Client: Association of Pharmaceutical Manufacturers in Estonia

Period: 2022

Health technology assessment involves the evaluation of the evidence of medical effectiveness and the analysis of economic cost-effectiveness that underpin the funding decisions of pharmaceuticals and other health technologies. The study compared the assessment process and the decision-making criteria used in England, Ireland, Sweden, and Estonia.

In the economic analysis of health technologies, the cost-effectiveness threshold is used as one of the key decision-making criteria. This is the amount that the society is considered to be willing to pay for health benefits equivalent to to one quality-adjusted life year. If the cost per quality-adjusted life year of an effective intervention is not higher than this amount, then it is considered economically justified. In Estonia, the cost-effectiveness thresholds used have remained unchanged for nearly ten years, although both the living standards of Estonian people and the budget of the Health Insurance Fund have increased over this period. In the study, we compared the thresholds used in various European countries. Today, the thresholds used in Estonia are below those used in many other countries, including Central and Eastern European countries with similar living standards to Estonia. The study thus recommends that the thresholds be regularly reviewed and assessed to ensure that the amount we are willing to pay for health benefits still corresponds to the needs of the society and what it can afford.

Another important methodological issue relates to how future costs and health outcomes are handled in economic analysis. Similar to the cost-benefit analyses of investments, revenues and costs are discounted the more, the further in the future they occur. The amount of discounting is determined by a parameter called the discount rate. The higher the discount rate, the lower the degree to which we take into account the health impacts that occur in the distant future when making decisions. The study found that most European countries use a lower discount rate than Estonia when assessing health technologies.