Study introduces novel strategy to obtain reasonable drug cost estimates for cost-effectiveness analyses

Value in Health, the official journal of ISPOR (the professional society for health economics and outcomes research), announced today the publication of a study introducing a novel strategy for obtaining reasonable drug cost estimates for US-based cost-effectiveness analyses. The report, A Transparent and Consistent Approach to Assess US Outpatient Drug Costs for Use in Cost-Effectiveness Analyses, was published in the June 2018 issue of Value in Health.

To estimate the net drug price for any given brand or generic drug, the strategy suggests using the National Average Drug Acquisition Cost (NADAC) as the upper bound of the estimate, the Veterans Affairs Federal Supply Schedule (VAFSS) as the lower bound, and the midpoint between the two as the base case. This strategy is transparent, consistent, and applicable to all US-based cost-effectiveness analyses.

This new cost assessment method stands in contrast to estimating a drug's cost based on the wholesale acquisition cost (WAC), which is currently the most prevalent strategy used in cost-effectiveness analyses. The authors point out that the WAC fails to account for discounts pharmacies and payers receive when acquiring drugs and thus may be an overestimate for the base case when conducting a cost-effectiveness analysis.

"Our article provides a clear methodology that improves on current practice to utilize metrics that do not rely on a particular National Drug Code list price," said lead author Joseph Levy, PhD, Department of Pharmaceutical Health Services Research, University of Maryland School of Pharmacy, Baltimore, MD, USA. "Overall, our approach represents the best available recommendations to measure drug costs in the United States because it improves transparency in drug cost estimates and provides consistency in computing results to inform decision makers."