Revision of Ireland’s Cost-Effectiveness Threshold: New State-Industry Drug Pricing Deal Should Adequately Reflect Opportunity Costs

James F O'Mahony

No 75rjm, SocArXiv from Center for Open Science

Abstract: Ireland’s cost-effectiveness threshold is currently €45,000 per quality-adjusted life-year (QALY). It has previously been determined by periodic agreements between the State and a pharma industry lobby body. A new deal is now due and it is therefore timely to re-examine Ireland’s threshold, how it is set and transparency around adherence to it. Previous research has noted a series of problems with the threshold, including that it is likely too high relative to the opportunity cost of unmet need in Ireland’s health system. This means reimbursement at the threshold may do net harm to population health. The high threshold may also mean the Irish health system is failing to satisfy existing legislation on healthcare resource allocation. Recent COVID-19 related pressures on healthcare capacity and public spending appear to increase the urgency for an evidence-based revision of threshold to better reflect opportunity costs within the Irish healthcare system. Despite these problems, the prospects for reform of the threshold do not appear strong as the political and institutional incentives may favour the status quo. At the very least, the State should provide greater transparency regarding how the threshold is set and adhered to. In the longer run, there may be good arguments for partially abandoning thresholds in favour of an auction process to achieve the lowest cost per QALY from new drug interventions.

Date: 2021-05-30
New Economics Papers: this item is included in nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:75rjm

DOI: 10.31219/osf.io/75rjm

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