The Swedish Dental and Pharmaceutical Benefits Agency (TLV) is the government body responsible for deciding whether outpatient drugs are to be included in the pharmaceutical benefits scheme. This paper analyzed all decisions made by TLV between 2005 and 2011 in order to investigate how the cost-effectiveness of a drug and the severity of the disease the drug targets affected the likelihood of subsidy of a drug. We find that TLV places significant weight on both the cost-effectiveness, measured as the cost per Quality-Adjusted Life Year (QALY), and disease severity. We also find that the higher cost per QALY approved for severe diseases is mainly represented by cancer drugs. Drugs targeting severe diseases other than cancer have a similar cost per QALY as for non-severe diseases.
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