Analysing the Potential Impact of UK "Value-Based Pricing"

June 2013

The UK Government is implementing a “new value-based approach to the pricing of branded medicines” in 2014. The new pricing and reimbursement structure has been informed by consultation processes. This included workshops run by the Department of Health during 2012 and 2013 with invited participants from industry, academia, patient groups, NICE and the NHS.

OHE took part in all of the DH/NICE workshops. We have closely followed the development of ”value-based pricing”, both in the UK and internationally, since the UK government first indicated its intended introduction
OHE Consulting was commissioned by a top-20, global pharmaceutical company to prepare and run a one-day workshop on the UK’s proposed "value-based pricing" scheme. The company wanted to understand the possible options and variants of this new pricing scheme, and the likely pricing and reimbursement/market access implications for its pipeline of new products.
 
OHE presented and discussed the following possible reimbursement criteria with the workshop participants:
  • The number of incremental quality adjusted life years (QALY) produced relative to the comparator treatment or current standard of care
  • The “burden of illness” of the condition being treated, i.e. whether the medicine treats diseases with unmet medical need or for patients suffering particularly severe conditions, receive greater reimbursement
  • “Therapeutic innovation and improvements”  when compared with other products
  • “Wider societal benefits” such as the ability to get patients and/or their carers back to work sooner.

Jointly with the client, two case studies were prepared before the workshop, each describing one product in the company’s pipeline expected to be launched in the UK. The impact on UK reimbursement prices for these products of different variants of value-based pricing, involving different mixes of the elements listed above, were then analysed quantitatively in the workshop.

The content and posting of this case study have been explicitly approved by the client.


 

“It was great working with OHE on this event. The meeting was a great opportunity to internally align our understanding of the methodological development of value-based pricing with our UK, European and Global colleagues and think about how this may impact our portfolio. The workshop was expertly delivered by the OHE, which brought a wealth of experience on the various methodologies being considered.” 
-- Health Economics Manager at a top-20 global pharmaceutical company


 

To learn more about OHE Consulting’s services, please contact Dr Jorge Mestre-Ferrandiz  •  jmestre-ferrandiz@ohe.org • +44 (0)20 7747 8860


 

OHE’s contribution to enhancing the understand on value-based pricing and how it may be applied in the UK and elsewhere includes, for example, a recent article in PharmacoEconomics that explores options for implementing a value-based pricing scheme.

Sussex, J., Towse, A. and Devlin, N., 2013. Operationalising value based pricing of medicines: A taxonomy of approaches. PharmacoEconomics. 13(1), pp.1-10.

To review all of OHE's publications, presentations and other activities on this top, see the value-based pricing category in our blog.