What Is Health Technology Assessment (HTA)?
Key Points
• HTA continues to grow internationally.
• There is a global movement toward “value-based medicine.”
• Industry-government-academia HTA initiatives have gained traction in Asia.
• Economic evaluation became mandatory in pharmaceutical reimbursement decision-making in Canada and Australia in the early 1990s.
• Introduction of HTA accelerated in European nations following the establish- ment of NICE in the UK in 1999.
• The British approach to HTA influenced nations in Asia and Latin America.
• The USA seeks its own approach without establishing a federal HTA agency.
• A European-style HTA agency has not yet been established in Japan, but HTA was introduced on a trial basis in 2016 and with a full scale in 2019.
Essential Knowledge
1.1.2.1 Brief Overview of Health Technology Assessment
Health technology assessment (HTA) is a comprehensive, multidisciplinary process that scientifically evaluates and summarizes information regarding the medical, social, economic, and ethical implications of health technologies To ensure accuracy and reliability, the assessment methodology must be systematic, transparent, and free from statistical bias.
Health Technology Assessment (HTA) aims to guide the development of safe, effective, and patient-centered healthcare policies that maximize value It encompasses a wide range of activities related to the formulation of government policies and the HTA system, rather than being confined to a specific academic discipline.
The emergence of Health Technology Assessment (HTA) is driven by demographic aging, rising national health expenditures—especially in Japan with high-cost medical care—and global advancements in health technology, such as personalized medicine and information technology These factors have intensified fears of a potential collapse in the healthcare market and raised concerns about the sustainability of universal healthcare As a result, promoting efficient resource allocation has become an urgent priority for nations around the world.
Health Technology Assessment (HTA) primarily emphasizes innovative health technologies, particularly pharmaceuticals and medical devices, but can encompass a broader range of products and processes within health systems While definitions of HTA are largely consistent among international agencies like the International Network of Agencies for Health Technology Assessment (INAHTA) and Health Technology Assessment International (HTAi), Towse et al distinguish between two levels of HTA application—micro and macro—pertaining to different types of health technologies.
1 Micro-technologies: new drugs, devices, and surgical procedures seen as incre- mental to the healthcare system; clinical practice guidelines are also included.
2 Macro-technologies: elements of the architecture or framework of the healthcare system (including number and types of hospitals and physicians).
The above international agencies and Towse et al equally recognize HTA as an issue of public policy.
In 2005, the European Federation of Pharmaceutical Industries and Associations (EFPIA) also endorsed a set of key principles to guide the conduct of HTA.
Health Technology Assessment (HTA) plays a crucial role in decision-making regarding pharmaceutical coverage, often acting as a barrier to the government's licensing of new technologies The establishment of the National Institute for Health and Care Excellence (NICE) has solidified HTA as a fundamental aspect of evaluating medical innovations, influencing practices on an international scale.
NICE is recognized for its transparency in disseminating information, with HTA providing guidance across various areas, including clinical practice and public health, and offering online access to its methods such as cost-effectiveness analysis The organization has established a cost-effectiveness threshold range of £20,000–£30,000 per quality-adjusted life year (QALY) gained, which has been updated to £20,000–£50,000 per QALY under the 2014 "value-based assessment" scheme This new range considers disease burden, societal impact, and additional factors like the certainty of incremental cost-effectiveness ratio (ICER) and health-related quality of life (HRQOL) The effective implementation of HTA as public policy relies on three key pillars: systems and policy, guidelines, and HTA assessment bodies, all grounded in pharmacoeconomics as a vital academic discipline.
Non-health objectives of the NHS £20,000 per QALY £50,000 per QALY
Fig 1.2 NICE’s decision-making: new approach
Fig 1.3 Three pillars of Health Technology Assessment
1.1.2.2 International Overview of HTA Agencies
Pharmacoeconomics is a field focused on the quantitative assessment of clinical effectiveness in relation to costs Its scientific methodologies and practical applications have significantly advanced, culminating in the establishment of the National Institute for Health and Care Excellence (NICE) in the UK in 1999 This development has had a profound impact, encouraging other European countries to establish their own health technology assessment (HTA) agencies.
The development of Health Technology Assessment (HTA) began in the early 1990s when the governments of Canada and Australia mandated economic evaluations for pharmaceutical reimbursement This initiative significantly influenced pharmaceutical policy-making in Europe and the USA, sparking debates for and against HTA Despite industry opposition hindering national HTA efforts, the establishment of the National Institute for Health and Care Excellence (NICE) in the UK propelled the adoption of HTA across Europe, leading to the creation of similar agencies Notably, in 2004, Germany and France established the Institute for Quality and Efficiency in Healthcare (IQWiG) and the French National Authority for Health (HAS), respectively, marking a significant step in HTA's European integration While the methodologies of IQWiG and HAS differ from NICE, they all emphasize using evidence for cost-effectiveness in shaping coverage and reimbursement policies This European trend has also reached Asia, resulting in the formation of national HTA agencies such as the Health Insurance Review and Assessment Service (HIRA) and the National Evidence-based Healthcare Collaborating Agency (NECA) in South Korea, the Division of HTA and National Institute of Health Technology Assessment (NIHTA) in Taiwan, and the Health Intervention and Technology Assessment Program (HITAP) in Thailand.
Latin American countries are increasingly adopting Health Technology Assessment (HTA) policies, resulting in the creation of national HTA agencies One notable example is the Institute for Clinical Effectiveness and Health Policy (IECS) in Argentina, which plays a crucial role in evaluating healthcare technologies.
The establishment of health technology assessment (HTA) agencies, such as DECIT in Brazil, the Ministry of Health in Chile, and CENETEC in Mexico, highlights the growing importance of HTA globally The UK's historical influence on technology and social structures during the Industrial Revolution parallels the current expansion of HTA, which has led to the formation of international organizations like ISPOR and HTAi Additionally, networks such as EUnetHTA and INAHTA have emerged, fostering collaboration and development in the field of health technology assessment across Europe and beyond.
Figure 1.4 illustrates the historical transitions in the institutionalization of Health Technology Assessment (HTA), highlighting nations' evolving approaches to cost-effectiveness evaluation with a focus on data emphasis This evolution spans from the era of "experience" leading up to the twentieth century.
“effectiveness” up to the late twentieth century, this is currently the area in which cost-effectiveness is evaluated in two dimensions, an approach employed primarily by nations in Europe.
Technology Assessment agencies in the world
∙ Canada: CADTH 2006 (the former CCOHTA 1990)
“Experience” up to the 20 th c.
䕺㻌 Refined unidimensional approach:
䕺㻌 Expansion into QOL (US FDA)
䕺㻌 Relative comparison (US PCORI)
HTA agencies of European nations (e.g NICE), Canada and Australia
Fig 1.4 Differential approaches to effectiveness and cost
The Patient-Centered Outcomes Research Institute (PCORI), created in the USA during the Obama administration, distinguishes itself by not employing cost-effectiveness evaluations in its comparative effectiveness research Unlike the UK, PCORI has explicitly prohibited the use of the ICER threshold in policymaking.
The US Food and Drug Administration has recognized patient quality of life as a key metric for assessing clinical outcomes in new drug applications, issuing the first global guidance on "Patient-Reported Outcome Measures." This approach distinguishes the USA's focus on refining effectiveness research as a singular evaluation of drug effectiveness, contrasting with the methodologies employed in Europe.
The Health Technology Assessment (HTA) approach in Asia mirrors that of the UK's National Institute for Health and Care Excellence (NICE) While countries such as South Korea, Taiwan, and Thailand have successfully integrated HTA into their healthcare systems, Malaysia, Singapore, the Philippines, China, and Japan are making strides in this area Despite the varying stages of development across these nations, the trend toward adopting HTA in Asia is unmistakable.
Japan's health technology assessment (HTA) system for evaluating cost-effectiveness, similar to those in Europe and the USA, was not established until 2011, with discussions beginning in 2012 under the Central Social Insurance Medical Council (Chuikyo) This initiative followed the government's May 2011 announcement to incorporate medical economic methods in assessing medical innovations as part of social security reforms by the Democratic Party of Japan Cost-effectiveness evaluation was later included in the Japan Revitalization Strategy revised in June 2014 Following discussions within the Chuikyo working group, the implementation of HTA became a national objective, leading to a trial introduction in April 2016 Although Japan's HTA initiative lagged behind those of South Korea, Taiwan, and Thailand, it presents a unique opportunity to develop a distinct HTA system that could serve as a model for other Asian nations, differing from the UK NICE approach Ultimately, Japan's new HTA system was officially institutionalized in April 2019.
Self-Check!
1 What does HTA stand for?
2 What are the two levels of HTA?
3 What is the name of the agency in the UK that contributed to the establishment of HTA across the world?
4 What are the three pillars of HTA?
5 When was a system for HTA first introduced in Japan?
7 Does PCORI promote cost-effectiveness research?
8 Does FDA accept quality of life as outcome measure?
9 Which countries in Asia pioneered HTA implementation?
10 What is the name of the Chuikyo working group for HTA launched in Japan in 2012?
Value-Based Medicine and Economic Evaluation
Key Points
• A paradigm shift in the twenty-first century toward “value-based medicine.”
• The concept of value-based policy making and pricing/reimbursement decisions is established in Europe.
• Pharmacoeconomics is the basis of the economic evaluation of medicines.
• Economic evaluation compares cost with effectiveness as a measure of outcome.
Essential Knowledge
The emergence of scientism in medicine marked a significant shift in Europe and the USA, transitioning from experience-based medicine, prevalent since ancient Greek times, to evidence-based medicine (EBM) in the late 1990s This new approach prioritizes scientific evidence derived from clinical research, establishing EBM as an international standard in medical practice.
EBM was first proposed by Sackett et al at McMaster University, Canada [8] This new school of medicine under EBM emphasized the importance of selecting
Cost-effectiveness clinical trial *1 & Modeling study
In the late 1980s and early 1990s, a significant shift in medicine emerged with the introduction of evidence-based medicine (EBM), which emphasized diagnosis and treatment methods grounded in empirical data This approach aimed to systematize scientific methods and practical education in the medical field Empirical data, derived from randomized clinical trials, played a crucial role in the development of EBM, which was championed by Sackett as a new standard for clinical practice, symbolizing a commitment to scientific rigor in healthcare.
In the twenty-first century, the concept of value-based medicine (VBM) emerged, highlighting the importance of health technology beyond just clinical trial evidence VBM asserts that while medical evidence is crucial for physicians' decision-making, evaluating additional factors that influence value is essential for patients and society This shift from the narrower focus of evidence-based medicine (EBM) to the broader perspective of VBM is gaining global traction.
In the USA, value in Value-Based Medicine (VBM) is primarily defined by effectiveness, such as the years of life gained from treatment, which extends beyond the efficacy measured in clinical trials as per Evidence-Based Medicine (EBM) However, the concept of "value" also includes a wider array of factors, including patient quality of life and ethical and economic considerations, which are increasingly integrated into Health Technology Assessment (HTA) practices in Europe.
Countries globally have long struggled to find the right balance between free market principles and government intervention in public healthcare policies The introduction of Value-Based Medicine (VBM) has made the integration of Health Technology Assessment (HTA) essential within health systems In Europe, this shift has resulted in the development of policies and processes for pricing and reimbursement decisions that prioritize the value of health technologies.
Health Technology Assessment (HTA) employs pharmacoeconomics to evaluate the impact of health technologies, such as pharmaceuticals and medical devices, on patient outcomes in relation to their costs This discipline focuses on utilizing scientific analysis and methodological research to provide evidence for economic evaluations The primary goal of pharmacoeconomics is to ensure that the benefits of health technologies are assessed against their financial implications, enhancing decision-making in healthcare.
Fig 1.6 Five layers of health economics
Pharmacoeconomics is a subclass of “Economic
Pharmacoeconomics is frequently mistaken for health economics, which encompasses five distinct subdisciplines Among these, three focus on economic evaluation: (1) pharmacoeconomics in a narrow sense, which assesses pharmaceuticals; (2) clinical economics, evaluating a broader range of health technologies, including examinations and procedures; and (3) pharmacoeconomics in a broad sense, which also considers technology for prevention and community healthcare alongside clinical practice Notably, pharmacoeconomics has the widest scope in economic evaluation In contrast, traditional health economics, in its narrow sense, diverges significantly from pharmacoeconomics, primarily concentrating on the economic analysis of healthcare systems and financing.
Pharmacoeconomic evaluation compares the cost and effectiveness of new interventions against traditional ones to guide decision-making This process primarily utilizes cost-effectiveness analysis, where the incremental cost-effectiveness ratio (ICER) serves as a key metric For instance, if a new drug costs USD 80,000 and provides 2.5 additional years of life, while a control drug costs USD 60,000 for 2 additional years, the incremental cost of the new drug is USD 20,000 for 0.5 additional years Consequently, the ICER is calculated at USD 40,000 per year of life gained, reflecting the additional expenditure associated with each extra year of life provided by the new intervention.
Fig 1.7 An evaluation model in pharmacoeconomics
Self-Check!
1 What does VBM stand for?
2 What is the name of discipline involving the economic evaluation of healthcare?
3 What is the primary measure of the value for money?
Introduction to Cost-Effectiveness Analysis
Key Points
• Decision analysis is the most fundamental approach in cost-effectiveness analysis.
• Decision analysis calculates the expected benefits of available alternatives and identifies the alternative with the maximum value.
• The results of cost-effectiveness analysis are presented in a standard cost- effectiveness table with incremental cost-effectiveness ratio (ICER) as the sum- mary measured.
Essential Knowledge
Decision analysis serves as the foundational method for cost-effectiveness analysis, enabling the calculation of the anticipated benefits and costs linked to each available option This approach helps identify the alternative that offers the highest expected value.
An example of decision analysis is presented in Fig 1.8 In this hypothetical case, a 50-year-old male patient is to decide whether to receive a laparoscopic
A decision tree of endoscopic cholecystectomy removing gallbladder polyp
Expected value of life years (yrs)
Fig 1.8 Calculation of expected effectiveness cholecystectomy (gallbladder removal surgery) for gallbladder polyps found during medical examination Typically, decision analysis proceeds through the following steps:
1 Identification of alternatives to be considered: Whether to receive laparoscopic cholecystectomy.
2 Structuring of the problem: A decision tree is constructed to model the decision process A decision tree consists of decision nodes (squares), chance nodes (cir- cles), terminal nodes (triangles), and branches that connect these nodes and rep- resent the possible outcomes of each chosen alternative In the simplest case, the following outcomes are expected: if surgery is chosen, it can be either successful or not; and if surgery is not chosen, no actions are taken and the possibilities are that polyps are either benign or malignant.
3 Assigning values: Probability estimates are assigned to branches emanating from chance nodes, and payoffs (resulting benefits) are assigned to terminal nodes In this example, payoffs are assigned in terms of average life expectancy for each terminal node.
4 Calculation of expected value: The expected value for each chance node is cal- culated as the sum of all expected values, each calculated as the payoff multi- plied by its probability.
5 Identification of the alternative with the maximum value: Since life expectancy is 26.73 years for surgery and 24 years for no surgery, the alternative to receive surgery is identified as the best option.
6 Sensitivity analysis: It determines, for instance, how the expected value changes if the probability of polyps being malignant becomes 80%.
In Figure 1.9, the expected cost is determined similarly to previous calculations, with each terminal node reflecting the total cost incurred from the decision point to that node By replacing the payoffs in Figure 1.8 with costs, the expected costs for each chance node can be computed using the same formula The analysis reveals an expected cost of JPY 3.03 million for surgery and JPY 1 million for opting against surgery.
Surgery provides a longer life expectancy but comes with higher costs, as illustrated in Figures 1.8 and 1.9 The cost-effectiveness analysis is encapsulated in Table 1.2, which details the intervention, associated costs, effectiveness, average cost-effectiveness ratio, incremental cost, incremental effectiveness, and the Incremental Cost-Effectiveness Ratio (ICER) This table serves as a comprehensive index summarizing the cost-effectiveness of the surgical intervention.
Decision analysis offers several advantages, such as simplifying the presentation of alternatives, clearly modeling the decision-making process, identifying gaps in data, and facilitating more rational choices However, it also has limitations, including the need for trained analysts and significant intellectual effort, the unavailability of reliable data, the absence of standardized modeling methods, a failure to capture real-world complexity, and restrictions on multifactorial decision-making.
Self-Check!
1 ICER is JPY 74.36 × 10k/year in Table 1.2 Explain how it was calculated.
2 Briefly explain what an ICER of JPY 74.36 × 10k yen/year means in the example presented in Table 1.2.
3 For the decision tree presented in Fig 1.8, determine how the analysis results change if the possibility of polyps being malignant changes to 80%.
Cost (JPY x 10K) Expected value of cost (JPY x 10K)
Fig 1.9 Calculation of expected cost
Table 1.2 The result of the analysis: cost-effectiveness table
Average cost- effective ratio (JPY × 10K/ years)
Incremental cost- effectiveness ratio [ICER] (JPY × 10K/ years) With operation
Assessing Cost-Effectiveness
Key Points
• Cost-effectiveness analysis determines the balance with a ratio of incremental cost to incremental effectiveness as a measure of cost-effectiveness.
• The incremental cost-effectiveness ratio (ICER) is defined as the ratio of incre- mental cost to incremental effectiveness.
• A new technology is considered cost-effective if it lies below the threshold line of the cost-effectiveness plane.
• While no absolute standard of threshold exists, the UK NICE uses a threshold of GBP20K–30K/QALY.
Essential knowledge
In economic evaluations, comparing a new technology to a standard one, such as new and standard drugs, is often done by assessing the average cost per effectiveness, typically measured in quality-adjusted life-years (QALYs) For instance, a new drug costing JPY 6.2 million provides 0.72 QALYs, while a standard drug costs JPY 5.4 million for 0.52 QALYs This results in an average cost of 8.61 million JPY per QALY for the new drug and 10.38 million JPY per QALY for the standard drug Consequently, the new drug demonstrates a lower average cost associated with improved effectiveness, indicating its superiority over the standard drug.
While the total expenses associated with the new drug may be elevated, it's essential to recognize that selecting one technology over another should not be based solely on average costs.
= the slope of the segment S-X [tanθ]
The segment 0-X* is a parallel translation of the segment S-X to the origin.
The Incremental Cost-Effectiveness Ratio is essential for consumers evaluating whether the switch from a standard medication to a new drug justifies the additional cost, as this assessment is also vital for public policy budget decisions.
Incremental analysis is a technique that evaluates the ratio of cost increase to effectiveness increase, serving as a measure of cost-effectiveness This concept is commonly encountered in everyday situations, such as when a passenger on the Euro Star train must choose between coach and first-class seating If the first-class fare exceeds their budget, they opt for coach However, if the price is affordable, a rational decision involves weighing the additional benefits of first-class, like greater comfort, against the price difference.
In the example illustrated in Fig 1.10, the Incremental Cost-Effectiveness Ratio (ICER) is depicted by the slope of segment SX, which connects standard drug S and new drug X This slope quantifies the relationship between the increase in cost and the corresponding increase in effectiveness.
ICER Incremental cost Incremental effectiveness
/ ff new drug X the cost of standard drugS The effectiveness o ff new drug Xthe effectivness of standard drugS
In the example illustrated in Fig 1.10, the incremental cost of the new drug X compared to the standard drug S is JPY 0.8 million (calculated as 6.2 million minus 5.4 million) Additionally, the incremental effectiveness between the two drugs is 0.2 QALY (derived from 0.72 minus 0.52) Consequently, the Incremental Cost-Effectiveness Ratio (ICER) is determined to be JPY 4 million per QALY (calculated as 0.8 million divided by 0.2).
When the standard drug is plotted at the origin, which translates segment SX, ICER is represented by the slope (tan θ in Fig 1.10) of the new segment OX*,
Judging rule in Cost-effectiveness: Area below the line at a slope Rmax is good, otherwise not good.
Fig 1.11 (Incremental) Cost-Effectiveness Plane which passes through the origin This is the basis of the cost-effectiveness plane used in evaluating cost-effectiveness (Fig 1.11).
The cost-effectiveness plane, also known as the effectiveness-cost plane or incremental effectiveness-cost plane, is represented in the xy-plane formed by the x and y axes This plane illustrates the incremental effectiveness and incremental cost of a new drug in comparison to a control drug, which is positioned at the origin While it is technically accurate to refer to it as the incremental effectiveness-incremental cost plane, it is commonly called the cost-effectiveness plane, provided that its meaning is clearly understood.
The cost-effectiveness plane, illustrated in Fig 1.11, is divided into four quadrants to evaluate a new drug's cost-effectiveness If the Incremental Cost-Effectiveness Ratio (ICER) is in the fourth quadrant, indicating the drug is more effective and less costly, it is deemed cost-effective Conversely, if the ICER is in the second quadrant, where the drug is more expensive and less effective, it is considered not cost-effective In the first and third quadrants, ICER values range from 0 to infinity, necessitating a threshold (Rmax) for comparison A drug is classified as cost-effective if its ICER is below this threshold line; otherwise, it is not In Fig 1.11, new drug X is positioned below the threshold line, confirming its cost-effectiveness.
There is no universal standard for determining the threshold of healthcare costs, as it varies based on each nation's economic conditions and societal willingness to pay In the UK, the National Institute for Health and Care Excellence (NICE) has established a threshold of £20,000 to £30,000 per Quality-Adjusted Life Year (QALY) Meanwhile, the World Health Organization (WHO) has suggested a threshold of 1 to 3 times the per capita GDP, although this recommendation lacks a solid theoretical foundation and appears to be made for convenience.
“Cost-effective” does not necessarily mean “cost reduction.” For instance, if ICER lies in the first quadrant, the cost will increase even below the threshold line
In rare instances, a "cost reduction" can occur when the Incremental Cost-Effectiveness Ratio (ICER) is positioned in the fourth quadrant (simple dominance) or the third quadrant, below the threshold line However, new technologies typically fall into the first quadrant Additionally, the value of the ICER is influenced by the choice of comparator, necessitating further discussion on its selection.
Self-Check!
1 The cost-effectiveness of a new drug was reported to be 2 million JPY/ QALY Explain why this statement is insufficient.
2 The ICER of a new drug X relative to the standard drug was calculated to be 6 million JPY/QALY Evaluate the cost-effectiveness of the new drug using a threshold of one time the nominal GDP per capita in Japan Additionally, con- sider a threshold of twice the nominal GDP per capita.
3 The cost and effectiveness of a standard drug are 3.5 million JPY and 1.25 QALYs, respectively, while the effectiveness of a new drug is found to be 1.37 QALYs What is the maximum allowable cost for the new drug for it to be evalu- ated as being cost-effective using a threshold of 6 million JPY/QALY?
Cost-Effectiveness League Table
Key Points
• Cost-effectiveness league tables are used to rank different health technologies by their relative cost-effectiveness.
• League tables from global clinical trial collaborations that list the cost- effectiveness of interventions by country may provide valuable information.
• The argument that “preventive care is more cost-effective than curative care” is not always true.
Essential Knowledge
Quantifying the cost-effectiveness of various health technologies using a standard measurement unit, such as cost per Quality Adjusted Life Year (cost/QALY), allows for the ranking of these technologies based on their relative cost-effectiveness An example of this ranking can be found in Table 1.3.
The league table reveals that an intensive tobacco-use prevention program for seventh and eighth graders has an ICER of $23,000 per QALY, indicating it is a cost-effective intervention In contrast, the ICER for screening all 65-year-olds for diabetes, compared to screening only those with hypertension, reaches $590,000 per QALY This highlights that the cost-effectiveness of preventive measures can vary significantly based on their design and comparators, demonstrating that not all preventive care is financially viable.
Creating league tables using ICER values is straightforward, but caution is necessary regarding the comparability of different interventions It's essential to ensure that monetary units are consistent, as shown in Table 1.3 (converted to 2006 USD), and to carefully select the comparator for determining the ICER (e.g., intervention A versus intervention B in Table 1.3) Additionally, many league tables have theoretical limitations due to their reliance on indirect comparisons of interventions, making it crucial to approach the comparison of various health technologies with careful consideration.
In global clinical trial collaborations, the cost-effectiveness of interventions can be compared across countries, as illustrated in Table 1.4, which details the cost-effectiveness of pneumococcal vaccination in ten Western European nations, according to Evers et al This table highlights significant variations in the Incremental Cost-Effectiveness Ratio (ICER) across different age groups and countries, particularly when considering a threshold of 40,000 EUR.
Table 1.3 Cost-effectiveness league table
A powerful anti-smoking prevention program for junior high school first and second grade vs No program
23,000/ QALY Screening for all the 65-year-old diabetic patients vs Screening for 65-year-old diabetic patients with hypertension
Cohen JT, Neumann PJ, Weinstein MC: Does Preventive Care Save Money? Health economics and the presidential candidates N Engl Med, 358(7): 661–663, 2008
The vaccine is deemed cost-effective for individuals aged 65 and older, as indicated by the QALY analysis (ICER for the age group ≥65) However, when examining ICER values in 10-year intervals, it is noted that only Denmark, France, and Scotland maintain cost-effectiveness for those aged 85 and older, with other countries showing values above the threshold This suggests that the cost-effectiveness of the vaccine diminishes as age increases.
Recent research has explored the distribution of Incremental Cost-Effectiveness Ratios (ICERs) across various health technologies, revealing that many cancer therapies are cost-effective, as shown by Greenberg et al Additionally, a 2008 study by Cohen et al in the New England Journal of Medicine highlighted that the ICER distribution for preventive care is similar to that of curative care, challenging the common belief that preventive measures are inherently more cost-effective This suggests that claims regarding the cost-effectiveness of preventive care must be substantiated through rigorous economic evaluations.
Self-Check!
1 What is the value of ICER for the age group 75–84 in Scotland?
2 Does the above ICER suggest the intervention is cost-effective?
3 Does the value of ICER for the age group ≥85 in Belgium suggest the interven- tion is cost-effective?
Table 1.4 Cost-effectiveness analysis in pneumococcal vaccination: comparison among ten
Cost-effectiveness ratio per QALY in pneumococcal vaccination € (1999)
Evers SM, et al.: Cost-effectiveness pneumococcal vaccination for prevention of invasive pneumo- coccal disease in the elderly: an update for 10 Western European countries Eur J Clin Microbiol Infect Dis, 26(8): 535, 2007
4 Should pneumococcal vaccination be recommended as a cost-effective interven- tion for the age group ≥65?
5 What is the main problem with the presented ICER values?
Common Misconceptions
Key Points
• Coverage decisions consider “cost-effectiveness” in addition to the current
• Cost-effectiveness analysis is not equivalent to the valuation of human life in monetary terms.
• The primary objective of introducing economic analysis is to measure the value of health technology and not reduce health spending.
• While the QALY has its advantages as a measure of clinical outcomes, its limita- tions must also be noted.
Essential Knowledge
To effectively evaluate the cost-effectiveness of health technology, it is essential to have a foundational understanding of pharmacoeconomics The Ministry of Health, Labour and Welfare offers guidelines that provide key definitions necessary for this understanding.
This article revisits Kamae I.'s insights on pharmacoeconomic approaches to health technology assessment, emphasizing the importance of accurately interpreting key metrics such as Quality-Adjusted Life Years (QALY) and Incremental Cost-Effectiveness Ratio (ICER) Understanding these concepts is crucial for effective decision-making in healthcare economics The revised perspective aims to enhance clarity and application of these essential tools in evaluating health technologies.
The cost-effectiveness of cancer treatment is evaluated through key metrics such as quality-adjusted life-year (QALY) and incremental cost-effectiveness ratio (ICER) These terms are essential for understanding the economic value of oncology interventions, as highlighted in the systematic overview by Greenberg et al in the Journal of the National Cancer Institute.
Despite previously established definitions, there remains a disparity in the interpretation of "cost-effectiveness" between everyday Japanese and the terminology used in pharmacoeconomics, leading to potential confusion.
1 Confusion over Cost-Effectiveness Measures
On May 24, 2012, the Nihon Keizai Shimbun (Nikkei) reported on the establishment of the Special Committee on Cost-Effectiveness by the Central Social Insurance Medical Council (Chuikyo), highlighting the integration of cost-effectiveness in new drug coverage decisions This coverage reflects the Nikkei's keen awareness of the economic aspects of healthcare However, since effectiveness considerations are already part of the current healthcare system, the article should emphasize "based on cost-effectiveness" instead.
The referenced article includes a table titled “Which of the two drugs is recommended?” from the Chuikyo working group meeting, highlighting that economic evaluation focuses on selecting one drug over another based on the average cost per patient However, this interpretation is misleading, as cost-effectiveness analysis typically employs the Incremental Cost-Effectiveness Ratio (ICER) rather than average cost The distinction between average cost and ICER warrants further examination to clarify this confusion.
2 Misunderstanding that the Valuation of Human Life in Monetary Terms Is Against the Philosophy of “Humanistic Medicine”
Pharmacoeconomic evaluations do not attempt to assign a monetary value to human life While cost-effectiveness analysis focuses on the costs associated with each year of life gained, it does not quantify the financial worth of an individual’s life.
In cost-benefit analysis, the value of a statistical life (VSL) is used to estimate the monetary value of healthcare benefits, though it is often mistakenly viewed as a direct monetary valuation of human life Instead, VSL reflects the "opportunity cost," focusing on societal productivity losses Universal health coverage aims to promote equity by redistributing financial resources, and enhancing the quality of the health insurance system through cost-effectiveness can strengthen the principles of humanistic medicine in the quest for social equity.
3 Misunderstanding that the Purpose of Introducing Economic Evaluation is to Cut Healthcare Spending
The evaluation of ICER forms the basis of economic evaluation As described in
Assessing cost-effectiveness reveals that new drugs typically demonstrate greater effectiveness than existing treatments, leading to increased costs and efficacy in innovative healthcare scenarios However, due to the monopolistic nature of the innovator, cost reductions are unlikely unless the new drug can facilitate additional savings Consequently, it is erroneous to believe that implementing economic evaluations will automatically result in decreased healthcare expenditures.
Effective management of healthcare spending necessitates the application of economic analysis, which includes not only the evaluation of the Incremental Cost-Effectiveness Ratio (ICER) but also its role in prioritizing pharmaceuticals and conducting budget impact analyses While these assessments extend beyond traditional cost-effectiveness evaluations, they play a crucial role in fostering value-based public policy making.
4 Misconception that QALY Is the Best Measure of Clinical Outcomes
The endorsement of QALY by the UK's NICE has led to the misconception that it is the best measure of clinical outcomes However, QALY has two significant advantages: it quantifies health benefits in terms of life-years while also considering the patient's quality of life, thus providing a two-dimensional measure of clinical benefits Additionally, QALY allows for the comparison of health benefits across various illnesses, unlike disease-specific measures, such as blood glucose levels in diabetes, which limit comparisons to specific conditions This ability to compare outcomes across different health issues often justifies the use of QALY as a primary measure of clinical outcomes.
Excessive reliance on Quality-Adjusted Life Years (QALY) poses significant risks, particularly regarding its value across different age groups There is an ongoing debate about whether a single QALY holds the same worth for individuals aged 20 compared to those aged 70 Moreover, as life expectancy declines with age, the health benefits measured by QALYs may be less favorable for elderly patients This discrepancy is further complicated when varying methods for utility measurement are employed, potentially leading to misleading conclusions about the differences in benefits received.
Self-Check!
1 What is not accurate about news coverage titled “Strict coverage policy applied to new drugs based on effectiveness”?
2 Cost-effectiveness analysis is a profit-based approach to medicine Is this state- ment true?
3 The adoption of a cost-effective health technology will lead to reduction in health spending Provide three reasons why this statement is false.
4 Give two advantages of using QALY.
5 The QALY gained from a new drug was calculated using a different utility mea- sure from the one used in the calculation of the QALY gained from the compara- tor Is it correct to compare those two QALY values?
Confusing HTA-Related Terminology
Key Points
• Terms related to HTA, such as EBM, VBM, and CER, can generate confusion.
• HTA involves multiple approaches to evaluation and is closely linked to policies and systems.
• The USA and Europe have different views on whether CER includes economic evaluation.
• A three-by-three framework matrix for EBM, CER, and HTA is proposed.
Essential Knowledge
Evidence-based medicine (EBM), value-based medicine (VBM), and comparative effectiveness research (CER) are interconnected concepts within health technology assessment (HTA) in the USA This article reexamines HTA, highlighting that the core aim of pharmacoeconomics, which underpins VBM, is the economic evaluation of health technologies Thus, the term "evaluation" serves as a crucial link between pharmacoeconomics and HTA, making pharmacoeconomics often synonymous with HTA in various contexts, which is a perspective that holds some validity.
Pharmacoeconomics and Health Technology Assessment (HTA) share similarities but differ in focus; pharmacoeconomics evaluates cost-effectiveness, while HTA employs various evaluation methods and is closely tied to health policies and systems The International Network of Agencies for Health Technology Assessment (INAHTA) defines HTA as a multidisciplinary field analyzing the medical, economic, social, and ethical implications of health technology development and use Additionally, Health Technology Assessment International (HTAi) describes HTA as scientific research aimed at guiding policy and clinical decisions regarding health technology implementation.
The terminology surrounding Health Technology Assessment (HTA) can be confusing, particularly with the introduction of Comparative Effectiveness Research (CER) in the USA during the Obama administration The Institute of Medicine (IOM) defines CER as the process of generating and synthesizing evidence to compare the benefits and harms of various methods for preventing, diagnosing, treating, and monitoring clinical conditions, as well as enhancing care delivery The primary aim of CER is to empower consumers, clinicians, purchasers, and policymakers to make informed decisions that enhance healthcare outcomes at both individual and population levels.
This section presents a revised interpretation of the original article by Kamae I., which discusses pharmacoeconomic approaches to health technology assessment (HTA) The article explores concepts related to Evidence-Based Medicine (EBM) and Needs-Based Medicine (NBM) within the context of HTA Published in Pharmaceutical and Medical Device Regulatory Science in 2012, the original work emphasizes the importance of integrating economic evaluations into health technology assessments to enhance decision-making in healthcare.
The ambiguity in the IOM definition of Comparative Effectiveness Research (CER) has created confusion in the USA, where it is often viewed as a comparison of evidence from traditional clinical trials that overlook cost-effectiveness In contrast, the American College of Physicians advocates for the inclusion of cost-effectiveness evidence in this definition Meanwhile, in Europe, CER is commonly interpreted to encompass comparative cost-effectiveness evidence, as highlighted by Kalipso Chalkidou and colleagues, who analyzed Health Technology Assessment (HTA) agencies across four major European countries, referring to them as CER entities.
To illustrate this confusion over terminology, Luce et al have proposed a frame- work, using a three-by-three matrix [16], consisting of the following three column factors:
1 Efficacy: whether there is evidence of efficacy (“Can it work?”)
2 Effectiveness: whether there is evidence of effectiveness in real-world practice settings (“Does it work?”)
3 Value: whether it offers reasonable value of clinical and economic benefits (“Is it worth it?”), and the following three row factors:
(c) Decision-making for the nine cells, in which the notions of EBM, HTA, and CER are depicted.
Fig 1.13 Relationship diagram on paradigm shifts (Source: Luce BR, Drummond M, Jonsson B, et al: EBM, HTA, and CER: clearing the confusion Milbank Q 88(2): 256–276 2010)
Luce et al highlight the intricate interrelationships among the three-by-three matrix factors, though researchers do not fully agree on these concepts By linking evidence-based medicine (EBM) more closely with efficacy, the transition from EBM to value-based medicine (VBM) becomes clearer In this context, health technology assessment (HTA), which plays a crucial role in value-based policy making, is positioned in the bottom right corner of the matrix.
Definitions by Luce et al
Evidence-Based Medicine (EBM) is a systematic approach that combines evidence synthesis with decision-making to support both patient and physician choices It evaluates the effectiveness of interventions while taking into account patient values, primarily focusing on individual patient decisions Additionally, EBM plays a crucial role in the formulation of clinical guidelines that are relevant to individual patient care.
Comparative Effectiveness Research (CER) encompasses both the generation and synthesis of evidence, focusing on the comparative evaluation of interventions in everyday clinical settings The findings from CER are instrumental in the development of clinical guidelines, evidence-based medicine (EBM), and the comprehensive social and economic evaluation of health technologies (HTA).
Health Technology Assessment (HTA) is a comprehensive method for synthesizing evidence related to clinical effectiveness, safety, and cost-effectiveness of health technologies It also encompasses social, ethical, and legal considerations, tailored to the specific objectives of each HTA A key application of HTA is to guide reimbursement and coverage decisions, necessitating thorough benefit-harm assessments and economic evaluations.
Self-Check!
1 What is the difference between the USA and Europe in their views on CER?
2 What is the difference between EBM and VBM?
1 International Network of Agencies for Health Technology Assessment (2009) HTA Resources http://www.inahta.org/ Accessed 30 Mar 2016
2 Health Technology Assessment International What is HTA? http://www.htai.org/ Accessed
3 Towse A, Devlin N, Hawe E, Garrison L (2011) The evolution of HTA in emerging mar- ket health care systems: analysis to support a policy response OHE Consulting Report for PhRMA, Office of Health Economics
4 Pearson SD, Rawlins MD (2005) Quality, innovation, and value for money: NICE and the British National Health Service JAMA 294(20):2618–2622
5 Rawlins MD (2005) 5 NICE years Lancet 365(9462):904–908
6 Japan Revitalization Strategy revised in 2014 Introduction of cost-effectiveness analysis in coverage decisions for innovative health technology p 98 http://www.kantei.go.jp/jp/singi/ keizaisaisei/pdt/honbun2JP.pdf Accessed 30 Mar 2016
7 Central Social Insurance Medical Council Special Committee on Cost-Effectiveness Proceedings of the 32th meeting http://www.mhlw.go.jp/stf/shingi2/0000107118.html Accessed 30 May 2016
8 Sackett DL, Straus SE, Richardson WS et al (2000) Evidence-based medicine: how to practice and teach EBM Churchill Livingstone, New York
9 Brown MM, Brown GC, Sharma S (2005) Evidence-based to value-based medicine American Medical Association, Chicago
10 Bootman JL, Townsend RJ, McGhan WF (2004) Principles of pharmacoeconomics, 3rd edn Harvey Whitney Books, Cincinnati, OH
11 Pharmaceutical and Medical Device Regulatory Science Society of Japan (ed) 2014 Introduction to health technology assessment: toward a comprehensive understanding of cost-effectiveness Pharmaceutical and Medical Device Regulatory Science Society of Japan, Tokyo
12 Cohen JT, Neumann PJ, Weinstein MC (2008) Does preventive care save money? Health eco- nomics and the presidential candidates N Engl J Med 358(7):661–663
13 Institute of Medicine (2009) Initial national priorities for comparative effectiveness research National Academies Press, Washington, DC http://www.nationalacademies.org/hmd/Reports. aspx?searchQuery Accessed 30 Mar 2016
14 American College of Physicians (2008) Information on cost-effectiveness: an essential product of a national comparative effectiveness program Ann Intern Med 148(12):956–961
15 Chalkidou K, Tunis S, Lopert R et al (2009) Comparative effectiveness research and evidence- based health policy: experience from four countries Milbank Q 87(2):339–367
16 Luce BR, Drummond M, Jonsson B et al (2010) EBM, HTA, and CER: clearing the confusion Milbank Q 88(2):256–276
25 © Springer Nature Singapore Pte Ltd 2019
I Kamae, Health Technology Assessment in Japan, https://doi.org/10.1007/978-981-13-5793-0_2
New HTA Policy in Japan
Past HTA System in Japan
Key Points
• A complex form of HTA already exists for macro-level technologies in Japan.
• HTA for microlevel technologies is also achieved through Japan’s unique
“Japanese model” of pricing policy.
Since 1992, the submission of health economic data has been acknowledged in Japan for applications to be included on the National Health Insurance (NHI) list, though this option remains underutilized.
The Japanese model of Health Technology Assessment (HTA) employs a "quasi-value-based pricing" approach, integrating HTA during the pricing of newly introduced technologies (Type I) and when reassessing prices (Type II).
Essential Knowledge
Some in Japan and outside Japan have suggested that Japan is a country that has
Japan has been perceived as "lagging behind" in the implementation of Health Technology Assessment (HTA) and value-based pricing (VBP) for pharmaceuticals, primarily due to its slow adaptation to pharmacoeconomic trends that originated in Europe and the USA While Japan lacks a formal value-based medicine (VBM) system, it has historically developed a pricing policy that can be seen as its own model of VBP The Japanese healthcare system incorporates a complex HTA process for macro-technologies, which has evolved through various healthcare reforms initiated under the Koizumi administration and continued through subsequent governments, with a particular emphasis on addressing the needs of an aging population.
Japan has developed a unique "Japanese model" of Health Technology Assessment (HTA) that reflects its distinctive pricing policy at the micro-technologies level The notion that Japan is an "HTA-underdeveloped country" stems from a misunderstanding of the historical and current dynamics of its healthcare system, particularly regarding its pricing strategies.
In Japan, macro-level technology assessments have primarily focused on cost estimation, particularly during the healthcare reform from FY 2005 to FY 2007, when the Council on Economic and Fiscal Policy aimed to limit healthcare spending growth to align with economic growth The Ministry of Health, Labour and Welfare (MHLW) also targeted a JPY 220 billion annual reduction in social security spending over five years starting in FY 2007; however, the scientific evaluation of how this cut would impact healthcare cost-effectiveness was inadequate Furthermore, beginning in FY 2015, the MHLW set an annual spending ceiling for long-term care prevention services for individuals with mild symptoms, aiming to control spending growth to 3–4%, reflective of the growth rate of those aged 75 and older, with an estimated JPY 200 billion reduction in spending by FY 2025.
Health Technology Assessment (HTA) primarily focuses on innovation in healthcare, encompassing both pharmaceuticals and medical devices, as well as broader health systems The UK's National Institute for Health and Care Excellence (NICE) has consistently prioritized the evaluation of the value of innovations in micro-level technologies through cost-effectiveness analysis While HTA encompasses a wider range of assessments beyond economic evaluation, the emphasis on the cost-effectiveness of healthcare technologies has emerged as a key focal point in discussions surrounding HTA.
In August 1992, Japan's Ministry of Health and Welfare approved the inclusion of health economic data in applications for the National Health Insurance (NHI) price list, responding to health technology assessment (HTA) initiatives in Europe and the USA However, progress stalled until a new policy was introduced in 2016, as the Central Social Insurance Medical Council (Chuikyo or CMC) had no formal guidelines regarding pharmacoeconomic studies in pricing decisions This lack of clarity led to widespread speculation among manufacturers by the late 1990s that submitting pharmacoeconomic data would not significantly impact pricing, resulting in limited motivation for the industry to provide cost-effectiveness information.
The “Japanese model” of HTA for the pricing system can be considered a
Japan employs a unique pricing strategy known as "Japanese quasi-value-based pricing" (quasi-VBP), which assesses the value for money of medical technologies This mechanism involves biennial price reviews that take into account market expansion and financial implications, alongside an experience-based evaluation of effectiveness The Japanese model of quasi-VBP includes an initial premium added to a baseline price for newly listed technologies (Type I) and a premium applied during repricing (Type II).
Japan's unique quasi-value-based pricing (VBP) model reflects a distinctive approach to healthcare, showcasing the country's innovative brand strategy A key advantage of this system is its compatibility with pharmacoeconomic methods, enhancing the overall effectiveness of healthcare delivery.
Table 2.1 Attachment of pharmacoeconomic data for drugs listed between June 1997 and
Source: Sakamaki H, Hiromori N, Yutani Y, et al.: A Survey of Pharmacoeconomic Data in Applications for NHI New Drug Price Listing in Japan Jpn J Pharmacoepidemiol, 6(2): 83–100, 2001
Table 2.2 Attachment of pharmacoeconomic data for drugs listed between December 2000 and
In their research paper, Ikeda and Onozuka (2004) explore the methodologies for pharmaceutical price calculation and the role of pharmacoeconomics in drug pricing They emphasize the importance of pharmacoeconomic data in applications for new drug price listings under Japan's National Health Insurance (NHI) system The study provides insights into the intersection of drug pricing and economic evaluation, highlighting the need for comprehensive data to inform pricing strategies in the pharmaceutical industry.
Table 2.3 Reasons not to submit pharmacoeconomic assessment evidence Reasons not to submit
Rate in 70 items without submission (%)
No business benefit in submitting evidence
Lack of data for analysis 43 Lack of experts in the company 11
The research by Ikeda and Onozuka (2004) explores the methodologies for pharmaceutical price calculation and pharmacoeconomics, emphasizing their significance in the context of Japan's National Health Insurance (NHI) new drug price listings The study highlights the importance of pharmacoeconomic data in the application process for drug pricing, providing insights into how these evaluations can influence market access and affordability of new pharmaceuticals.
Sect 7.7) The incremental cost-effectiveness ratio (ICER), for example, which is an important pharmacoeconomic measure, could be formulated as follows:
1 Price for new drug = price of comparator + (ICER × △E) (where △E is the incremental effectiveness), while the formula used for pricing in Japan is as follows:
2 Price for new drug = baseline price + premium.
Assuming the equality of the two equations, the term "premium" in the second equation can be interpreted as the product of the Incremental Cost-Effectiveness Ratio (ICER) and the incremental effectiveness in pharmacoeconomics While this relationship is suggested, there is currently no established fee schedule in Japan to convert ICER into a premium within the existing pricing system Nonetheless, it is important for future discussions to recognize that the concept of "premium" in the Japanese pricing framework has a foundation in pharmacoeconomics.
Review of Japanese Quasi-Value-Based-Pricing
Japan's Health Technology Assessment (HTA) system plays a crucial role in determining the cost-benefit analysis of health technologies within its government Since 1961, the country has established a comprehensive universal health coverage system alongside advanced HTA frameworks that evaluate the costs and benefits of new health technologies The Japanese Ministry of Health, Labour and Welfare (MHLW) sets the official prices based on these assessments Once a new technology's price is established by the MHLW, it is automatically eligible for inclusion in the National List for reimbursement, unless the technology's manufacturer opts not to sell it in Japan at the designated price.
In Japan, the official price of drugs and medical devices is revised downward every two years, with the discount rate set by the Ministry of Health, Labour and Welfare (MHLW) Once a product is listed on the National Formulary, it automatically receives a constant reimbursement rate of 70%, leaving no room for negotiation on reimbursement rates post-approval Consequently, pricing and reimbursement issues are tightly regulated within the Japanese healthcare system.
Table 2.4 Submission of evidence to assess cost-effectiveness for past HTA
Skills of medical staff (2011) Cost-effectiveness analysis using
Cost-effectiveness analysis not using
The other (Cost analysis, Cost- minimization analysis and etc.)
Special Committee on Cost-Effectiveness, Central Social Insurance Medical Council July 18, 2012 reimbursement have been historically focused on how to improve the government rules to determine the official prices.
The decision flows from approval to pricing is shown in Fig 2.1 as of March
2018 There are two methods: (1) cost calculation and (2) comparator pricing (or called similar efficacy comparison).
When a new drug enters the market without any existing competitors in its category, its price is determined using the cost calculation method This involves adding together manufacturing costs, selling and administrative expenses, sales profit, distribution costs, and consumption tax The average sales profit rate of 14.6% can be adjusted based on the drug's innovativeness, efficacy, and safety, ranging from -50% to +100% For a drug deemed highly innovative, the sales profit rate may reach 29.2%, while a less impressive drug may only qualify for a reduced rate of 7.3%.
The comparator pricing method is used when similar drugs are already available, while the cost calculation method is applied in their absence This approach sets the price of a new drug to match the daily dose cost of existing options If a new drug demonstrates superior efficacy, safety, or innovation, it may qualify for a premium, which is an additional bonus to the baseline price Premiums can be awarded based on four categories: innovation, usefulness (1), usefulness (2), and precursor status (the first registration in Japan) Additionally, government policies may provide special support for certain drugs, such as orphan drugs or pediatric drugs, which can also lead to marketability premiums.
Average Foreign Price Adjustment Average Foreign
(Lacking innovation) Later than 3 rd and 3 years from first
• Selling and general administration cost
Comparator Pricing Method (2) Cost Calculation Method
Fig 2.1 Pricing protocol for new drugs in Japan Source: Mahlich J, Kamae I, Rossi B, IJTAHC
In Japanese pricing practices, a "premium" is commonly applied, where a percentage is added to the baseline price of a new drug to account for its enhanced usefulness.
Newprice = Baseline price + (Baseline price × Premium rate).
The pricing mechanism in Japan embodies a value-for-money assessment influenced by subjective judgment, while also factoring in the price-volume impact on the national budget over a two-year period This approach, referred to as "quasi value-based pricing" (QVBP), consists of two categories: Type-I, which pertains to initial pricing following approval, and Type-II, which involves repricing every two years.
A survey conducted on 106 new drugs listed in the National Health Insurance from 1998 to 2013 revealed that only 27 drugs received a premium price However, the number of drugs awarded a high premium rate is relatively small.
Eighty-five percent of all drugs received a "Usefulness (2)" rating, leading to premium rates ranging from 3% to 20% However, the criteria for determining these premium rates were not disclosed in many instances Additionally, the indication criteria for each premium category are outlined without specific numerical values, with the conditions for the innovation premium detailed as an example.
1 The newly entered drug has a clinically useful new mechanism of action.
2 The newly entered drug has been shown objectively to have greater efficacy and safety than existing (comparator) drugs in the same class.
3 The newly entered drug has been shown objectively to improve treatment of the indicated disease or trauma.
The innovation premium for a new drug is awarded only when three specific conditions are met However, the detailed nature of these conditions may not provide clear guidance on how to determine the innovation premium Additionally, the definition lacks a scientific basis for understanding the rationale behind establishing the premium point rate within a defined range of upper and lower limits.
The MHLW acknowledges that Japanese official pricing rules lack a scientific basis, yet it has been hesitant to adopt pharmacoeconomic methodologies for making reimbursement and pricing decisions.
In 2011, three key reasons emerged regarding the challenges of adopting a cost-QALY threshold approach for reimbursement decisions in Japan First, this method, as established by the UK's NICE, could conflict with the principles of equity inherent in Japan's universal health coverage, making it difficult for the Japanese public to accept Second, the Japanese health technology assessment (HTA) process mandates that reimbursement and pricing decisions occur almost simultaneously, typically within 60 to 90 days post-approval, thereby complicating the separation of pricing issues from reimbursement considerations.
The intricate Japanese-style QVBP rules pose challenges in incorporating pharmacoeconomic methodologies without significantly altering the existing framework These complexities hinder Japan's potential to become a leader in modern Health Technology Assessment (HTA), particularly regarding economic evaluations, despite having developed a unique HTA system over the past 50 years.
Self-Check!
1 Is Japan an “HTA-underdeveloped country?”
2 What is the primary target of HTA evaluations?
3 When was the submission of health economic data as part of applications for listing first approved in Japan?
4 What are the trends observed in Tables 2.1 and 2.2?
5 What was the primary reason for companies not submitting health economic data?
6 Which method of evaluation has been used for the majority of health economic data submitted in the past?
7 Has there ever been a Japanese model of HTA?
8 What are the two types of Japanese quasi-VBP?
9 What is a “premium” in the Japanese pricing system equivalent to in theoretical pharmacoeconomics?
Road to the Implementation of a New HTA Policy in Japan
Key Points
• Cost-effectiveness considerations in the listing decision of outpatient smok- ing cessation treatment (the Nicotine Dependence Management Fee) in April
2006 was a pioneering case toward the introduction of a new HTA policy in Japan.
• In April 2011, the newly appointed chairman of the Chuikyo, Akira Morita, expressed his commitment to consider the implementation of cost-effectiveness evaluation in Japan.
• In May 2012, the first meeting of the Chuikyo’s Special Committee on Cost- Effectiveness was held.
• The revised Japan Revitalization Strategy issued in June 2014 included a plan to implement cost-effectiveness evaluation in coverage and pricing decisions for innovative healthcare technologies.
• A new HTA policy was introduced on a provisional basis starting in April 2016, and lead to a full introduction in April 2019.
Essential Knowledge
In April 2006, the inclusion of the Nicotine Dependence Management Fee for outpatient smoking cessation treatment in the NHI price list followed Chuikyo discussions that highlighted key cost-effectiveness evaluation points Payers requested verification of the fee's cost-effectiveness and the listing of pharmacological agents, specifically seeking evidence from economic evaluations conducted in Japan At that time, modeling was not accepted by Chuikyo; however, the decision to list the fee was influenced by the presented Incremental Cost-Effectiveness Ratio (ICER) Despite the lack of comprehensive economic evaluation guidelines, this case marked a significant step toward establishing a new Health Technology Assessment (HTA) policy in Japan.
The movement towards a new Health Technology Assessment (HTA) policy for cost-effectiveness evaluation in Japan began in 2011, marking a significant development in the country's approach to healthcare evaluation Although the Ministry of Health and Welfare had permitted the submission of economic evaluation data since 1992, the lack of guidelines resulted in minimal utilization of such data In April 2011, Akira Morita, the newly appointed chairman of the Chuikyo, emphasized the need for discussions on cost-effectiveness evaluation Following this, in May 2011, the government announced plans to consider health economic methods in assessing healthcare innovations during the Democratic Party of Japan's social security reform, along with a roadmap for partial implementation of these evaluations.
Table 2.5 The summary of early arguments in Central Social Insurance Medical Council in 2006
(from the angle to utilize economic evaluation)
• The public payer asked to consider cost-effectiveness of medical technologies in coverage decisions for national health insurance.
• Domestic studies are required, not overseas ones.
• A positive value of ICER is accepted even though it does not necessarily provide cost savings.
– However, economic evidence based on modeling study is not acceptable for decision making.
Fukuda T: On policy use of economic evaluation in health care: Covering smoking cessation treat- ment as an example Monthly IHEP, 152: 39–43, 2007
Table 2.6 The process toward the introduction of the system
April 2011 Central Social Insurance Medical Council “A new chairman’s implication for considering introduction of cost-effectiveness assessment”
In May 2011, the Democratic Party of Japan initiated a reform of the social security system, focusing on the application of health economic methods for assessing health innovations By May 2012, the Central Social Insurance Medical Council established a special framework aimed at enhancing the evaluation and implementation of these health innovations.
June 2014 Abe Cabinet’s the revised Japan Revitalization Strategy “Introduction of cost-effectiveness assessment for covering and pricing of innovative health technologies”
In April 2016, the Central Social Insurance Medical Council approved the provisional implementation of a cost-effectiveness assessment as part of a new Health Technology Assessment (HTA) policy, which was proposed during the revisions of the FY 2014 reimbursement policy.
The Chuikyo Special Committee on Cost-Effectiveness held its inaugural meeting in May 2012, comprising six payer representatives, six providers, four public members, four experts, and three observers In June 2014, the committee requested preliminary data from select companies to assess the feasibility of their analysis and evaluation system This initiative spanned from May 2012 to January 2014.
In 2016, the Chuikyo's special committee conducted 33 meetings, during which discussions led to the postponement of a previously proposed plan for limited cost-effectiveness evaluation initially set for FY 2014 However, on December 16, 2015, the Chuikyo approved the provisional introduction of a new Health Technology Assessment (HTA) policy, with plans for full implementation in Japan moving forward.
The healthcare and medical strategy introduced by the Abe administration is pivotal, highlighted by Prime Minister Abe's unprecedented publication in The Lancet in September 2013, which outlined Japan's approach to global health diplomacy This initiative aimed to link global health with peace-oriented diplomacy, establishing a new international strategy for Japan Key issues addressed include the global aging population, escalating national healthcare costs, and advancements in health technology such as personalized medicine and regenerative therapies Concerns over the sustainability of universal healthcare and potential market failures are shared worldwide In response, the Abe administration proposed policies to enhance efficient healthcare resource allocation, as reflected in the revised Japan Revitalization Strategy released in June.
24, 2014, proposed a plan to implement cost- effectiveness evaluation in coverage and pricing decisions for innovative healthcare technologies.
Under this policy, the following plans were proposed:
1 To meet the needs of patients for innovative healthcare technologies while at the same time guaranteeing sustainable universal health coverage
2 To introduce cost-effectiveness evaluation in the pricing scheme on a provisional basis starting in FY 2016
3 To explore ways under exceptional rules to enable the listing of healthcare tech- nologies that have been evaluated as not being cost-effective (or too costly to be listed under the current system)
The Chuikyo handout from December 16, 2015, emphasized the complete implementation of Health Technology Assessment (HTA), echoing the policy outlined in the 2014 Basic Policies for Economic and Fiscal Management and Reform, known as the Large-Boned Policy Additionally, the 2015 Basic Policies proposed a strategy to initially apply cost-effective considerations in coverage and pricing decisions for pharmaceuticals and medical devices on a provisional basis.
FY 2016 reimbursement policy revisions, quickly followed by a full- scale implementation’.”
Self-Check!
1 What was the pioneering case in the Chuikyo’s discussion to introduce cost- effectiveness considerations?
2 Is the new HTA policy only one of several institutional reforms of the Ministry of Health, Labour and Welfare?