Manual of Resource Items and Their Associated Costs for use in submissions to the Pharmaceutical Benefits Advisory Committee involving economic evaluation
General principles and recommendations.
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>> Variation to unit costs
This Manual identifies the types of resources that are commonly or occasionally relevant to economic evaluations included in major submissions to the PBAC, together with the natural unit of measurement and the unit cost for each resource type. The list of resource types is not exhaustive, and if other resource charges are considered relevant, a case can be made in a submission for their inclusion.
As stated in the introduction, the original objective of the Manual was to strike a balance between comparability and accuracy in the determination of unit costs. To some extent, this reduces the accuracy of these unit costs, for example by adopting average rather than true marginal costs for hospital episode and residential care costs.
Achieving greater comparability of unit costs provides for a "reference case" across economic evaluations considered by the PBAC. This also means that decisions as to whether to list a drug on the PBS are influenced by the drug itself, rather than the selection of unit costs. Furthermore, all those preparing submissions to the PBAC can be confident that all other submissions are referring to the same set of costs, thus improving transparency. There are other advantages to this approach. The unit costs are:
This second revision maintains the objective of balancing comparability and accuracy, but is now also based on the experience of applying the Manual for more than a decade. History indicates that resources and their unit costs have had a varying impact on the conclusions of economic evaluations. Some types of resources (eg allied health services and over-the-counter drugs) have rarely, if ever, had a pivotal impact on these conclusions. For other types of resources (eg medical services and other PBS drugs), any costing issues usually arise from the number of resources changed, rather than the unit cost of each resource. Occasionally, the unit cost does become important (eg hospital costs to deliver cancer chemotherapy or claims of heterogeneity across hospital services within an AR-DRG). In addition, occasionally resource types that are not identified in this Manual (eg variations in hospital duration or hospital component costs) have been included in submissions and these are considered on a case-by-case basis.
It is expected that there will continue to be circumstances where either the Manual does not identify a particular resource, or an alternative to the recommended unit cost for an identified resource may be more accurate and that substituting a different, but justifiable unit cost could influence the conclusions of the PBAC.
The preferred approach for either circumstance is to prepare two base case presentations of the affected economic evaluation. The first would be presented according to the unit costs recommended in the Manual, in order to promote the comparability of PBAC decisions. The second would adopt the alternate costs. This would assist the PBAC assess the importance of the unit cost to its decision as to whether to recommend listing. The submission's justification for the alternative unit costs should be made as part of this second presentation. Two sets of sensitivity analyses should be presented, one for each base case.
It is conceivable that there might be a resource which is to be included in an economic evaluation, but is not included in this Manual, and for which the only unit cost available has not been recently updated. In addition, the unit costs recommended in Section 7.2 pertaining to the Australian Ambulatory Classification (AAC) were generated in 1992 and have not been updated. In both circumstances, the unit costs should be adjusted for inflation. The appropriate deflator to be used is the one that most specifically relates to the health care sector. The Australian Bureau of Statistics has recommended that the most appropriate deflator is the Implicit Price Deflator (IPD) for government final consumption expenditure on hospital and clinical services. For the period 30 June1992 to 30 June 2001, the impact of this IPD is to increase the unit cost by 1.189. For other periods, the advice of the PES of the Department of Health and Ageing should be sought (refer to the address).