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Revision of Ireland’s Cost-Effectiveness Threshold: New State-Industry Drug Pricing Deal Should Adequately Reflect Opportunity Costs

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  • James F. O’Mahony

    (Trinity College Dublin)

Abstract

Ireland’s cost-effectiveness threshold is currently €45,000 per quality-adjusted life-year (QALY). It has previously been determined by periodic agreements between the State and a pharma industry lobby body. A new deal is due in July 2021 and it is therefore timely to re-examine Ireland’s threshold, how it is set and transparency around adherence to it. Previous research has noted a series of problems with the threshold, including that it is likely too high relative to the opportunity cost of unmet need within Ireland’s health system. This means reimbursement at the threshold may do net harm to population health. The high threshold may also mean the Irish health system is failing to satisfy existing legislation on healthcare resource allocation. Recent COVID-19-related pressures on healthcare capacity and public spending appear to increase the urgency for an evidence-based revision of threshold to better reflect opportunity costs within the Irish healthcare system. Despite these problems, the prospects for reform of the threshold do not appear strong as the political and institutional incentives may favour the status quo. At the very least, the State should provide greater transparency regarding how the threshold is set and adhered to. A potential reform for consideration in the longer run could include a partial abandonment of thresholds in favour of an auction process to achieve the lowest cost per QALY from new drug interventions.

Suggested Citation

  • James F. O’Mahony, 2021. "Revision of Ireland’s Cost-Effectiveness Threshold: New State-Industry Drug Pricing Deal Should Adequately Reflect Opportunity Costs," PharmacoEconomics - Open, Springer, vol. 5(3), pages 339-348, September.
    • Handle: RePEc:spr:pharmo:v:5:y:2021:i:3:d:10.1007_s41669-021-00289-0
    DOI: 10.1007/s41669-021-00289-0
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    References listed on IDEAS

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