Nonmarginal budgetary impacts and economic evaluation: is mortgaging a solution?

Recent years have seen an increase in the number of health technologies whose budgetary impact, if accepted by the relevant decision-making authority, would be deemed to be “nonmarginal”. This means that decision-making regarding the acceptance or otherwise of such technologies would require adjustments to the relevant threshold employed in order to consistently fulfil the objectives – such as that of population health maximisation – set down in the remit of such decision-making authorities, since adoption of the new health technology would displace existing technologies not just at the margin of the healthcare service’s spending, but also health technologies that are more cost-effective than those displaced at the margin.

One solution proposed for this has been that of a mortgage-type arrangement which would seek to smooth such nonmarginal budget impacts over future time periods. It has been argued that this would potentially permit a payment option that would over time be preferable for both a decision-maker seeking to maximise health over the relevant time horizon and for the manufacturer of the health technology.

This paper seeks to examine the process by which such a potential mortgage-type arrangement would operate and how this interacts with the technical context in which decisions are made, how it interacts with the normative basis for decision-making, and the type of decision rule that should be adopted in these cases.