The Influence of Cost-Effectiveness Evaluations on Reimbursement in Australia: A Retrospective Study of Decisions made by the Pharmaceutical Benefits Advisory Committee

Background: The Pharmaceutical Benefits Advisory Committee (PBAC) is an independent statutory body, established to provide recommendations to the Australian Minister for Health detailing which health technologies should be considered for subsidisation under the Pharmaceutical Benefits Scheme. Objective: The study was designed to investigate the influence of economic evaluations with respect to the PBAC decision-making process. The study examined the likelihood of reimbursement in light of a pharmaceutical’s incremental cost-effectiveness ratio (ICER), testing the notion that the PBAC is unwilling to recommend for reimbursement pharmaceuticals beyond a certain threshold. Methods: All 156 pharmaceutical submissions to the PBAC encompassing the period of July 2005 to March 2007 were reviewed. The consistency of reimbursement decisions were tested on the basis of cost and cost effectiveness using quality-adjusted life-year (QALY) outcomes. Chi-squared tests, Fisher exact tests and logistic regression analyses were undertaken to determine whether a statistically significant relationship existed between a pharmaceutical’s cost effectiveness in relation to the likelihood of attaining reimbursement. Results: The PBAC was increasingly reluctant to recommend pharmaceuticals beyond a cost-effectiveness ratio of $A45,000 per QALY, with a clear inverse relationship between the ICER and probability of reimbursement. Discussion: The results of this study reveal that the PBAC is not bound by an absolute decision rule. However, reimbursement decisions over the study period appear to be consistent within the boundaries of a cost-effectiveness threshold.