Defining Benefit Through Willingness to Pay

Since 2007, new medications may be paid for by the statutory health insurance funds (GKV) in Germany only if they are cost-effective. Willingness-to-pay analyses can be essential background for decisions about the pricing and reimbursement of prescription medicines.

Since 2007, new medications may be paid for by the statutory health insurance funds (GKV) in Germany only if they are cost effective. Prof Peter Zweifel and Michèle Sennhauser of the University of Zurich have tested whether willingness to pay (WTP) can be used to define benefit. At a recent OHE lunchtime seminar, Prof Zweifel reviewed the results of their discrete choice experiment.

This research compared long-acting insulin (insulin detemir) to short-acting insulin across four attributes: risk of hypoglycaemia, weight gain, flexibility of injection time, and ease of preparation. Of the 1,100 individuals surveyed in face-to-face interviews, 600 were not diabetic, 200 had Type 1 diabetes, and 300 were Type 2 diabetics – half of whom were not treated with insulin. Two price attributes were included: copayment and increased contributions to health insurance.

Not surprisingly, the non-diabetics and those not treated with insulin showed a higher WTP when financing was through copayments; the other two groups, who would be immediately affected by access to the medicine, showed a higher WTP when financing was through increased contributions to health insurance. All survey participants, however, were willing to pay substantially more than the average cost of long-acting insulin. According to Prof Zweifel, this demonstrates that inclusion of long-acting insulin in the SKV list of benefits is justified.

The working paper describing this research is available online: http://www.soi.uzh.ch/research/wp/2009/wp0914.pdf