An Analysis of the Decision-making Process of the TLV and the Willingness to Pay for Healthcare in Sweden

Abstract

The Dental and Pharmaceutical Benefits Agency (TLV) is the Swedish government agency who decides if a new medicine should be included in the benefit scheme or not. This study investigates which implicit factors influence the agency’s reimbursement decisions and how the TLV values different properties of a medicine. The dataset used for this study consists of 116 observations and was extracted by analyzing all decision documents published on the TLV’s website between the years 2008-2015. We model the TLV’s reimbursement decisions as binary choices and investigate eight potentially important factors influencing the decisions. Six factors are identified as being of importance in the decision-making process: cost-effectiveness, the severity of the disease, the existence of an alternative treatment, the size of the applying firm and if the medicine is a preventive treatment or an orphan drug. We also estimate the TLV’s valuation of four different characteristics often associated with a medicine. The results indicate that the TLV has the highest WTP for medicines categorized as palliative treatments, followed by medicines intended to treat severe diseases, orphan drugs and preventive treatments.