For a pharmaceutical company to get a new medicine or an indication expansion recommended as a possible standard treatment, the company has to apply for an assessment from the Medicines Council.
There is a method guide on the Medicines Council’s website wherein the requirements for the application are specified. Among other things, the application must contain documentation of the medicine’s clinical effect and health economic analyses.
The Medicines Council’s recommendation is based on an assessment of whether the medicine’s effect (measured in QALY) and safety are proportional to the costs of using the medicine.
The health economic analysis consists of a cost-utility analysis. This is a health economic analysis in which the health gains are expressed as QALY (quality-adjusted life years), which is a standardised measurement that combines quality of life and survival in one measurement. QALY can be used to compare health improvements across different diseases, types of treatment and focus areas. The result of a cost-utility analysis is expressed by an incremental cost-effectiveness ratio (ICER).
If the new medicine’s health effect is equal to the relevant comparator, the company can submit a cost minimisation analysis.