An Economic Evaluation of the IQWiG's Efficient Frontier

The German Institute for Quality and Efficieny in Health Care (IQWiG) introduced a concept for the evaluation of the cost-effectiveness of different treatments. This technique deviates greatly from internationally accepted health-economic standards. The method focuses on a so called "efficient frontier" - a term well known from other economic applications (portfolio and production-theory). A detailed analysis of the different models shows, that the proposed method lacks a theoretical foundation. The two classic models not only show great technical differences to the concept of the IQWiG but also serve a different purpose - the identification of existing efficient alternatives. It is therefore suggested, that the method is not suitable to determine an upper bound for the price of innovative interventions. Additionally the concept will result in significant practical problems, offers potential for manipulation and is likely to hinder the introduction of innovations, due to the fact that the existing price-level in a market determines the pricing of entrees. It is therefore suggested to set the proposed method aside and rather give preference to established health-economic methods (e.g. implicit thresholds). On the other hand the efficient frontier of the IQWiG provides a useful tool to generate a graphical and intuitive overview of a market on the basis of existing evidence. This would facilitate the identification of available yet inefficient treatments, whose reimbursement could possibly be adjusted.