-utility analysis is recommended as the base analysis.

      However, because these tools have mostly been developed in Europe and North America, they may fail to reflect Asian cultural preferences, even after the reliability and validity of the questionnaires for Asians or certain Asian populations have been tested. In other words, for a specific health state, Asian preferences may differ from European or American preferences.

      Economic evaluation studies in most Asian countries now use the Western tools with no changes in preference measures. The corresponding utility estimates could therefore be a misleading representation of Asian preference values. How can we advise or give instructions to the responsible party the industry or research units to estimate preferences for quality of life correctly, unless we develop our own tools? Reviewing capacity has been built up during the past decade in South Korea, producing experts with health economics subspecialty in economic evaluation degrees from universities.

      Most of these people are working at economic evaluation—related jobs either in government or in industry. The experts in government and in academe played a pivotal role in setting up the policy framework, including the South Korean guidelines. However, the health authority needs to increase the capacity to review submitted documents.

      The South Korean health authority has identified this as an issue and is working to improve the situation.

      For example, HIRA recently developed a fifteen-point checklist for every reviewer to follow in the review process, with the objective of ensuring that all important review aspects are considered and are done so consistently. The question is whether this measure is sufficient in ensuring the quality of reviewing. Until the economic evaluation policy is fully implemented—and maybe even after—continuous capacity build-up by the government is highly encouraged and expected. In July , when talks for the Korea-U. FTA began, the U. Since then, the policy and its contents have become a hot subject in the bilateral negotiations.

      On 1 April , both countries concluded the historic agreement, including provisions on pharmaceutical market access and on protecting IP rights. Details of the agreement on pharmaceuticals and patented products are to be worked out in the coming months, and it is anticipated that some of the policy contents may be reshaped. The continued growth in new health technologies offering improved health outcomes puts increasing financial pressure on health systems.

      Every country must find ways to ensure that resources are allocated efficiently. In terms of pricing, a country may allow free pricing for some medicines, i.