The German method for setting ceiling prices for drugs: in some cases less data are required

The Institute for Quality and Efficiency in Health Care in Germany makes recommendations for ceiling prices of drugs based on an evaluation of the relationship between costs and effects in each therapeutic area. The analysis requires, when applicable, calculation of savings from avoided clinical events and increased future health expenditures from prolonging life (i.e., downstream costs). This article suggests that because of the specific requirements of the Institute for Quality and Efficiency in Health Care, in some cases calculation of downstream costs is not necessary when clinical outcomes are used as a measure of effectiveness. In this article, we identify these conditions. If they hold, it will reduce data requirements, the costs and time required to conduct evaluations, and the uncertainty in the analysis.