When comparing health technology costs across countries, market exchange rates are misleading – they reflect capital flows, not the actual purchasing power of money in each economy. Purchasing Power Parity (PPP) conversion factors adjust for price-level differences, making costs genuinely comparable.
ParCC ships with World Bank PPP data for 30 countries and automatically assesses costs against WHO-CHOICE willingness-to-pay thresholds.
A new oncology drug is priced at $50,000 per year in the United States. You are advising HTAIn on whether this price is justifiable for the Indian market.
At the 2022 market rate of ~INR 78.6 per USD:
\[\$50{,}000 \times 78.6 = INR 39{,}30{,}000\]
But this dramatically overstates the burden, because goods and services are much cheaper in India. A doctor’s consultation, hospital bed-day, or meal costs far less in India than in the US.
PPP conversion uses international dollars as an intermediate currency:
\[C_{target}^{PPP} = \frac{C_{source}}{PPP_{source}} \times PPP_{target}\]
Step 1: Convert US dollars to international dollars:
\[\$50{,}000 \div 1.00 = \text{Int}\$50{,}000\]
(The US PPP factor is 1.00 by definition.)
Step 2: Convert international dollars to Indian rupees:
\[\text{Int}\$50{,}000 \times 23.2 = INR 11{,}60{,}000\]
ParCC displays three key results:
| Metric | Value |
|---|---|
| PPP-adjusted cost | INR 11,60,000 |
| Market FX cost | INR 39,30,000 |
| PPP/FX ratio | 0.30 |
The PPP-adjusted cost is 70% lower than the market FX conversion. This means the drug’s true economic burden in India is much less than the naive exchange rate suggests.
ParCC automatically calculates WHO-CHOICE thresholds for the target country:
| Threshold | India (2022) |
|---|---|
| 1x GDP per capita (highly cost-effective) | INR 1,87,750 |
| 3x GDP per capita (cost-effective) | INR 5,63,250 |
At INR 11,60,000 the drug exceeds 3x GDP per capita and is flagged red – not cost-effective by WHO-CHOICE criteria at this price.
The PPP analysis suggests that a price of INR 11,60,000 is the PPP-equivalent economic burden. But even this is above the WTP threshold. A price negotiation should target below INR 5,63,250 (3x GDP/capita) to be considered cost-effective, or below INR 1,87,750 (1x GDP/capita) to be highly cost-effective.
The default data is from the World Bank 2022 ICP round. If you have more recent data:
This is useful when a country has experienced significant currency fluctuation since the last ICP round.
India, United States, United Kingdom, Germany, France, Japan, China, Brazil, Australia, Canada, South Korea, Thailand, Mexico, South Africa, Turkey, Indonesia, Nigeria, Egypt, Poland, Sweden, Norway, Switzerland, Italy, Spain, Netherlands, Belgium, Ireland, New Zealand, Malaysia, Philippines.
PPP factors are economy-wide averages. Health-sector-specific PPP factors exist but are not widely available. The World Bank general PPP is the standard in most HTA submissions.
WHO-CHOICE thresholds are guides, not rules. Many countries now use empirical thresholds (UK: GBP 20,000-30,000/QALY; India: 1x GDP/capita per HTAIn guidelines). ParCC shows the WHO-CHOICE thresholds as a starting point.
No exchange rate conversion is applied to module outputs. The PPP converter is a standalone analysis tool. The currency selector in Settings affects display formatting only.