4.2 Estimation of use and financial impact of the proposed medicine

Page last updated: September 2016

Information Requests

  • For an epidemiological approach, use the relevant spreadsheets of the Excel workbook to estimate the number of (Subsection 4.2.1):
    • patients with the medical condition targeted by the proposed medicine
    • patients who would be eligible for the requested restriction
    • patients likely to take the proposed medicine
    • units dispensed each year over six years
  • For a market-share approach, use the relevant spreadsheet of the Excel workbook to (Subsection 4.2.2):
    • describe the market and estimate the number of units dispensed (and the number of patients this represents) for currently listed medicines
    • estimate the rate of substitution of the proposed medicine and the number of units dispensed each year over six years
    • indicate whether the market or the market growth rate will increase because of listing
  • Provide estimates disaggregated according to the PBS and the RPBS, and for beneficiary type (Subsection 4.2.3)
  • Estimate the financial impact over six full calendar years for each form and strength of the proposed medicine (Subsection 4.2.4)
  • Present special pricing arrangements. Describe any ‘caps’ on duration of treatment and/or dosage, and any financial impacts with and without this limitation (Subsection 4.2.4)

Justify any estimates of the incidence, prevalence or market growth over six years. Multiple factors may influence growth, and it may not be appropriate to assume linear growth in the estimates, particularly if the proposed medicine is not the first entrant to the market for the specific indication. It is important to base projections on the number of patients, not dispensed packs, wherever possible.

4.2.1   Epidemiological approach

Incidence or prevalence data

For an epidemiological approach, present the methods and assumptions for converting incidence or prevalence data to the number of patients likely to be taking the proposed medicine each year.

The choice to use incidence or prevalence data depends on several factors, including the nature of the medical condition, its treatment and the available data. In general, treatments of short duration are best suited to incidence estimates, and long-term treatments (eg for chronic diseases or conditions) may be better suited to prevalence estimates. A combination of prevalence and incidence estimates may be required (eg intermittent treatments for a chronic condition).

Consider the current prevalent patient population in addition to the incident population – for example, a cancer therapy where there are patients receiving best supportive care before the proposed medicine becomes available. Only calculating the incident population would underestimate the likely number of patients treated in the early years of listing.

Detail the impact of any grandfathered use of the proposed medicine when estimating patient numbers.

Estimate the number of patients with the medical condition

Estimate the likely number of patients in the current year and in the six years following listing, using the incidence or prevalence approach, accounting for changes in disease or condition incidence or prevalence trends. If appropriate, present shorter periods (eg monthly or quarterly) in supporting spreadsheets and summarise annually for six years from listing. If using an incidence approach, also estimate the prevalent population (from years before listing) that may add to the treated patient pool in year 1. Justify when the addition of a prevalent population is not required.

If the medical condition has a subjective element in its diagnosis, consider the impact of misdiagnosis for the purposes of rendering patients eligible for treatment with the proposed medicine. Where this is regarded as unlikely because of activities proposed by the sponsor to support QUM, describe these activities in Subsection 4.7.

Estimate the number of patients eligible for the requested restriction

Using the annual numbers of patients with the medical condition for six years, estimate the proportions of patients who would be expected to be eligible for therapy according to each of the proposed restrictions for PBS listing.

Where the proposed restriction contains subjective elements, consider whether patients might be misclassified to be eligible for the proposed medicine. Again, ensure that any proposed QUM activities are described in Subsection 4.7.

Estimate the number of patients likely to take the medicine for the proposed indication

Using the annual numbers of eligible patients, estimate the proportions likely to take the proposed medicine in each of the six years. Ensure that the estimates reflect the rate of uptake of the proposed medicine and include the impact of the use of other medicines. Justify the estimate of uptake and assess variations to this estimate in a sensitivity analysis.

Estimate the units dispensed

The estimate of the units dispensed for each of six years should account for:

  • the rate of uptake of the proposed medicine across the six years from listing (described previously)
  • the dose, frequency and duration of therapy involving the proposed medicine
  • different forms and strengths of the proposed medicine.

Present each of the steps for estimating the units dispensed separately.

Ensure that the estimates reflect the quantities of medicine dispensed, rather than the quantities of medicine consumed, which may be affected by compliance, dose reductions, discontinuations and wastage.

The proposed listing may specify different forms, strengths and maximum quantities of the proposed medicine. When listed, such medicines will have separate PBS item numbers to distinguish them. Therefore, disaggregate the estimated utilisation for each of the forms, strengths and maximum quantities.

4.2.2   Market-share approach

Describe the market

To generate estimates of expected utilisation and costs, ensure that the market-share approach relies on medicine utilisation data or studies for currently available medicines that are likely to be substituted by the proposed medicine. This is the basis for predicting whether the market will change because of listing the proposed medicine.

Units dispensed for currently listed medicines

Estimate the units dispensed in the most recent 12 months of the relevant PBS market. This estimate should be based on data from Services Australia for the currently listed medicines.

Where possible, present the units dispensed and the number of patients this represents according to the evidence provided in Section 2. This will be particularly important where a market-share approach is being compared or used in conjunction with an epidemiological approach. It may also be required where the submission is providing information on PBS-listed medicines that increase or decrease in usage, because this is often calculated from patient-level data rather than units dispensed. Consider the impact of wastage, discontinuations and noncompliance when back-calculating the number of patients from units dispensed, or justify when these factors are unlikely to be important. However, if the duration of therapy or the units dispensed per patient per course of treatment is uncertain, do not back-calculate to patients, as it can introduce significant errors into the patient numbers.

Estimate the rate of growth in this market over six years following listing. Base this on historical trends in the market or other influences, but ensure that it is unrelated to the listing of the proposed medicine. Justify the estimate of market growth in the absence of the listing of the proposed medicine.

Where more than one PBS item is likely to be substituted, present the market share and rate of growth for each item, if required. Disaggregating the estimated growth according to each PBS item is important if they are likely to have different rates of growth, are likely to be substituted differentially by the proposed medicine or have a different cost to the PBS. Where all substituted PBS-listed medicines come from a single group of medicines listed on a cost-minimisation basis and the cost differential of each against the proposed medicine is similar, disaggregation according to different PBS items is less important.

Estimate the market share

Estimate the rate of substitution in the market by the proposed medicine for each year over six years. Provide evidence, such as market uptake rates from other markets and the applicability of these markets to the Australian setting, to justify the estimate of market share. Clearly communicate and justify the likely extent of market uptake following listing of the proposed medicine. Ensure that substitution is consistent with the equi-effective dose calculated in Section 3B.2, when presented.

Present the estimate of the rate of substitution for each of the following, if required:

  • different PBS-listed medicines that will be substituted where the rate of growth is different, the rate of substitution is different or the cost is different
  • different forms, doses and durations of treatment where multiple PBS item numbers are available for each PBS-listed medicine.

Present a table in the submission for overall estimates, if appropriate. Also present a table in the Excel workbook, stratified by individual PBS items, and clearly show the steps for aggregating the data. Ensure that the proportions of each PBS item and PBS-listed medicine likely to be substituted by the proposed medicine are clear on the spreadsheet.

Estimate the growth of the market after listing

Estimate the units dispensed for the proposed medicine for each year that is above the growth projected in the market using historical data. Report both the expected increase in patient numbers, and the expected units for each form, strength and duration for the proposed medicine.

Justify when no additional growth in the market is predicted. When the proposed medicine may be used in clinical practice to treat people who are intolerant to an existing listed medicine, or following failure with that medicine, it is likely that entry of the proposed medicine into the market will increase the overall number of people treated.

Provide references to data of similar circumstances in similar markets, and discuss risks associated with market growth, to increase the certainty of the financial implications of listing the proposed medicine.

4.2.3   Estimates by beneficiary type

For both the epidemiological and market-share approaches, present estimates for the proposed medicine stratified by the PBS and the RPBS, and by beneficiary type, as follows:

  • PBS General
  • PBS General Safety Net
  • PBS Concessional
  • PBS Concessional Safety Net
  • RPBS
  • RPBS Safety Net.

Apply the proportions (available from the Services Australia website) in each beneficiary type for the closest therapy that is currently listed (the main comparator, if it is PBS listed), if appropriate. Present different weights if they are likely to apply.

These estimates may assist in determining the copayment to be removed from the dispensed price for maximum quantity (DPMQ) or the dispensed price for maximum amount (DPMA).

4.2.4   Financial impact over six years

Financial impact disaggregated according to beneficiary type

In most circumstances, apply two sets of unit costs to the estimates stratified by beneficiary type for each of the forms and strengths of the proposed medicine:

  • the DPMQ or the DPMA
  • the DPMQ or the DPMA with appropriate patient copayments removed. A weighted copayment can be used, but it should distinguish between PBS and RPBS patients. For medicines listed under section 100 Efficient Funding of Chemotherapy, only one copayment is payable per course of treatment. (Copayments are stated in the Schedule of Pharmaceutical Benefits and are available on the PBS website).

Where these prices do not apply (eg for products to be funded under the National Immunisation Program [NIP]), apply the price to the Australian Government.

For these calculations, use constant prices, make no allowance for inflation and use a zero discount rate. See the Manual of resource items and their associated costs for further guidance.

Overall costs

Present the total estimated financial impact for each of the forms and strengths of the proposed medicine to the PBS and the RPBS, for both the DPMQ or the DPMA, and the DPMQ or the DPMA with appropriate patient copayments subtracted.

Calculate the above sets of estimates of units dispensed and costs in the relevant spreadsheet of the standardised Excel workbook.