Good Research Practices for Measuring Drug Costs in Cost-Effectiveness Analyses: Medicare, Medicaid and Other US Government Payers Perspectives: The ISPOR Drug Cost Task Force Report—Part IV


C. Daniel Mullins, University of Maryland, School of Pharmacy, 220 Arch Street, 12th Floor, Baltimore, MD 21201, USA. E-mail:


Objectives:  Public programs finance a large share of the US pharmaceutical expenditures. To date, there are not guidelines for estimating the cost of drugs financed by US public programs. The objective of this study was to provide standards for estimating the cost of drugs financed by US public programs for utilization in pharmacoeconomic evaluations.

Methods:  This report was prepared by the ISPOR Task Force on Good Research Practices—Use of Drug Costs for Cost-Effectiveness Analysis Medicare, Medicaid, and other US Government Payers Subgroup. The Subgroup was convened to assess the methodological and practical issues confronted by researchers when estimating the cost of drugs financed by US public programs, and to propose standards for more transparent, accurate and consistent costing methods.

Results:  The Subgroup proposed these recommendations: 1) researchers must consider regulation requirements that affect the drug cost paid by public programs; 2) drug cost must represent the actual acquisition cost, incorporating any rebates or discounts; 3) transparency with respect to cost inputs must be ensured; 4) inclusion of the public program's perspective is recommended; 5) high cost drugs require special attention, particularly when drugs represent a significant proportion of health-care expenditures for a specific disease; and 6) because of variations across public programs, sensitivity analyses for actual acquisition cost, real-world adherence, and generics availability are warranted. Specific recommendations also were proposed for the Medicare and Medicaid programs.

Conclusions:  As pharmacoeconomic evaluations for coverage decisions made by US public programs grows, the need for precise and consistent estimation of drug costs is warranted. Application of the proposed recommendations will allow researchers to include accurate and unbiased cost estimates in pharmacoeconomic evaluations.