Points of View Evaluation of the price adjustment portion of cost-effectiveness assessment

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Yuki Miura, Senior Researcher, Pharmaceutical and Industrial Policy Research Institute

Executive Summary

This paper analyzes the evaluation of the additional portion of the price adjustment for innovative drugs (in this study, mainly the additional price adjustment for usefulness) for 15 products that were subject to cost-effectiveness evaluation. For the additional portion of the price adjustment subject to this survey, "novel mechanism of action," "high efficacy and safety," "improvement of treatment methods," and "usefulness through innovations in drug formulation" were evaluated for the comparative drugs at the time of NHI price calculation. Although a full-scale statistical analysis is difficult due to the limited number of data, an analysis of the relationship between these requirements and the addition adjustment rate in the cost-effectiveness analysis suggests that there is no statistically significant relationship between the presence of a "new mechanism of action," which is a requirement for addition at the time of NHI price calculation, and the probability of addition adjustment in the cost-effectiveness evaluation. The results suggest that there is no statistically significant relationship between the presence of a "novel mechanism of action," which is a requirement for addition to the drug price list at the time of drug price calculation, and the probability that the drug price will be adjusted by cost-effectiveness assessment. In the analysis of six products with 0% and 90% addition adjustment rates, there were four products for which the comparator and comparator technologies differed, and there were cases in which there were price differences between the two. We hope that further analysis, examination, and discussion will be conducted from the perspective of transparency and predictability in the future.

1. Introduction

The value of pharmaceuticals is constantly changing due to various factors, such as the evolution of the pharmaceuticals themselves and changes in the values of the people themselves who receive medical care. In Japan, there are two systems: the National Health Insurance (NHI) drug price standard system, which sets the prices of drugs that can be used in insured medical care, and the cost-effectiveness evaluation system, which aims to adjust prices after listing on the NHI drug price list. Under the NHI drug price standard system, additional requirements are set in addition to efficacy and safety, and fulfillment of these conditions entitles the pharmaceutical company to receive additional payments and price adjustments. Because drugs at the time of launch do not have sufficient clinical evidence to contribute to the evaluation of value, a system also exists to evaluate these requirements once they have been established, in the form of one point five percent, depending on the number of requirements. In addition, a cost-effectiveness evaluation system that reviews this evaluation in terms of health care economics for items that have a large financial impact has been established to quickly deliver the latest medical services to the public under universal health insurance.

This survey was conducted to understand the current status of the addition and adjustment portion of the cost-effectiveness evaluation, focusing on the addition rate and addition requirements of both systems and the adjustment rate of the addition portion.

2-1. Survey Methodology

The survey covered 15 drugs that were selected for cost-effectiveness evaluation in Japan after being listed in the Japanese NHI Drug Price Standards and whose evaluation was completed on the C2H ^website1) between April 2019 and May 2023. Of these, Zorgensma, whose analysis of price adjustment rates was suspended, was excluded due to the lack of necessary data collection for Kimuria, for which the percentage of patients per analysis population was not disclosed because it was considered a trade secret, and for which data on long-term efficacy were lacking. ^Items2) that were not individually analyzed and evaluated as similar products were excluded from the study in order to prevent duplication.

The terms used in this paper are defined as follows The additional usefulness ratio (hereinafter referred to as "addition ratio") corresponds to the additional periodicity and usefulness ratio (hereinafter referred to as "usefulness-based addition") among the additional corrections in the NHI drug price calculation.

The price adjustment ratio is calculated by dividing the price adjustment ratio for the price adjustment portion in Figure 1 by the ICER category in Figure 2, based on the applicable patient ^{ratio3) for} each comparator population (Formula 1).

Addition adjustment rate (%) = 1 - price adjustment rate according to ICER category (%) x patient proportion (%) ⁴⁾... (Equation 1)

The price reduction rate is the value obtained by dividing the drug price after price adjustment only for the price adjustment portion by the drug price before adjustment according to the evaluation results based on the cost-effectiveness evaluation system (Equation 2). For some of the drugs in the analysis that were calculated using the cost accounting method, the price reduction ratio was calculated by including operating income in addition to the additional usefulness ratio (Equation 2).

Price reduction rate (%) = 1 - adjusted NHI price (yen) / pre-adjustment NHI price (yen)... (Formula 2)

In addition to the addition rate received at the time of NHI drug price calculation (including operating income in the case of the cost accounting method), comparative calculation ^drugs5), and addition requirements, the background information on how the addition portion at the time of NHI drug price calculation was adjusted in the subsequent cost-effectiveness assessment was obtained from the information on the addition adjustment rate and price reduction rate at the time of cost-effectiveness assessment and comparative control technologies. The results of the cost-effectiveness analysis were used to determine the usefulness and effectiveness of the cost-effectiveness evaluation. The results of the cost-effectiveness analysis depend not only on what requirements and to what extent the additional benefit was added, but also on whether the foreign average price was adjusted or not, and on the difference between the comparator drug and the comparator technology. Therefore, the present analysis is not intended to confirm the basic facts. Therefore, for the purpose of basic fact-finding, this time we will discuss the effects of the usefulness addition and the difference between the calculated comparator and the comparator technology, respectively, separately.

Since the number of items analyzed is limited to 15, no statistical analysis was conducted (only some reference information is included).

2-2. Outline of Target Items

Table 1 lists the results for the items covered in this study. The individual tabulation results in Table 1 are presented thereafter. Calculated comparators and comparator technologies indicate the names of ingredients and medical technologies. Since cost-effectiveness evaluations are conducted on an item-by-item basis, we ask for your understanding that the items are listed by their names (product names) in the text.

As shown in the left-hand side of Figure 3, two-thirds of the items in this survey were calculated based on the Comparable Drug Efficacy Method (I), and the remaining one-third were calculated based on the cost accounting method. The survey targets only those items that are subject to the "additional cost" method (breakthrough and usefulness), and not those items that are subject to the "similar drug effect comparison method" (II). The right-hand side of Figure 3 shows that 80% of the H1 drugs in the cost-effectiveness evaluation category ⁽⁷⁾ were those for which the additional fee for usefulness was calculated or disclosed in less than 50% of the cases, and the estimated market size was 10 billion yen or more. One product, Koralan, was in H2 (the additional fee for usefulness was calculated or disclosed less than 50% and the projected market size was between 5 billion yen and 10 billion yen), and two products, Kymriah and Zorgensma, were in H3 (the additional fee for usefulness was calculated or disclosed less than 50% and the unit price was deemed necessary by the General Assembly of the Chuikyo Medical Association, such as a remarkably high unit price). Figure 4 shows a cross tabulation of Figure 3.

Figure 4 is a cross tabulation of Figure 3. Although it is a subjective observation due to the small sample size, there was no significant difference in the trends between the NHI drug price calculation method and the cost-effectiveness evaluation category.

The three products in Figure 5 that were not added to the NHI price calculation (Noxafil ^tablets8), Mgaldi, and Becluri) were all calculated using the cost-effectiveness method and did not have a usefulness system addition. Looking at the calculation requirements, nine products received an addition for "improvement of treatment method," followed by four products for "new mechanism of action," and one each for "high efficacy and safety" and "usefulness of innovative drug formulation.

Figure 6 (left panel) shows the distribution of the percentage of additions to the usefulness scale for the subject items. The distribution is divided into 5% intervals, with 5% being the most common (6 items), since the additions are made in accordance with points. Some of the items calculated based on the cost accounting method are not divided by 5%, since the addition rate is adjusted according to the disclosure rate.

The addition adjustment rate in Figure 6 (center) is obtained by subtracting the price adjustment rate based on the ICER category from 1 in Figure 2, weighted by the patient ratio. Items that require consideration, such as anticancer drugs, are obtained according to a different ICER category (details omitted). The distribution of the additive adjustment rate shows that four items did not receive a price reduction (0% additive adjustment rate), two items received a 90% additive adjustment rate (maximum additive adjustment rate), and the others were distributed in the 3%, 6%, 14%, 34%, 35%, 50%, and 54% categories, one item each. The price reduction rate indicates the overall price reduction rate after adjusting the price for the additional usefulness portion.

3-1. analysis of individual cases by additive adjustment rate (0% and 90%)

Based on the results of the cost-effectiveness evaluation analysis, we analyzed four products for which the added-value portion remained unchanged (0% additional price adjustment) and two products for which the added-value portion was adjusted to the maximum extent (90% additional price adjustment).

Table 2 shows that the group with a 0% price adjustment rate consists of four products for which no price adjustment was made because their usefulness at the time of NHI price calculation was recognized to be more efficient than that of the comparator technology in terms of health economics as a result of the cost-effectiveness evaluation analysis. We examined the addition requirement and the differences between the calculated comparator and comparator technologies in this population. Turning to the additional usefulness requirement, three of the four products were "improvement of the treatment method. Intuitively, one would think that "improvement of treatment method" would make it difficult to receive price adjustments, but 9 of the 15 products in the survey met this criterion (Figure 5). Since only three of the 15 items were subject to this requirement, it cannot be determined whether the price adjustment was due to the additional requirement. In addition, one product was selected for "high efficacy and safety" and one for "new mechanism of action" in addition to "improvement of treatment method.

Comparing the comparator technologies during the cost-effectiveness evaluation with the comparator drugs, Cabometix and Daraculo were the same two drugs. For Koralan, the comparator drug was pimobendan, while the comparator technology was placebo, and for Boraibee, the comparator drug was brentuximab vedotin, while the comparator technology was R-ICE therapy and a different medical technology.

The population with an addition adjustment rate of 90% corresponds to two products in the population with the maximum price adjustment because their usefulness at the time of drug price calculation was not found to be more efficient than the comparator technology in terms of health care economics as a result of the cost-effectiveness evaluation analysis. In this population, as in the previous population, we examined the addition requirement and the differences between the calculated comparator and the comparator technology.

Turning to the additional requirement for usefulness, two different requirements were applied: "new mechanism of action" and "improvement of treatment method". In the group with a 0% addition adjustment rate, three of the four drugs were subject to the "improved treatment method" requirement, making it difficult to link the presence of an "improved treatment method" to the impact of the additional usefulness requirement.

Next, comparing the comparator drug and the comparator technology used in the cost-effectiveness evaluation, Yurtomiris was the same drug, but Trintellix was a different drug from Esitalopram, while the comparator drug for Trintellix was Milnacipran. Similarly, it is difficult to link the same or different comparator and technology to the effect of the additionality adjustment rate.

3-2. Requirements for Calculation of Added Value and ICER

We looked at the addition requirement of 0% and 90% for the addition adjustment ratio, but due to the limited sample size, it was difficult to find a link, so we focused on the addition requirement for all of the included products. These requirements include "novel mechanism of action," "high efficacy and safety," "improvement of treatment methods," and "usefulness through formulation innovation" (Figure 5). Intuitively, from the perspective of healthcare economics, "high efficacy and safety" contributes to improved health-related quality of life through therapeutic efficacy and reduced treatment costs when adverse events occur due to improved safety, while "improvement of treatment methods" can be a treatment option when efficacy is insufficient (e.g., avoidance of surgical options) or a convenience improvement that reduces intervals between hospital visits. The "usefulness of improved formulation" seems to contribute to the improvement of QOL by making the treatment less invasive, such as oral formulation instead of injectable formulation. At present, these factors have been reported to contribute to reimbursement decision making at NICE in the U.K. ⁹⁾.

On the other hand, cost-effectiveness assessment evaluates efficiency by comparing existing technologies with new technologies. In other words, having a "novel mechanism of action" has no direct impact on ICER.

Figure 7 shows the relationship between the requirements for calculating the addition of efficacy and the addition adjustment ratio for the surveyed items.

Trintellix was the only product with a "novel mechanism of action" (Table 1). Trintellix had the highest rate of addition adjustment at 90%. On the other hand, three drugs, Zorgensma, Kymriah, and Coralan, were applicable when both "new mechanism of action" and "improvement of treatment method" were included. Since Zorgensma and Kymriah were excluded from the analysis, only Koralan was included in the analysis, but the addition adjustment rate was 0%, the usefulness addition was left unchanged, and the price was not reduced. A chi-square test was conducted using Stata14 with "presence or absence of price adjustment rate" as the objective variable and "presence or absence of new mechanism of action" as the explanatory variable, although this information is for reference only due to the small sample size. The results showed that there was no statistically significant difference in the effect of the presence or absence of a new mechanism of action on price adjustment, with a p-value of 0.93.

Although it is not possible to discuss the relationship between the presence of a "novel mechanism of action" and ICER based on these analysis results alone, in a broad sense, the presence of a "novel mechanism of action" is an extremely important factor, not only in terms of therapeutic effect, but also in terms of enabling administration even when existing treatments are ineffective and improving safety, which is reflected in the calculation requirements recognized at the time of addition of usefulness. It may also contribute to ICER through a pathway that is not reflected in the calculation requirements recognized at the time of the addition of usefulness. Novel mechanisms of action may also have important effects such as opening new avenues for drug discovery. Further study of "novel mechanisms of action" will be necessary through the accumulation of more case studies.

Next, individual case studies on the selection of comparator and control technologies will be presented in the next section.

3-3. Comparison of Calculated Comparison Drugs and Comparison Control Technology

Table 2 shows that the comparator for TRINTELIX is escitalopram, an SSRI, while the comparator for depression (moderate or higher) is milnacipran, an SNRI. The reason for the selection of the comparison and control technology is that, based on depression treatment guidelines, among antidepressants, SSRIs, SNRIs or novel antidepressants including NaSSAs are used as first-line agents from the viewpoint of tolerability, and no superiority or inferiority between these agents has been demonstrated. Therefore, it is considered appropriate to set the least expensive of these drugs as the comparative control ^{technology10)}. On the other hand, the third edition of the Analytical Guidelines for Cost-Effectiveness Evaluation describes the comparison and control technologies as follows The principle approach is to select one of the technologies that is widely used clinically at the time when the technology under evaluation is introduced as a treatment for the population under analysis and is assumed to be substituted by the technology under evaluation, and that has a higher therapeutic ^effect11). This paper will only refer to the comparison of the two technologies without referring to the validity of the comparator or the comparator technology.

Next, we examined the price: from the C2H ^report10), the daily drug price of escitalopram was 230.27 yen, and the daily drug price of milnacipran was 41.78 yen. Cost-effectiveness evaluations include not only drug prices but also other costs, but since the report does not clarify the amounts of these costs, we will focus only on the daily drug prices in our analysis. As mentioned above, the difference between escitalopram, the comparator drug, and milnacipran, the control technology, is 188.49 yen per day. It is possible that the analysis was conducted with the difference in NHI drug price when adjusting the price of the additional portion (Figure 8). The same perspective as for Trintellix is also used to examine Coralan. For Koralan, the comparator is "pimobendan," but the comparator technology is also different, being placebo. The reason why placebo was selected as the comparator is clearly stated in the report, and only standard treatment is considered appropriate as the comparator because there are no other treatments available in Japan for uncontrolled cases despite standard treatment. As with Trintellix, price differences are considered, but the Coralan ^report12) did not contain information on daily drug prices. On the other hand, the calculated comparator pimobendan has a drug price, and it is sensibly clear that placebo has no drug price. In the cost-effectiveness evaluation, a comparison was made between placebo and standard treatment plus Coralan, in ^{addition to standard treatment13)}.

Since the difference in utility values from the comparator technology is also reflected in the process of calculating ICER, there is no problem with the drug price difference itself, but the drug price difference arises depending on the selection conditions of the comparator technology, and whether all such drug price differences are reflected in the ICER or not is a matter of how conditions such as "novel mechanism of action" affect the case It will be necessary to wait for the accumulation of cases and conduct analysis to see how conditions such as "new mechanism of action" affect the ICER.

Since these are individual case studies, it cannot be said from these results that the difference in the addition adjustment rate was caused by the difference in drug prices between the comparator drug and the comparator technology, but on the other hand, it was found that analysis was conducted with the drug price difference as shown here when the comparator drug and the comparator technology were different. The selection criteria for the calculated comparative medicines are "efficacy and effectiveness," "pharmacological action," "composition and chemical structural formula," and "dosage form, dosage form category, dosage form and usage," while the comparative control technology is selected based on substitutability (e.g., therapeutic guideline). It is difficult to standardize the selection criteria because there is not enough evidence and safety information for a drug at the time of its launch. We assume that this problem arises because Japan has a system in which cost-effectiveness evaluation is conducted after reimbursement. However, it may be necessary to consider how this difference in drug prices should be handled in the selection of comparator drugs and technologies for comparison. In addition to the factors that cause a drug price difference, a foreign average price adjustment is made when there is a large deviation from the foreign average price at the time of drug price calculation. Both drugs in this case received a subtraction respectively due to the foreign average price adjustment (Table 1). With the subtraction, the ICER decreases in the cost-effectiveness evaluation analysis due to the decrease in costs. Therefore, we inferred that this reduces the likelihood of price adjustments being made in the cost-effectiveness evaluation.

Summary

In this paper, we analyzed the evaluation of the additional portion of the supplemental price adjustment for innovative drugs (in this study, mainly the additional cost of usefulness) for 15 products that were subject to cost-effectiveness evaluation. For the additional portion of the price adjustment subject to this survey, "new mechanism of action," "high efficacy and safety," "improvement of treatment methods," and "usefulness through innovations in drug formulation" were evaluated for the comparative drugs at the time of NHI price calculation. Although a full-scale statistical analysis is difficult due to the limited number of data, an analysis of the relationship between these requirements and the addition adjustment rate in the cost-effectiveness analysis suggests that there is no statistically significant relationship between the presence of a "new mechanism of action," which is a requirement for addition at the time of NHI price calculation, and the probability that the addition will be adjusted by cost-effectiveness evaluation. The results suggest that there is no statistically significant relationship between the presence of a "novel mechanism of action," which is a requirement for the addition to the drug price at the time of drug price calculation, and the probability that the addition will be adjusted by cost-effectiveness evaluation. The results of the cost-effectiveness analysis to adjust the addition depends not only on the requirements for the addition of usefulness and to what extent, but also on whether the foreign average price is adjusted or not, and on the difference between the calculated comparator drug and the comparator technology. However, due to data limitations, it is difficult to simultaneously take these three factors into account in this analysis. Therefore, for the purpose of basic fact-finding, it was decided to discuss the effects of the addition to the usefulness index and the difference between the calculated comparator drug and the comparator technology separately.

It was suggested that the presence or absence of a "novel mechanism of action," which is a requirement for an addition to the drug price calculation, has no statistical relationship with the probability of price adjustment based on cost-effectiveness evaluation. In cases where different items or medical technologies were selected for both the calculated comparator drug and the comparator technology, there were cases, such as Trintellix, where a difference in drug prices was observed.

In the drug pricing system, the system is designed to evaluate innovation in addition to the perspective of patient access and efficacy and safety. On the other hand, the cost-effectiveness evaluation system targets drugs that have a large financial impact after reimbursement, analyzes them from a health economic perspective, and adjusts the price for the additional cost. Although it is impossible to state the merits or demerits of the issues raised by this survey, such as the different comparison and contrast technologies used for similar drugs at the time of drug price calculation and price adjustment, or the handling of calculation requirements that are not easily reflected in ICERs, further consideration could be given in the future from the viewpoint of transparency and predictability. As Japan adopts both systems, these discussions will continue due to advances in pharmaceuticals and medical technology, and we hope that analysis, examination, and discussion will proceed so that the various values that are important to the public will be appropriately incorporated into the evaluation.

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