The European Journal of Health Economics vol:9 issue:1 pages:17-22
This study estimated costs of production and distribution of ostomy appliances, and compared cost estimates with tariffs in Belgium. The cost model took into account manufacturing costs, overhead, R&D, warehousing, profits, and distribution margins. Data were derived from manufacturers, a decomposition of finished products, and interviews with stakeholders. The cost model generated estimated retail prices of <euro>2.96 for one-piece appliances, <euro>1.62 for two-piece pouches, and <euro>2.06 for two-piece flanges. Production and distribution costs accounted for 40 and 60% of retail prices, respectively. Estimated retail prices corresponded well with tariffs for one-piece appliances and for two-piece pouches. For two-piece regular flanges, a substantial difference was observed between the calculated price of <euro>2.06 and the tariff of <euro>6.05. In the absence of publicly disclosed information on the cost structure of appliances, estimating ostomy appliance costs is valuable to reimbursement agencies when setting tariffs.