Value appropriation in hepatitis C

Lindgren P, Löfvendahl S, Brådvik G, Weiland O, Jönsson B

In 2015 the Swedish government decided to allocate 1.5 billion Swedish kronor to the regions in order to provide funding for the treatment of hepatitis C. This was triggered by the substantial medical developments in the field in recent years, with new therapies showing cure rates in excess of 90 % with very few side effects.

Traditionally, the cost-effectiveness of new drugs are assessed then they are launched. This gives a snap-shot of the current situation but in order to understand the full effects to society it is necessary to study the innovation from a life-cycle perspective. This highlights questions about profitability for the producer and how the benefits are distributed.

To capture the value of a new innovation not only the procurement cost but also cost changes inside and outside of the health care sector needs to be included. In addition, the value of the obtained health benefits needs to be estimated. Based on data from the InfCare Hepatitis registry, we used a modelling approach to estimate producer- and consumer surplus.

Our analysis show that a large social surplus was generated, 15% of which was appropriated by the producers whose share fell rapidly over time as prices fell. Most of the consumer surplus was generated by QALY gains, although 10% was from reduced indirect costs. The government intervention helped realize a substantial value, and this may serve as a model for the funding of future novel interventions with large prevalent pools of patients being candidates for treatment.

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The European Journal of Health Economics, 2021
Published online: 2 December 2021
DOI 10.1007/s10198-021-01409-7