Z. Evid. Fortbild. Qual. Gesundh. wesen (ZEFQ) (2014) 108, 360—366
Available online at www.sciencedirect.com
ScienceDirect journal homepage: http://www.elsevier.com/locate/zefq
Revolution then evolution: The advance of health economic evaluation in Australia Nach Revolution Evolution: Die Entwicklung der gesundheitsökonomischen Evaluation in Australien Ruth Lopert a,b,∗,1, Rosalie Viney c a
LWC Health Pty Ltd, Canberra, Australia Department of Health Policy, George Washington University, Washington DC c Centre for Health Economics Research and Evaluation, University of Technology, Sydney and Chair, Economics Subcommittee, Pharmaceutical Beneﬁts Advisory Committee b
Submitted/eingegangen 16 June 2014; revised/überarbeitet 26 August 2014; accepted/akzeptiert 28 August 2014
KEYWORDS Health economic evaluation; health technology assessment; value-based assessment; value for money; evidence-based medicine
SCHLÜSSELWÖRTER Gesundheitstechnologiebewertung; wertorientierte Beurteilung; ∗
Summary All governments face immense challenges in providing affordable healthcare for their citizens, and the diffusion of novel health technologies is a key driver of growth in expenditure for many. Although important methodological and process variations exist around the world, health economic evaluation is increasingly seen as an important tool to support decisionmaking around the introduction of new health technologies, interventions and programmes in countries of varying stages of economic development. In Australia, the assessment of the comparative cost-effectiveness of new medicines proposed for subsidy under the country’s national drug subsidy programme, the Pharmaceutical Beneﬁts Scheme, was introduced in the late 1980s and became mandatory in 1993, making Australia the ﬁrst country to introduce such a requirement nationally. Since then the use of health economic evaluation has expanded and been applied to support decision-making across a broader range of health technologies, as well as to programmes in public health. Zusammenfassung Weltweit sehen sich Regierungen damit konfrontiert, ihren Bürgern eine bezahlbare Gesundheitsversorgung sichern zu müssen. Einen Schlüsselfaktor für die Ausgabensteigerung stellen insbesondere neuartige Therapien dar. Auch wenn es zwischen den Ländern Unterschiede in den Methoden und Prozessen gibt, wie man zu Erstattungsentscheidungen kommt, so wird doch die Kosten-Nutzen-Bewertung mehr und mehr als wichtiges Instrument bei der Entscheidungsﬁndung um neue Therapieformen angesehen. Als Kriterium, ob ein neues Arzneimittel in das Pharmaceutical Beneﬁts Scheme, die Liste der zu erstattenden Arzneimittel,
Corresponding author: Dr Ruth Lopert, Director, LWC Health Pty Ltd and Adjunct Professor, Department of Health Policy, George Washington University, Washington DC. E-Mails: [email protected]
, [email protected]
(R. Lopert). LWC Health Pty Ltd, 10 Hopegood Place, Garran ACT 2605, Australia
Revolution then evolution: The advance of health economic evaluation in Australia Kosten-NutzenBewertung; evidenzbasierte Medizin; Gesundheitsökonomie
aufgenommen werden soll, wurde die Kosten-Nutzen-Bewertung gegen Ende der 1980er-Jahre in Australien eingeführt. 1993 wurde sie verpﬂichtend. Damit ist Australien das erste Land, das eine solche Anforderung auf nationaler Ebene eingeführt hat. Seitdem wurde die Nutzung von Kosten-Nutzen-Bewertungen auch auf Entscheidungen zu nichtmedikamentösen Gesundheitstechnologien und auch auf Public-Health-Interventionen ausgeweitet.
Introduction All governments face immense challenges in providing affordable healthcare for their citizens, and the diffusion of novel health technologies is a key driver of expenditure growth for many. While perspectives on the deﬁnition of innovation vary, most would accept the premise that an innovative health care technology should (aim to) improve survival and health related quality of life, or improve efﬁciency in the provision of health services. However, irrespective of the extent of innovation offered by a novel technology, its diffusion and uptake will be heavily dependent on funding and delivery arrangements. To be adopted in practice a technology will typically need to be subsidized (or reimbursed) by a third party payer. Third party payer acceptance increasingly requires demonstration that a technology is comparatively safe, effective, and in most industrialized countries, cost-effective - although other factors may ultimately drive uptake. Many jurisdictions now incorporate formal health economic evaluation processes into their decision-making. Australia has had a long history of collective funding of health care, with the establishment of the Pharmaceutical Beneﬁts Scheme as part of reforms to health insurance post World War II . While other aspects of universal coverage were not introduced until much later, public subsidy for prescription medicines has been part of the Australian health care landscape since 1948, and as such, has had considerable time to develop a framework for evaluating applications for reimbursement . Since 1993 this has incorporated a formal legislated requirement for consideration of comparative cost-effectiveness, making Australia the ﬁrst country internationally to introduce a formal process of health economic evaluation as a prerequisite for public subsidy of medicines .
Health economic evaluation in Australia background and context To understand the role and extent of the application of heath economic evaluation in Australia it is useful to ﬁrst describe the context in which it has evolved. Australia, a federation of six states and two territories, with a population of 23 million, has a notional single payer system (i.e. a single payer system in its operation and ethos, but in reality a single insurer with multiple payers) with a public, income tax-funded program called Medicare at its heart . Medicare provides universal access to subsidized medical and pharmaceutical services through the federal Medicare Beneﬁts Scheme (MBS) and Pharmaceutical Beneﬁts Scheme (PBS), and free treatment in public hospitals, which are
operated by state and territory governments, albeit with substantial funding contributed by the Commonwealth (federal) government. Medicare is complemented by optional private health insurance that provides a ‘wraparound’, covering, for example, treatment as a private patient in a public or private hospital, as well as services not currently covered by Medicare such as dental, optical and allied health.  Like most OECD countries, health spending in Australia has increased over the past decade at a faster rate than spending on all goods and services , but at 9.4% of GDP in 2009-10 expenditure is just under the OECD average, and compares favourably with the United States. Of a total expenditure of $121.4 billion (AUD 5,479 per person) in 2009-10, the federal Government contributed 44%; state, territory and local governments 26%; and individuals’ outof-pocket payments made up the remaining 30%.  Health economics as a discipline has a surprisingly long history in Australia, with analyses of health ﬁnancing data by Deeble (1967) and Scotton (1967) being highly inﬂuential in shaping the architecture of Medicare. [5,6] Health economic evaluation (HEE) to inform resource allocation came somewhat later, but the foundations were laid during the 1980s with detailed studies commissioned by government of a range of technologies and programs including breast and cervical cancer screening. Its systematic use in Australia emerged in the late 1980s with the introduction of pharmacoeconomic methods for the evaluation of medicines for listing on the PBS. Since then the application of HEE has expanded to encompass a range of processes and mechanisms that use scientiﬁc evidence to assess the cost-effectiveness of health services and technologies. It is applied to medicines and vaccines, diagnostic tests, medical devices, surgically implanted prostheses, medical procedures and public health interventions. The use of HEE in Australia is critical to decision-making intended to ensure that Australians have timely, equitable and affordable access to cost-effective health technologies, and to maximize beneﬁcial health outcomes for the Australian population within the overall funds available. Unlike the UK which has a dedicated agency in the National Institute for Health and Care Excellence (NICE), the Australian Government currently has three expert advisory committees providing advice on whether various health technologies should receive government subsidies: the Pharmaceutical Beneﬁts Advisory Committee (PBAC) for medicine and vaccines to be funded under the Pharmaceutical Beneﬁts Scheme (PBS) and National Immunisation Program (NIP) respectively; the Medical Services Advisory Committee (MSAC) for medical services involving new procedures or health technologies to be funded under the Medicare Beneﬁts Schedule (MBS); and the Prostheses List Advisory Committee (PLAC) for prostheses and implantable
R. Lopert, R. Viney
Extracted from the Australian guidelines for submissions to the Pharmaceutical Beneﬁts Advisory Committee (PBAC)a
Requirements for submissions to PBAC
Study perspective Main Comparator
Societal and health care sector The therapy most likely to be replaced in practice if the proposed medicine added to the PBS formulary. (a) If existing pharmacological analogues —–the analogue prescribed on the PBS for the largest number of patients. (b) If ﬁrst-in-class —–the medicine on the PBS prescribed for that indication for the largest number of patients (c) If no medicine currently listed for the indication —–standard medical management (may include a non-listed medicine, a surgical procedure or other non-drug therapy or conservative management). If comparative effectiveness evidence demonstrates • non-inferiority — cost minimization analysis (CMA) • superior effectiveness — cost-effectiveness analysis or (preferably) cost utility analysis All (direct medical, and non-medical) costs should be included; if indirect costs are presented the economic evaluation should be presented both with and without these costs Use of Multi-Attribute Utility Instruments (MAUIs) preferred to health state valuation studies. Pharmacoeconomic models must be transparently reported (including model structure, input parameters, assumptions etc) and with evidence- based input parameters. The time horizon should be appropriate for the condition being treated. The time horizon should reﬂect the natural history of the condition, patterns of treatment the likely duration of treatment and the length of time necessary to demonstrate the relationship between any surrogate endpoint(s) relied upon in the clinical trials and the relevant clinical endpoint(s). Incremental differences in effects and costs should be separately reported in detail. Both costs and beneﬁts should be discounted at 5% pa in the base case of the model, and varied in sensitivity analyses. One-way and multi-way sensitivity analyses varying critical assumptions and parameters. Permitted with adequate justiﬁcation
Quality of life methods Modeling Time horizon
Incremental methods Discounting Sensitivity analyses Use of expert opinion a
devices funded through private health insurance arrangements under the Prostheses List. The government considers advice from these committees to inform decisions about which health technologies it should subsidise. In the case of pharmaceuticals, the legislation explicitly sets out that a drug cannot be reimbursed on the PBS without a positive recommendation from the PBAC.
Health economic evaluation and formulary listing of prescription medicines The origins of the PBS extend as far back as 1919, when a limited program was established to provide subsidized medicines to World War I veterans and their families, but the scheme was not formally established until 1948. At that time, it covered all medicines for pensioners and 139 ‘‘life-saving and disease preventing’’ medicines for everyone else. Since then it has evolved into a comprehensive formulary of more than 4000 different items, covering most medical conditions for which drug therapy is appropriate. The program primarily covers medicines dispensed in the community, as well as certain medicines administered in outpatient settings . In the late 1980s, amid concern over high prices and rising costs, the PBS became the ﬁrst national pharmaceutical
reimbursement program to introduce an explicit consideration of ‘‘value for money’’ as a prerequisite for formulary listing. However, the introduction of health economic evaluation of drugs proposed for listing on the PBS formulary was not intended as a mechanism of cost containment, but as a means of ensuring appropriate value for money for Australian taxpayers’ expenditure. Before a drug may be added to the PBS formulary, it must ﬁrst obtain marketing approval from the Australian regulatory authority, the Therapeutic Goods Administration (TGA). Like many other industrialized countries today, Australia has what is known as a ‘‘fourth hurdle’’ process — so-called because the requirement to demonstrate comparative cost-effectiveness is assessed separately and generally subsequent to regulatory processes intended to ascertain quality, safety and efﬁcacy (or performance in the case of medical devices) for entry to market. Once a medicine has marketing approval from the TGA it may be dispensed as a private prescription (with the patient paying the full cost although this may be offset by a contribution from the patient’s private health insurance). However, to be included in the formulary and subsidized by the PBS, a drug must meet the additional criterion - the ‘‘fourth hurdle’’ of comparative cost-effectiveness . Submissions seeking the listing of new medicines on the PBS (or for making changes to existing listings) are
Revolution then evolution: The advance of health economic evaluation in Australia considered by the PBAC. The PBAC is a statutory independent expert committee established under the National Health Act (1953) to make recommendations to the Minister for Health about medicines to be included in the schedule of pharmaceutical beneﬁts (and any conditions that should apply). A 1987 amendment to the legislation introduced a requirement that when considering a proposal for the listing a medicine on the PBS formulary, the PBAC must take into account the effectiveness and cost of a medicine compared with other drug (or non-drug) therapies. Importantly, the legislation speciﬁes that a medicine that is substantially more costly than available alternatives may only be recommended for subsidy if for some patients at least, it provides a signiﬁcant increase in efﬁcacy or reduction in toxicity, or both . The development of formal guidelines for applicants seeking the listing of medicines on the PBS formulary began in the late 1980s, and the ﬁrst version was released in 1992. Since then the guidelines have evolved through a continuous process of review and update, with a major revision in 2006, and a series of smaller revisions before and since. The revisions are informed by the experience of evaluating more than 1300 major submissions and re-submissions that incorporate evaluation of comparative cost-effectiveness. The most recent version was released in late 2013. Sponsors are required to prepare their submissions in accordance with these, which guide them as to the nature, content and presentation of the evidence. While the guidelines are rarely prescriptive in the sense of mandating what must be included in a submission, or a minimum standard of evidence, they focus on specifying what evidence should be included and how it may best be presented to address the information needs of PBAC. The required information falls into three broad categories: clinical evidence (comparative safety, efﬁcacy); economic evidence (comparative cost-effectiveness); and ﬁnancial impact (anticipated utilization and cost to PBS and government heath budgets). A submission may also canvass other relevant issues, such as the severity of the condition or equity of access for particular populations . The PBAC meets three times a year to consider submissions and will usually have between 25 and 35 major (i.e. submissions requiring an economic evaluation) items at each meeting, and often as many minor submissions as well (for example, submissions requesting changes to wording of a restriction). Since 2006 the PBAC has also been given responsibility for the evaluation of vaccines for the NIP. In coming to its recommendations the PBAC does not apply a minimum standard of evidence. Direct (head-tohead) randomized controlled trials (RCTs) of a new drug against the appropriate main comparator (the therapy most likely to be replaced in practice, which may also be a nondrug therapy) are generally the most persuasive. While a submission will not be rejected if there are no head to head randomized data available to be presented, the interpretation of indirect randomized comparisons or observational study designs presents greater challenges for all involved - sponsors, evaluators, and the committee - and in many cases is less persuasive to the committee. In the absence of one or more direct head-to-head RCTs, the PBAC’s preference is to compare two sets of randomized trials using a common reference or control, such as a placebo (or an
active common comparator). This is methodologically challenging, and detailed consideration of the exchangeability of evidence between the two trials forms an increasingly important component of the assessment of the submission in these cases. Most submissions present modeled cost-utility analyses, and these are preferred by PBAC, as although the committee is only required to assess technical and not allocative efﬁciency, the use of a metric capturing length and quality of life supports both consistency in decision-making and equity across disease states and populations. Cost-minimisation analyses are also frequently presented, where the focus is on establishing non-inferiority of the new treatment, and establishing the appropriate price for an equi-effective dose. While the preferred perspective for submissions to PBAC is societal, in practice the focus is on health system resource use, regardless of where the burden of expenditure falls. The guidelines recommend that productivity gains should not be included in the base case, although they may be presented in sensitivity analyses. Downstream health system resource use and outcomes should be incorporated in the analysis, with the preferred discount rate for the base case being 5%. The time frame for modeled economic evaluations is generally determined by the nature of the disease and intervention; for diseases with lifelong sequelae, a lifetime perspective is generally preferred (See Table 1).
Determining acceptable cost-effectiveness in the PBAC process The PBAC does not utilize ﬁxed decision rules, instead weighing a range of relevant factors in its deliberations. In particular, the Committee does not (nor is it required to) apply a ﬁxed cost-effectiveness threshold. Analyses of PBAC decision-making have suggested that an incremental costutility ratio of more than AUS$50,000 per quality-adjusted life year (QALY) is associated with a decreasing likelihood of a positive recommendation, but the committee has at times declined to recommend the listing of drugs with lower cost-effectiveness ratios, and recommended the listing of others with those considerably higher.  This is because, in addition to acceptable incremental cost-effectiveness (a mandatory criterion), there are several other factors that the PBAC has identiﬁed as informing its decision-making. These include clinical need; the extent to which a proposed treatment reﬂects a clinically meaningful advance in therapy; the affordability of the medicine for patients in the absence of a subsidy; the scope for use of a drug beyond any practical restriction for subsidy, and the extent to which a restriction can be constructed that satisfactorily distinguishes use that is acceptably cost-effective from use that is not cost-effective; the degree of uncertainty in the estimate of incremental cost-effectiveness; and the potential total cost to the PBS and/or government health budgets. These factors are not weighted equally by the PBAC and will assume greater or lesser importance in different circumstances; for that reason, the importance of any particular factor cannot be quantiﬁed. However the issue of uncertainty in the estimate of incremental cost-effectiveness is particularly critical. A submission presenting an incremental
364 cost-utility ratio that is extremely favorable may still be rejected if the uncertainty associated with the point estimate is high. While probabilistic sensitivity analysis is increasingly used internationally, and may be presented in submissions to PBAC, the assessment of uncertainty in PBAC evaluations is more commonly based on extensive one way and multi-way sensitivity analyses, varying critical assumptions and parameters. In some cases this may include a re-speciﬁcation of the base case during the evaluation period, based on the critical analysis of the submission and model by PBAC’s evaluators and expert sub-committees. As noted above, while cost-utility analysis is preferred it is not mandatory, and there are some notable instances where the PBAC has chosen to rely on an assessment of incremental cost per life-year saved rather than the more usual cost per QALY. While PBAC does not have a preference for a particular method of valuing health outcomes for the incorporation of QALYs, the guidelines do note a preference for quality of life to have been measured in the pivotal clinical trial(s), using a Multi-Attribute Utility Instrument (MAUI). A 2008 review of methods found that speciﬁc health state valuation studies were used in approximately one third of submissions, and that the use of QALYs based on the EQ5D dominated, but this did not necessarily entail use of the EQ-5D directly in a clinical trial.
Health economic evaluation and its effect on real-world decision-making As noted above, the PBAC may not recommend a medicine for PBS listing that is more costly than alternatives unless it offers additional beneﬁts for at least some patients. The Committee’s focus is thus on ensuring that any additional costs are justiﬁed by the anticipated additional beneﬁts, and a higher price will only be accepted if a new intervention provides additional health outcomes at an acceptable incremental cost. The PBAC’s objective may be thought of as value-based purchasing of health outcomes — rather than medicines — and in pursuing this, attempting to address questions of both technical efﬁciency and equity. The PBAC’s determinations are however, advisory only. The PBAC makes recommendations to the Minister for Health regarding those drugs that should be listed on the PBS (or included in the NIP) and any conditions that should apply. The ﬁnal decision rests with the Minister (with endorsement of the Federal Cabinet required for certain high budget impact listings), and while the Minister may choose to accept or reject a listing recommendation made by the PBAC, he/she may only list a medicine on the PBS if the PBAC has recommended it. This provides a substantial shield against political interference in the listing process since no amount of political lobbying can bring about the PBS listing of a medicine in the absence of evidence of its value to the Australian community. This was illustrated very clearly in the case of Herceptin (trastuzumab) which in 2001, despite extensive campaigning by patient groups supporting listing on the PBS—–for what was then one of the most expensive medicines ever proposed for listing—–was rejected by the PBAC as insufﬁciently cost-effective in the treatment of metastatic breast cancer. Throughout 2001, interest groups
R. Lopert, R. Viney heavily lobbied key politicians including the Prime Minister, as well as PBAC, leading to pre-election commitments from both major political parties to subsidize the drug. Nevertheless, without a positive recommendation from the PBAC the government was unable to list the drug and instead created a separate, taxpayer-funded Herceptin program outside the PBS, one that continues today. In 2006 Herceptin was listed on the PBS for early-stage breast cancer, but subsidized access in advanced metastatic disease remains limited to this special program—–an arrangement that has not been repeated to this day. Arguably both the viability and credibility of the PBAC and PBS processes would be undermined were it to occur again, at least in the absence of any formal public discourse on social values and spending priorities.
Health economic evaluation and non-drug technologies The Medicare Beneﬁts Schedule (MBS) is a list of professional medical services (items) approved for reimbursement to individual patients under Australia’s Medicare program. Each listed service has a ‘Schedule Fee’ determined by Government, although providers are not bound by this, so any additional charge becomes an out of pocket cost to the patient. The MBS covers out-of-hospital medical services (eg general practice and specialist consultations, diagnostic imaging and pathology services, as well as providing a subsidy for in-hospital services for private patients). The relationship between the schedule fee, the cost to the consumer and the cost to government has become more complex in the last decade because of the introduction of an extended Medicare Safety Net, which limits the total out of pocket costs to individuals and families in a calendar year. [16,17] Assessment of health technologies for funding under the MBS is the responsibility of the Medicare Services Advisory Committee (MSAC). MSAC was established in 1998 as an independent Ministerial advisory committee with the objective of strengthening arrangements for assessing new technologies and procedures before they are considered for reimbursement under the MBS. MSAC’s Terms of Reference are to provide advice to the Minister for Health on • the strength of evidence in relation to the comparative safety, effectiveness, cost-effectiveness and budget impact of a medical service; • whether public funding should be supported for a medical service and, if so, under what circumstances it should be supported; • whether new medical technologies and procedures should be funded on an interim basis to allow data to be assembled to determine their safety, effectiveness and cost-effectiveness; and • where funding under the MBS is recommended - the proposed MBS item descriptor and fee for the service. The evaluation processes used by MSAC differ from those used by the PBAC. Although any person or entity may make an application to PBAC, in practice it is rare for a
Revolution then evolution: The advance of health economic evaluation in Australia submission to be received from an entity other than the medicine’s manufacturer or ‘sponsor’. By contrast, applications to MSAC seeking public reimbursement for medical services and technologies are commonly received from the medical profession, the pharmaceutical and medical device industries, individuals, and patient groups. Funding advice may also be sought directly from MSAC by the Minister, the Australian Health Ministers’ Advisory Council (AHMAC), or from within the Department of Health. Among the key challenges for MSAC processes has been developing ‘ﬁt for purpose’ evaluation processes for dealing with so-called ‘co-dependent’ technologies, used for example, to determine the cost-effectiveness of a diagnostic where the outcome will indicate or exclude a particular drug therapy, and is therefore dependent at least in part, on the cost-effectiveness of the medicine. Perhaps the most fundamental challenge for MSAC has been the limitations of the evidence base for assessing many medical procedures and devices. Compared with the case of new medicines, there are many fewer comparative randomised trials on which to build an assessment of comparative cost-effectiveness. In addition to the supporting decision-making around the funding of medical devices and procedures, health economic evaluation is used to support the coverage of devices and prostheses by private health insurers, and methods and processes are currently under development to extend the use of health economic evaluation to the funding of blood and blood products.
Other applications of health economic evaluation In Australia, where there is a split of responsibilities in the provision and funding of health care between the federal and state levels of government, it is inevitable that there will be variations in the methods and extent of the use of economic evaluation in health resource allocation decisions. Each state government is responsible for capital works planning and provision of hospital services, and therefore to a considerable extent, for decisions about the diffusion of technologies in public hospitals. Similarly, most public hospitals have processes for deciding which drugs are included in the hospital formulary. The extent to which these decisions are informed by health economic evaluation is highly variable. Individual decisions about a new technology may be based on a speciﬁcally commissioned health economic evaluation, but this is not applied in the same systematic way as the national processes used by PBAC and MSAC. The extent to which public health programs in Australia have been informed by health economic evaluations is variable. Australia currently has three national screening programs. The National Breast Cancer Screening Program was established in 1991, and was informed by pilot studies that included economic evaluations [18,19], including the ﬁrst cost-utility analysis in Australia. Similarly a number of commissioned economic evaluations were used to inform the establishment and ongoing policy implementation of the National Cervical Screening Program (NCSP). Recently, consideration of the scope and content of the NCSP became the responsibility of MSAC, which has since reviewed the cost-effectiveness of human papilloma virus (HPV) testing,
as well as proposals to modify the age range and screening interval associated with the deployment of new technologies, including HPV testing.  Australia’s third major cancer screening initiative is the Colorectal Cancer Screening Program, which began in 2006, and was again informed by economic evaluation. However, a key concern raised in relation to the current screening program is that its implementation has been driven more by resource constraints and political imperatives than by evidence of what would be most costeffective. This is, of course, one of the challenges in the use of health economic evaluation; resource allocation decisions must take into account overall budget impact (and opportunity cost) in addition to the incremental costeffectiveness ratio.
Challenges and opportunities While health economic evaluation plays an increasingly important role in decision-making for health technologies and services in Australia, the various processes are not always consistent or congruent, perhaps reﬂecting the underlying funding system in Australia, with its different funding silos for different services. Key challenges remain in ensuring the health technologies assessed and recommended for funding on the basis of trial evidence and modelled analyses prove to be effective and cost-effective in the ‘real world’. This represents challenges not only in data collection and evaluation, but also in managing disinvestment, both clinically and politically. Other key issues lie in minimising duplication and improving efﬁciency with multiple and seemingly disparate evaluation and funding mechanisms, and in the absence of single coordinating agency. As noted above, there is also potential for health economic evaluations to be duplicated across states and territories. More concerning is the fact that because of the structure of funding arrangements, even well-developed health economic evaluation processes provide only limited capacity to ensure the best use of resources. For example, while PBAC considers comparative cost-effectiveness against the technology most likely to be replaced, regardless of whether this is a drug or not, this may not facilitate an assessment of the best use of additional health funding across the whole health system. There may be better value for money options that are not funded in other programs, but as noted above, there is currently no scope within the evaluation processes to consider issues of allocative efﬁciency. Finally, although none of the health economic evaluation processes and mechanisms established in Australia has had as its objective cost containment, to date there has been no explicit evaluation of whether and to what extent these processes are contributing to achieving better value for money, let alone exerting any indirect control over expenditure growth.
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