The reference ICER for the Australian health system: estimation and barriers to use

Abstract: Spending on new healthcare technologies increases net population health only when the benefits of the new technology are greater than their opportunity costs. New technologies with an incremental cost per Quality-Adjusted Life Year (QALY) greater than their opportunity cost should therefore only be funded when satisfying criteria beyond the QALY such as health equity. In Australia, public summary documents indicate that decision making committees consider interventions with ICERs in the range $45,000-$75,000 per QALY (£27,700-£46,200) to be cost-effective. The first empirical estimate of the opportunity cost in Australia suggests that we forgo 0.6 QALYs for every QALY gained from recommending new technologies at the lower bound ($45,000/QALY) of this price range.

This talk will describe the methodological approach taken to estimate the reference ICER in Australia including the econometric model used to estimate the effect of marginal increases in public healthcare spending on mortality-related QALYs lost and the estimation of morbidity-related QALY gains from population-level change in Health-Related Quality-of-Life (HRQoL) and its estimated length of maintenance without additional spending. Following this, we will critically discuss the role of broader political factors that have been used to justify paying high prices for some technologies.