4.6 Identification, estimation and reduction of uncertainty

Page last updated: September 2016

Information Requests

  • Evaluate sources of uncertainty, and distinguish the type and degree of uncertainty in utilisation and financial estimates (Subsection 4.6.1)
  • Describe the direction and magnitude of the impact of uncertainty on the overall estimates (Subsection 4.6.2)
  • Estimate the level of the uncertainly and propose ways to reduce it (Subsection 4.6.3)
  • Use a separate spreadsheet to calculate the impact of uncertainty, and summarise the results in the relevant spreadsheet of the Excel workbook (Subsection 4.6.4)

4.6.1   Sources of uncertainty

Uncertainty arises when estimating utilisation and financial implications because of the potential for usage that differs from expectations, and usage that extends beyond the restriction.

Address both of these sources of uncertainty and clearly differentiate the two. Where there is substantial uncertainty in the utilisation and financial estimates, particularly when this uncertainty is a result of usage beyond the restriction (‘leakage’), minimise the impact of the uncertainty by proposing a risk-sharing arrangement.

Where uncertainty arises because of the risk of inappropriate usage, or usage beyond the restriction, propose measures in Subsection 4.7 that are designed to reduce this risk.

Factors affecting uncertainty

The following subsections list some factors to consider when assessing uncertainties in predicted utilisation patterns and financial implications resulting from listing of a proposed medicine as requested. The lists are not exhaustive; they reflect general factors that have been considered previously by the Drug Utilisation Sub-Committee and the PBAC. Factors may arise from epidemiological data, pharmacoepidemiological data, expert opinion and assumptions used in generating the quantified predictions. Present any of these factors to increase understanding of the uncertainties present in utilisation estimates. It might not be necessary to address any or all of these factors, because the uncertainties might be very small or of little importance to the overall cost to the PBS, so consider how relevant each of the factors might be.

Factors that could affect the extent of usage within the requested restriction
  • Promotion might result in greater identification of the proposed medicine, resulting in more prescribers considering patients for treatment.
  • Indirect media exposure might result in some consumers being more aware of the proposed medicine and seeking treatment with it. These patients might not be identified if a treated prevalence approach has been used.
  • Outcomes of related research might have a positive or negative effect on uptake of the proposed medicine. The effects could emerge at the time the submission is lodged or within six years of listing.
  • More prescribers and patients might seek treatment if the proposed medicine treats a medical condition for which the alternatives are considered to be substantially inferior to the proposed medicine (eg in terms of effectiveness, tolerability, patient acceptability, convenience).
  • Limited access to designated types of PBS prescribers or to designated diagnostic procedures in a requested restriction might limit uptake and usage.
  • The duration of therapy might be longer than expected from the randomised trials, particularly if trials are truncated.
  • Patients might be treated more or less often than expected, particularly in the case of medical conditions with episodic manifestations.
  • There might be a likelihood of doses varying over time from those expected from the randomised trials.
  • Epidemiological or market-share trends may have been inaccurately forecast.
Factors that could affect the likelihood of usage beyond the requested restriction

Some of the factors listed in the previous subsection might also affect the likelihood of usage beyond the requested restriction. Many of these factors relating to the requested restriction could be considered to be more applicable to risk-sharing arrangements. More detailed guidance is given in Subsection 1.4 about ways of designing a restriction to minimise usage beyond its intention, but consider the following factors:

  • The requested restriction is for a subset of the types of patients who are eligible according to the TGA-approved indication(s).
  • The requested restriction is for a subset of the types of patients who were eligible for the randomised trial(s) published for the proposed medicine, or there are randomised trials demonstrating evidence in other medical conditions.
  • The requested restriction is for a subset of the types of patients who have been subsidised by the sponsor before lodgment of the submission (eg on compassionate grounds or as part of clinical studies).
  • The requested restriction is for a subset of the types of patients for whom the sponsor plans to promote use of the proposed medicine before or after PBS listing.
  • The requested restriction is for a subset of the types of patients who have the underlying medical condition.
  • Prescribers could find it difficult to determine eligibility for the proposed medicine (eg a difficult differential diagnosis, ambiguity in the wording of the restriction, poor precision or accuracy in a diagnostic test), which might result in the misclassification of patients as eligible.
  • Patient advocacy groups may have an influence on determination of eligibility by prescribers.

4.6.2   Impact of uncertainty

Address the following factors in any uncertainty consideration:

  • The direction of impact on the estimate (underestimate or overestimate).
  • The impact on the magnitude of the estimate (small or large).

Although quantitative estimates of uncertainty are preferred, provide approximate assessments, if required. Note where the effects of some uncertainties are difficult to quantify. As a general principle, the more sensitive the overall financial implications are to a particular source of uncertainty, the more important it is to minimise that uncertainty.

4.6.3   Reducing uncertainty

Uncertainty can be reduced by using data from multiple sources, if available, which is sometimes referred to as ‘triangulation’ (the use of multiple sources of data or multiple approaches to determine the consistency or otherwise of the conclusions from those sources or approaches). Where estimates derived from different sources are concordant, there might be more confidence, and less uncertainty, in the resulting estimates. Where estimates are discordant, the disparity between the estimates might contribute to the estimate of uncertainty. A similar approach can be taken when more than one methodological approach has been applied (eg estimates based on a market-share base as well as an epidemiological base; or treated prevalence, where the prevalence of patients treated for a disease or condition, determined from a pharmacoepidemiological database, is used as a surrogate for the true prevalence).

Risk-sharing arrangements

Uncertainties, such as about cost-effectiveness, expected usage and overall financial impact, may affect the PBAC’s decision. In some instances, the sponsor may propose a risk-sharing arrangement (RSA) to enable access to a proposed medicine, while addressing uncertainties. An RSA is a restriction specifying continuation rules or stopping rules for obtaining subsidised medicine, or a Managed Access Program, or a combination of these two approaches.

RSAs are generally financial- or performance-based financial arrangements. Performance-based RSAs have been described as arrangements that ‘involve a plan by which the performance of the medicinal product is tracked in a defined patient population over a specified period of time and the level or continuation of reimbursement is based on the health and economic outcomes achieved’.49

RSAs are also established through deeds of agreement between the Australian Government and the sponsor of the medicine. This deed must be in place before the PBS listing date. In the case of a cost-minimisation submission, where the comparator of the medicine has an RSA in place, the sponsor of the new medicine will usually share the same conditions as the existing RSA.

RSAs can address, for example, the following types of uncertainties:

  • number of eligible patients
  • potential use in non-cost-effective populations
  • potential for dose escalation beyond that expected in the submission
  • potential for use beyond disease or condition progression, for a longer duration than is cost-effective or in nonresponding patients
  • risk of use in combination with, or in addition to, current therapy rather than replacing existing therapies.

Describe the RSA proposed and explain which uncertainties will be addressed through the proposed arrangement. Consult with the officers in the Pharmaceutical Evaluation Branch, Department of Health, while preparing the submission. Refer to Procedures for listing medicines on the PBS.

Present the consequences of the RSA on the financial estimates using relevant scenarios under which the RSA would be applied. Ensure that the effect of the RSA is also captured in Section 3.

4.6.4   Summary of calculations

Summarise the results of any calculations (eg sensitivity or scenario analyses), to quantitatively examine the impact of uncertainty, in the relevant spreadsheet of the standardised Excel workbook. Do not include the supporting calculations in that spreadsheet. If additional calculations need to be explained, provide a separate workbook for any analysis other than the base-case (most likely) analysis. The first spreadsheet of the separate workbook should highlight the differences from the base-case workbook.