Implications of Nonmarginal Budgetary Impacts in Health Technology Assessment: A Conceptual Model.

Abstract

This paper introduces a framework with which to conceptualize the decision-making process in health technology assessment for new interventions with high budgetary impacts. In such circumstances, the use of a single threshold based on the marginal productivity of the healthcare system is inappropriate. The implications of this for potential partial implementation, horizontal equity, and pharmaceutical pricing are illustrated using this framework.Under the condition of perfect divisibility and given an objective of maximizing health, a large budgetary impact of a new treatment may imply that optimal implementation is partial rather than full, even at a given incremental cost-effectiveness ratio that would nevertheless mean the decision to accept the treatment in full would not lead to a net reduction in health. In a one-shot price-setting game, this seems to give rise to potential horizontal equity concerns. When the assumption of fixity of the incremental cost-effectiveness ratio (arising from the assumed exogeneity of the manufacturer's price) is relaxed, it can be shown that the threat of partial implementation may be sufficient to give rise to an incremental cost-effectiveness ratio at which cost the entire potential population is treated, maximizing health at an increased level, and with no contravention of the horizontal equity principle.