Many reimbursement decisions still overlook indirect healthcare costs. These expenses arise from lost productivity and unpaid care, yet they frequently outweigh direct medical spending in long-term conditions. Decision makers who focus only on payer budgets risk undervaluing interventions that help people stay at work and reduce family burden.

The Growing Weight of Lost Productivity

Chronic illnesses now affect labour supply across entire economies. Conditions such as diabetes, dementia and mental disorders reduce output through sickness absence, reduced performance at work and early exit from employment. Global models project that productivity losses linked to diabetes will reach several trillion dollars by 2050 when both mortality and morbidity are counted. Informal care adds another layer. Family members provide the majority of support for people living with dementia, and recent estimates place the annual value of this care above 500 billion dollars in the United States alone.

Methods That Shape the Numbers

Two main approaches dominate productivity measurement. The human capital method multiplies lost work time by average wages, which produces large but sometimes overstated figures. The friction cost method assumes firms replace absent staff after a short adjustment period, yielding smaller estimates that reflect labour-market realities more closely. Informal care receives similar scrutiny. Replacement cost values caregiver time at professional rates, while preference-based techniques ask how much people would pay to avoid such duties. Each choice changes the final total and affects whether an intervention appears cost-effective.

Real-World Data Offer Clearer Pictures

Administrative records from social security systems and sickness registers allow objective tracking of absence and disability. Linking these files with health data reduces reliance on self-reported surveys and improves consistency across studies. Countries that already combine employment and clinical records report more stable estimates of indirect healthcare costs and find they represent 40 to 60 percent of total disease burden in several non-communicable conditions.

Policy Consequences of Narrow Perspectives

HTA bodies that restrict analyses to the payer viewpoint systematically undervalue treatments improving daily function or easing caregiver strain. This narrow lens can delay access to coordinated care programmes and mental health support. It also shifts costs onto households, often affecting women who provide most unpaid care. Equity concerns therefore arise alongside economic ones.

Practical Steps for Decision Makers

• State the chosen perspective and list every cost category included in each submission.
• Adopt consistent valuation rules for both productivity and informal care, with sensitivity checks.
• Require analysts to draw on national employment and insurance datasets rather than estimates alone.
• Expand value frameworks to capture social returns such as retained workforce participation.

These measures align with ongoing discussions at NICE and ICER about broader perspectives.

Conclusion

Indirect healthcare costs form a major share of the true burden created by chronic disease. Their routine inclusion would give a fuller account of intervention value and support fairer allocation of resources. Strengthened data linkage and clearer methodological standards can move practice in this direction without adding undue complexity to existing processes.

Reference

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