IHE Report / IHE Rapport,
IHE - The Swedish Institute for Health Economics

Abstract: How accurate are hospital drug administration costs used in health economic (HE) evaluations? In Sweden, HE evaluations often rely on tariffs from publicly available price lists, such as the Southern Healthcare Region’s Price List (SSPL), to estimate the cost of drug administration. However, the SSPL serves as a tool to manage interregional payments and reimbursement rates — not to capture the actual resource use or true economic cost of healthcare services. This raises critical questions about the reliability of its tariffs for direct use in HE evaluations and reimbursement decisions. To clarify this issue, this report investigates in detail the underlying assumptions and calculation methods of the SSPL tariffs, examines how well these tariffs reflect real-world resource use based on clinical input, and explores alternative approaches to more accurately estimate these costs.

The findings suggest that standardized tariffs from regional price lists may significantly distort cost estimates, potentially leading to misguided healthcare decisions and inefficient use of resources. The SSPL tariffs lack transparency and granularity needed for accurate HE evaluations. For drug administration, they bundle unrelated costs (such as drugs themselves, accounting for up to 76% of the total cost), and rely on broad averages that fail to capture variations in clinical resource use related to administration complexity (simple versus complex administrations) and treatment occasions (first versus subsequent administrations). A hypothetical example of intravenous drug administration at the hematology department demonstrated striking discrepancies: the SSPL tariff-based estimate could be more than 20 times higher than the economic value of the clinical resource use.

The use of tariff-based cost estimates in health economic evaluations risks undermining their intended role: to inform efficient and equitable resource allocation based on robust cost-effectiveness estimates. As an alternative, this report demonstrates the practical application of a marginal cost approach, grounded in economic theory and informed by clinical practice. In the case of drug administration, the marginal cost reflects the additional resources required to treat one additional patient. By applying micro-costing methods based on detailed input from healthcare personnel, this approach isolates variable costs — that is, those that vary directly with each administration — offering a higher degree of granularity and clinical accuracy, particularly in comparative evaluations of treatment alternatives.

This report highlights the importance of refining cost estimation methods to reflect both economic theory and clinical practice. As our understanding of healthcare delivery and resource use evolves, so must the methods we use to evaluate costs and guide decisions. Data used in health economic evaluations should be not only methodologically sound, but also relevant in real-world settings. More accurate, granular, and transparent inputs are essential to strengthen the validity of these evaluations and to support fairer, more informed decisions about healthcare resource allocation.

Keywords: drug administration; hospital costs; intravenous; subcutaneous; tariffs; health economics; economic evaluation; resource allocation; micro-costing; economic theory; marginal cost; cost-effectiveness; reimbursement; HTA; Sweden; Sverige; läkamedelskostnader; läkemedelsadministrering; ekonomisk utvärdering; Method; Metod; Health economic evaluation; Policy

Language: English

41 pages, 2025

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