The Potential Benefits of HTA Centralisation



Pharma IQ
02/24/2011

It is quickly becoming clear in the pharmaceutical industry that price and value are two defining issues, with organisations constantly striving to develop optimum strategies for understanding value-based pricing, maximising cost-effectiveness and fast-tracking reimbursement.

However, proving value for money has become far more difficult in recent times, while an increased emphasis on clinical efficacy has resulted in the remit of reimbursement being expanded to clinical design and firms designing trials with this in mind.

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Many have made the argument for centralised purchasing of medical devices as a means of cutting revenue and ensuring reimbursement, but this may not be the case, according to one expert.

It was an issue recently explored by Rosanna Tarricone, executive director of the European Health Technology Institute for Socio-Economic Research and an associate professor at Bocconi University.

She claimed that centralised purchasing of medical devices does not necessarily reduce prices, and medical devices are sometimes undervalued as analysis only focuses on short-term financial and economic perspectives and fails to look at the bigger picture.

With the advent of the credit crunch, reimbursement took on a whole new level of importance in the pharmaceutical industry, with this area of health economics only set to increase in the months ahead, and the expert highlighted this.

Professor Tarricone pointed to one Italian study conducted between 2007 to 2009 by the General Directorate of Drugs and Medical Devices at the Italian Ministry of Health, in cooperation with CERGAS Bocconi University.

She said that its aim was to investigate the main aspects of procurement procedures, expenditures and consumption of medical devices, as well as capital equipment for imaging, with cardiovascular, orthopaedic, neurosurgery and neuroradiology products being explored.
"Data shows that while procurement procedures become more centralised, prices coefficient of variation (CV) decreases to almost nil. However, such phenomenon is not correlated with the inter-regional prices variability observed for each category of medical devices.

"In other words, centralised purchases are not always predictive of lower prices," Professor Tarricone explained.

Another investigation was the presence of HTA Commissions, with the expert revealing that almost all the local health authorities sampled for the survey had established a HTA Commission for medical devices.

However, she pointed out that the activities of these commissions are often limited to a partial evaluation, which generally focuses on short-term financial and economic perspectives.

"This approach is also confirmed by the purchasing analysis that mainly focuses on the most valuable economic criterium, excluding any other evaluation of the value of medical devices," Professor Tarricone added.

According to the specialist, this report demonstrates a "growing acknowledgement" from local health authorities that more effective tools for the assessment and management of medical devices are required.

One country which has migrated towards centralised purchasing of medical devices is China, which in 2009 reinstated central purchasing programmes in the form of public tenders - or bidding processes - and then expanded this to include more medical supplies and products.
The move was made after the basic healthcare system in the country deteriorated and costs rose, with public outcry to control prices prompting the government to take control of products and services as part of the universal healthcare reform.

So far, the results have been mixed, with increased government investment achieving the objective of reducing the healthcare cost to the average patient.

However, the long-term viability of this is still being questioned, particularly as there are 17,000 government-owned healthcare institutions in China, and so it is questionable if all of their needs can be served by the products contained on one list.

Centralised purchasing has also been viewed by many as harking back to an economy controlled by the government, with poor judgment and corruption.

It is clear that the debate about the efficacy of centralised HTA is far from over, and in the meantime it will be up to those who adopt the method to prove its worth as a viable cost-cutter with minimal side-effects.