Objectives: Major guidelines regarding the application of cost-effectiveness analysis (CEA) have recommended the common and widespread use of the "societal perspective" for purposes of consistency and comparability. The objective of this Task Force subgroup report (one of six reports from the International Society for Pharmacoeconomics and Outcomes Research [ISPOR] Task Force on Good Research Practices-Use of Drug Costs for Cost Effectiveness Analysis [Drug Cost Task Force (DCTF)]) was to review the definition of this perspective, assess its specific application in measuring drug costs, identify any limitations in theory or practice, and make recommendations regarding potential improvements.
Methods: Key articles, books, and reports in the methodological literature were reviewed, summarized, and integrated into a draft review and report. This draft report was posted for review and comment by ISPOR membership. Numerous comments and suggestions were received, and the report was revised in response to them.
Results: The societal perspective can be defined by three conditions: 1) the inclusion of time costs, 2) the use of opportunity costs, and 3) the use of community preferences. In practice, very few, if any, published CEAs have met all of these conditions, though many claim to have taken a societal perspective. Branded drug costs have typically used actual acquisition cost rather than the much lower social opportunity costs that would reflect only short-run manufacturing and distribution costs. This practice is understandable, pragmatic, and useful to current decision-makers. Nevertheless, this use of CEA focuses on static rather than dynamic efficacy and overlooks the related incentives for innovation.
Conclusions: Our key recommendation is that current CEA practice acknowledge and embrace this limitation by adopting a new standard for the reference case as one of a "limited societal" or "health systems" perspective, using acquisition drug prices while including indirect costs and community preferences. The field of pharmacoeconomics also needs to acknowledge the limitations of this perspective when it comes to important questions of research and development costs, and incentives for innovation.