Journal: Value in Health
Citation: Cohen JT, It’s time to reconsider the three percent discount rate., Value in Health (2024).
Health technology assessment (HTA) guidance often recommends an annual discount rate of 3 percent, but most guidance provides no supporting rationale. The literature advances two approaches to identify an appropriate rate: (a) bottom up (the Ramsey Equation) sums contributing factors, but economists disagree on their values; (b) real interest rates can represent returns available from other investments, but which market rate to use is unclear.
Pragmatically, we can start with the commonly recommended 3 percent discount rate and consider trends suggesting recent changes to this value. Projected declines in consumption growth and observed declines in real interest rates suggest HTAs should now recommend a discount rate of 1.5 to the low 2 percent range.
Using a lower discount rate will improve projected cost-effectiveness for therapies with long-term (e.g., lifetime) benefits and increase the impact of accounting for long-term drug price dynamics, including reduced prices attending loss of market exclusivity.
