Good research practices for measuring drug costs in cost-effectiveness analyses: A managed care perspective: The ISPOR drug cost task force report - Part III

Edward C. Mansley, Norman V. Carroll, Kristina S. Chen, Nilay D. Shah, Catherine Tak Piech, Joel W. Hay, James Smeeding

Research output: Contribution to journalArticle

17 Scopus citations


Objectives: The objective of this report is to provide guidance and recommendations on how drug costs should be measured for cost-effectiveness analyses conducted from the perspective of a managed care organization (MCO). Methods: The International Society for Pharmacoeconomics and Outcomes Research (ISPOR) Task Force on Good Research Practices - Use of Drug Costs for Cost Effectiveness Analysis (DCTF) was appointed by the ISPOR Board of Directors. Members were experienced developers or users of CEA models. The DCTF met to develop core assumptions and an outline before preparing a draft report. They solicited comments on drafts from external reviewers and from the ISPOR membership at ISPOR meetings and via the ISPOR Web site. Results: The cost of a drug to an MCO equals the amount it pays to the dispenser for the drug's ingredient cost and dispensing fee minus the patient copay and any rebates paid by the drug's manufacturer. The amount that an MCO reimburses for each of these components can differ substantially across a number of factors that include type of drug (single vs. multisource), dispensing site (retail vs. mail order), and site of administration (self-administered vs. physician's office). Accurately estimating the value of cost components is difficult because they are determined by proprietary and confidential contracts. Conclusion: Estimates of drug cost from the MCO perspective should include amounts paid for medication ingredients and dispensing fees, and net out copays, rebates, and other drug price reductions. Because of the evolving nature of drug pricing, ISPOR should publish a Web site where current DCTF costing recommendations are updated as new information becomes available.

Original languageEnglish (US)
Pages (from-to)14-17
Number of pages4
JournalValue in Health
Issue number1
StatePublished - Jan 1 2010



  • Cost-effectiveness analysis
  • Costs
  • Drug costs
  • Economic analysis
  • Managed care

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

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