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Value-based pricing (VBP) is an efficient method for pricing new drugs. Rate of return pricing could, however, be useful in two cases: treatments for ultra-rare diseases, and ‘cures’ for conditions currently being treated at great expense. Rate of return pricing gives rise to challenges. Two are (i) finding proxy estimates of development costs including failures, and (ii) driving future research towards discovering high-value treatments.

Estimating a cost-effectiveness threshold reflecting the opportunity cost of adopting a new technology in a health system is not easy. A new OHE report provides empirical evidence on the relationship between health outcomes and health expenditures in England. Results suggest that setting a cost-effectiveness criterion for NICE may not be capable of being synthesised using scientific methods alone, but involve political judgements.

The combination of rising drug costs in the US and increasing financial stress for individual patients has triggered intense national concern. One target has come under particular scrutiny: rebates. A new report published by ICER and the OHE describes how alternatives to the current rebate system offer potential disadvantages as well as potential benefits. It outlines evidence presented to date and key questions that still need to be answered.

Research just published in Public Administration Review, co-authored by OHE’s Professor Graham Cookson, demonstrates that contracting out auxiliary public services may lower the quality of the core service as well as the auxiliary service. Studying NHS cleaning services, the research shows that contracted out cleaning is cheaper but lower quality and leads to worse health outcomes including higher rates of hospital-acquired infections.

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