Pricing and Reimbursement

The August 2011 issue of Health Affairs featured four articles on how and why pricing for pharmaceuticals differs from one country to another. The OHE’s Prof Adrian Towse co-authored the lead article with Prof Patricia Danzon from the Wharton School and Dr Andrew Mulcahy of RAND.

In October 2009, the OHE published research that compared access to orphan medicinal products (OMPs) in selected European countries. At the request of the UK Orphan Medicines Industry Group [1], OHE recently updated to May 2011 some of the data included in that research.

Most patients in middle and low income countries (MLICs) lack insurance coverage and so pay out of pocket for prescription medicines; pricing commensurate with income thus becomes critical to access to drugs. In this paper, the authors examine what determines the prices that manufacturers charge for originator and generic drugs across countries at all income levels.

To date, the UK Government has not been specific about how VBP will be implemented, but has indicated that calculations of value will extend beyond the QALY approach currently used by NICE. The Department of Health has stated that it will include “the range of factors through which medicines deliver benefits for patients and society”.

OHE is making available as Occasional Papers drafts of two important chapters that will appear in the Oxford Handbook on the Economics of the Pharmaceutical Industry due out in 2012. One on access to drugs and vaccines in developing countries and the other on measuring value with pharmacoeconomics.

Register now for our workshop on 'value-based pricing', how it relates to risk-sharing and patient access schemes and what approaches might make the most sense.

In forthcoming chapter in the Oxford Handbook on the Economics of the Biopharmaceutical Industry, experts in the field outline the evolution of cost-effectiveness analysis (CEA) through its use as part of health technology assessment. The authors also explore the theoretical and practical issues that have arisen as the result of using CEA of drugs to make decisions about resource allocation, pricing and use and offer some important recommendations.

In December 2010, the UK Department of Health released a consultation document to elicit comments on ‘proposals for a new value-based system of pricing medicines which aims to recognise and reward innovation. The document sets out the principles that would underpin the move to value-based pricing, outlines how the new system could work across the UK and seeks views on a number of key issues’.

Summarised in this post is a just-released OHE Occasional Paper that examines the potentially positive impact of differential pricing in Europe and the overall negative effects of international reference pricing (IRP) measures.

Spending by Spain’s National Health Service (NHS) on pharmaceuticals was €12.1 billion in 2010. Its market for prescription medicines is among the slowest growing in Europe, expanding by only 1% for the 12 months to September 2010 - half of the average of 2% for the five largest European markets.


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