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

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ORIGINAL RESEARCH ARTICLE

Informing a Cost‑Effectiveness Threshold for Health Technology Assessment in China: A Marginal Productivity Approach Jessica Ochalek1   · Haiyin Wang2   · Yuanyuan Gu3   · James Lomas1   · Henry Cutler3   · Chunlin Jin2

© Springer Nature Switzerland AG 2020

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.

1 Introduction Health technology assessment (HTA) has been increasingly used in China since its introduction in the 1990s. With the support of key decision makers from the Chinese Ministry of Health, more than 15 academic institutions conducting Jessica Ochalek and Haiyin Wang contributed equally to this research. Electronic supplementary material  The online version of this article (https​://doi.org/10.1007/s4027​3-020-00954​-y) contains supplementary material, which is available to authorized users. * Yuanyuan Gu [email protected] 1



Centre for Health Economics, University of York, Heslington, York YO10 5DD, UK

2



Shanghai Health Development Research Centre, Shanghai 201199, China

3

Centre for the Health Economy, Macquarie University, Sydney, NSW 2109, Australia



HTA have been established across the country. The initial version of China Guidelines for Pharmacoeconomic Evaluations was published in 2011 to guide the practice of HTA [1]. The HTA Research Network was established in 2016, led by the National Health Commission (NHC)’s