Pharmaceutical policy in Australia : developing methods to manage uncertainty in health technology assessment

University of Technology Sydney. Faculty of Business.Economic evaluation is a tool used by decision makers to ensure that promising high cost drugs that receive public funding are value for money. Funding decisions are inevitably based on limited data and there is always some uncertainty regarding whether the drug be cost-effective in clinical practice. An incorrect funding decision will reduce society’s welfare. The aim of this thesis is to investigate and evaluate current and potential methods to assess and manage uncertainty regarding the cost-effectiveness of a drug in clinical practice. The thesis undertakes an in-depth case study of a specific high cost drug which captures many of the features common to emerging high cost drugs: trastuzumab (Herceptin) for the treatment for human epidermal growth factor receptor 2 (HER2) positive metastatic breast cancer. The research had five stages: 1) a systematic review and critique of published economic evaluations was conducted; 2) an economic model was developed using trial evidence; 3) uncertainty was analysed using different methods, including value of information analysis; 4) real-world observational data were analysed to inform modifications to model parameters; and 5) the model was adjusted to estimate the cost-effectiveness in clinical practice. The systematic review demonstrated the importance of judgements made regarding the structure of the analysis and the data sources used in economic models. The cost-effectiveness of trastuzumab was estimated to be $180,910/Quality Adjusted Life Year (QALY) gained in 2001 (when first considered for PBS-subsidy). This is above the range usually considered cost-effective. The model was used to demonstrate how to estimate the value of collecting real-world observational data to be used in economic evaluations. The case study was extended by exploring a hypothetical coverage with evidence development (CED) arrangement based on observational data collected within the Australian government’s Herceptin Program. It was concluded that the hypothetical CED arrangement would not have been appropriate unless the cost of trastuzumab was reduced. The analysis of the observational data lead to policy options for achieving improved cost-effectiveness. In particular, non-adherence to treatment guidelines with respect to concomitant therapies and treatment post-progression was found. This underscores the need for post-market review. It was estimated that there was a net loss from funding trastuzumab via the Herceptin Program due to the high price of trastuzumab and non-adherence to treatment guidelines. This thesis demonstrates some of the challenges for decision makers regarding high cost drugs with limited evidence, and offers some solutions regarding how uncertainty can be managed