Comparator choice shapes health technology assessment: it sets the benchmark a new medicine is assessed against, driving both patient access and where firms invest in R&D. We consider five theoretical comparator examples and, for each, assess the implications of comparator selection on access, launch decisions and innovation incentives for new medicines.
Why the comparator matters
Comparator choice is at the heart of Cost-Utility Analysis (CUA) and health technology assessment (HTA) as it directly affects which interventions are funded in healthcare systems and, upstream, firms’ research and development (R&D) investment decisions. Yet it attracts far less scrutiny than cost-effectiveness thresholds, discount rates or evidence standards, despite shaping access and innovation incentives just as powerfully. Current approaches to comparator selection in HTA can create unintended consequences: they can influence which medicines get developed, and risk disincentivising investment in areas of significant unmet need. The result can be both static inefficiencies, in how resources are allocated today, dynamic inefficiency, in where innovation is directed tomorrow, and inequity between therapy areas.
Framing the problem
In many HTA systems driven by CUA, the cost-effectiveness of a new technology is assessed by comparing the incremental cost-effectiveness ratio (ICER) of the new treatment versus a comparator, most often the existing standard of care (SOC) for a given indication, against an (explicit or implicit) cost-effectiveness threshold. This approach is well founded in principles of efficient resource allocation, but it places considerable weight on the comparator: the comparator’s own cost and effectiveness define the origin from which incremental value is measured, and therefore the benchmark the new treatment must beat. Comparators vary substantially across therapy areas in terms of their patent and exclusivity status (and therefore price) as well as their effectiveness, creating very different bars for new treatments to demonstrate value across indications.
Comparator characteristics determine the commercial headroom available to innovators. Where the comparator is low-cost, for example a cheap generic, the potential for cost offset of the new treatment is reduced, so the maximum price at which it can be cost-effective is low. This limited price headroom weakens the incentive for future innovation in the class, even where unmet need remains high. The reverse also holds: where the comparator is poorly effective, the incremental QALYs a new treatment can deliver are larger, increasing the headroom available. In principle, this should reward innovation precisely where current treatment is weakest. In practice, however, this theoretical headroom may fail to translate into investment in areas such as rare diseases, where the science is difficult, development risks are high, and innovation may not have occurred for decades.
The five comparator typologies
We explore five comparator typologies, noting if they are pre- or post- loss of exclusivity (LOE), the point at which a medicine loses all forms of protection against competition, including patents and regulatory exclusivities, allowing generic or biosimilar entry; and noting their HTA status (whether or not they have been appraised by the HTA agency) when relevant. We describe each in turn below:
- Generic Ccmparator
If the SOC reaches LOE, generic manufacturers can enter the market, and the SOC effectively becomes a low-cost generic. Its price will therefore fall sharply, increasing the incremental cost of the new treatment in a CUA and making it more difficult to demonstrate cost-effectiveness; in effect, decreasing the price headroom for new products. - Biosimilar comparator
Similarly, in an indication where the SOC is a biosimilar, the comparator price sits below that of the originator biologic, although it does not fall as far as a generic price would. This is because biosimilar prices erode less steeply than generic prices, reflecting the higher costs of biosimilar development and manufacturing (e.g. immunogenicity, delivery, quality). The underlying logic is the same as for a generic comparator, but the resulting benchmark is less demanding: a higher comparator price leaves more price headroom for the new treatment, making it somewhat easier to demonstrate cost-effectiveness.
Moreover, there are often multiple biosimilar competitors, each with slight variations in pricing dynamics. Where HTA has no clear guidance on comparator selection in these instances, there is an incentive to select the cheapest biosimilar comparator even if it does not hold the largest market share, exacerbating the effects of an already squeezed headroom. - Best Supportive Care (BSC) comparator
Where no active treatment exists for an indication, the comparator can be best supportive care (BSC), such as symptom management. BSC is often relatively low cost, so on the cost side its effects can resemble those in typology a), raising the incremental cost of the new treatment and pushing towards a low-price ceiling. BSC is also often relatively poorly effective, which increases the benefit headroom available for new treatments. - Off-Label SOC comparator
In some therapy areas with no active licensed treatment available, clinical practice may rely on ‘off-label’ medicines, those used for an indication other than the one they are licensed for. Some HTA agencies, such as NICE, may accept an ‘off-label’ medicine, in which case, the comparator’s cost can vary considerably depending on its exclusivity status, producing effects on access and incentives similar to those in typologies a) and b). Conversely, when agencies do not accept off-label treatments as comparators, the choice of an appropriate comparator becomes less clear cut, adding uncertainty to the benchmark to be met and reducing the incentive to innovate in the area. In some cases, HTA agencies may select BSC, creating further distortion to the HTA recommendations, as described in typology 3. - Cost-ineffective comparator
In some cases, the SOC is itself not cost-effective, having entered clinical practice without formal HTA or through routes that did not require it. This is uncommon, but it can occur in areas of limited innovation and high unmet need, such as ultra-rare conditions. HTA method guidelines generally do not specify how a comparator should be selected in these situations, leaving the choice open to discretion. This introduces uncertainty into comparator selection and, in turn, into the benchmark a new treatment must meet, weakening the incentive to innovate in precisely the areas where unmet need is greatest.
Visualising the Comparator Effect
The two schematics below visualise how comparator exclusivity status and comparator selection dictate the origin of the cost-effectiveness (CE) plane, determining price headroom and reimbursement decisions.
Figure 1 – Comparator pricing: pre-LOE vs post-LOE comparator
When a comparator passes LOE, its price reduces dramatically or to some extent, as described in typologies a) and b). Comparing a new treatment to a post-LOE treatment instead of a pre-LOE one increases the incremental cost of the new treatment, while the benchmark for health gains remains unchanged. This is reflected by a downwards shift in the origin on the cost effectiveness (CE) plane, reducing the price headroom of new treatments and decreasing the maximum price at which the new treatment is considered cost-effective (see figure 1). This makes it harder for new treatments to be reimbursed via HTA: the green shaded area in Figure 1 captures treatments with ICERs that would have been deemed cost-effective against the pre-LOE comparator but not after post-LOE price reductions.
Figure 2 – Challenging comparator selection: cost-ineffective and BSC comparator
In some instances, there is uncertainty around the choice of comparator, as described in typologies 3, 4 and 5. Here we consider an HTA agency faced with the dilemma of two plausible comparators:
- Typology 4, where the current SOC is cost-ineffective if compared to BSC, lying in the North-East (more costly and more effective) quadrant of the CE plane , and funded within the healthcare system under exceptional circumstances.
- Typology 3, where the comparator is BSC.
Comparing a new treatment to the cost-ineffective comparator as opposed to BSC, increases the price headroom available to the manufacturer. For any new treatment the maximum cost-effective price at a given threshold ICER is higher (see figure 2), increasing the payer price for new drugs, and increasing innovation incentives. Although this option better reflects the current clinical practice, it leads to static inefficiency.
Implications
Price Headroom
The price headroom scenarios described in Section 4 have implications in terms of both static (short-run) and dynamic (long-run) efficiencies.
Having a low-cost comparator increases the price headroom for new treatments. In the short run, this decreases the acceptable price for HTA or payers, increasing the affordability of new treatments. This may improve access. However, the low payer price may cause delays in access due to manufacturer price negotiations and launch strategies. Policies such as external reference pricing (most notably most-favoured-nation (MFN) policy) and low commercial attractiveness of certain markets may also compromise short-term access.
In the long run, the smaller price headroom may disincentivise investment in new development in the affected therapy area and reduce future access to innovative medicines. Post-patent price reduction (as seen in typologies a) and b)) leads to competitive, efficient markets with affordable access to existing effective treatments (static efficiency), but at the expense of reduced commercial incentives that limit investment in future innovation when these post-patent medicines are used as comparators. The result is therapy areas where innovation has stalled for years, despite persistently high unmet medical need .
Underlying this is the differing speed at which the standard of care changes across therapy areas, reflecting the pace of therapeutic innovation in each. Where that pace is rapid, the SOC is displaced before or soon after LOE and the benchmark is repeatedly refreshed at a pre-LOE price; where innovation has been static for decades, the SOC is more likely to be a low-cost generic or biosimilar, and the price headroom for the next entrant is correspondingly compressed. The inequity between therapy areas is therefore self-reinforcing: the classes least likely to see their benchmark refreshed are those in which innovation is hardest to justify commercially.
Some cases, such as typology e), will have the opposite effect, if the cost-ineffective (high price) comparator is selected. In the short run, this leads to higher acceptable prices for new treatments. However, this scenario brings inefficiencies from the healthcare and payer perspective, which have led to the development of multiple solutions and a debate in the health economics literature; see Sacristán et al., (2020) and Walton et al., (2025). In addition, access may be restricted, due to limited payer affordability and application of measures to control financial impact such as budget impact thresholds or expenditure caps. In the long-run, greater innovation incentives due to higher reimbursement prices can drive investment into the area, increasing R&D and innovation in the class, and contributing to future availability of new medicines (dynamic efficiency). While this represents a positive outcome for future investment in the area, the short-term access versus long-term innovation incentives trade-off needs to be explicitly balanced by policy makers.
Health Gain Headroom
The comparator and its choice can also determine the health gains headroom, ultimately affecting both pricing and access decisions, and innovation incentives. Low-effective comparators (typology 5, where cost-ineffectiveness is driven by low effectiveness, or BSC, typology 3) increase the health-gain headroom for innovations. This enables higher prices, incentivising innovation to the area, although still in face of budget constraints and limited payer affordability. However, if the low-effective comparator (BSC) is also cheap, the reduced-price headroom leads to the opposite effect. The final effect of the BSC comparator is therefore ambiguous; ultimately the outcome is determined by the relative cost-effectiveness of the chosen comparator.
This creates different incentives across indications. Companies may be incentivised to innovate in the few areas where large gains are possible, whilst those that incur greater scientific challenge and risk (such as rare diseases), where innovation often progresses in smaller iterative steps are deprioritised. Paradoxically this punishes indications in which, arguably, innovation is most needed.
Ripple Effects of Comparator Selection
When there is no clear set of guidelines to determine the comparator, payers and HTA bodies may be incentivised to select the lowest-price option to increase affordability and budget efficiency. This heightens the implications of the low-price headroom for these indications. When the comparator itself is uncertain, the manufacturer is unable to determine the value of the potential new treatment and creates difficulty in generating HTA evidence for an appraisal. This uncertainty can delay or prevent access to innovation in the short run and undermine investment in future innovation.
The effects of comparator choice are not confined to individual funding decisions and can have global pricing implications. Companies read comparator signals across a range of nations when determining where to invest and which indications to pursue. Comparator decisions therefore dictate which markets they decide to launch in. These dynamics are heightened by policies such as MFN pricing, which require prices to be benchmarked against the lowest price among a set of eligible comparator countries. If comparator choice leads to low, inefficient price of innovation in a key market for MFN price setting, then availability, launch, price negotiation and access issues can be exacerbated on a global scale.
The case for policy action
Comparator selection and comparator characteristics have important implications for access to new treatments and for long-term investment in innovation. We have shown that there are two key issues related to the comparator problem in HTA. The first is the limited guidance on comparator selection in complex circumstances, most notably where the SOC is not itself cost-effective. The second is the limited debate on the implications that a low-cost comparator can have for long-run incentives to innovate and for launch strategies.
We therefore call for more research in this area, along three lines.
- First, a worked example using an existing product, to estimate the impact of different comparator typologies on price headroom and reimbursement outcomes.
- Second, the development of pragmatic methodological and process-related solutions that HTA agencies could implement. Some have already been proposed in the literature, including the use of a common reference comparator and the re-assessment of all available options where the comparator is cost-ineffective.
- Third, structured engagement with stakeholders and HTA users on the solutions proposed to date, as none of which has yet been formally assessed or tested, alongside wider debate to develop new ones.
Opening and driving the debate on how comparators are selected in HTA and on what that choice implies for innovation, and testing the resulting methods with stakeholders, is a necessary step towards HTA decisions that reward innovation where it is most needed.