Value in Health: It’s time to reconsider the three percent discount rate.

When weighing future benefits against today’s costs, economists rely on the discount rate.

In this paper, Dr. Joshua Cohen, deputy director for the Tufts Center for Evaluation of Value and Risk in Health, argues that prevailing academic assumptions underweight the future and improperly measure the benefits of new treatments.

Abstract

“Health technology assessment (HTA) guidance often recommends a 3 percent real annual discount rate, the appropriateness of which has received limited attention. This paper seeks to identify an appropriate rate for high-income countries because it can influence projected cost-effectiveness and hence resource allocation recommendations.”

Conclusions

“Declining consumption growth and real interest rates imply HTA guidance should reduce recommended discount rates to 1.5 – 2+ percent. This change will improve projected cost-effectiveness for therapies with long-term benefits and increase the impact of accounting for long-term drug price dynamics, including reduced prices attending loss of market exclusivity.”

Value in Health: It’s time to reconsider the three percent discount rate.