Value-Based Pricing

Berdud, Drummond and Towse (2020) propose a method for establishing a reasonable price for an orphan drug. Assuming prices for drugs are set according to incremental value, they propose adjustments to a payer’s ‘normal’ cost-effectiveness threshold (CET) for non-orphan drugs to ensure orphan drug developers achieve no more than the industry-wide rate of return. Adjustments are calculated for differences in R&D costs and population sizes.

The American Society of Health Economists (ASHEcon) announced Patricia Danzon as recipient of the 2020 Victor R. Fuchs Award. This is given to an economist making significant lifetime contributions to the health economics field. Professor Danzon is an internationally recognized expert in the fields of economics of health care, the biopharmaceutical industry, and insurance, including the medical malpractice area where she began her research.

OHE authors develop a supply and demand model of pharmaceutical markets to analyse the social welfare distribution between consumers (payers) and developers (industry) to set an optimal cost-effectiveness threshold (CET).

A move towards paying multiple prices for medicines (depending on what they are used for) could address a commonly cited problem in drug development and increase patient access. Our latest consulting report investigates whether key stakeholders are onboard.

Research by OHE and the University of Washington into how uncertainty-related novel elements of value could be included in an Augmented Cost-Effectiveness Analysis has been published in Journal of Managed Care & Specialty Pharmacy (JMCP). The research discusses what has been or could be done to measure these elements and looks at empirical research to date.

A COVID-19 vaccine is needed now, but timelines (12-18 months) create large market risk. By the time a vaccine is ready, the crisis may have passed. A CGD Note explores three options: business as usual – which may lead to promotion of an inferior vaccine or fierce country competition for supply – and two models (cost- or value-based), with countries pre-committing to purchases meeting specified efficacy. The authors prefer a value-based model.

Adrian Towse presented evidence that transparency of process reduced corruption and improved competition. Evidence was, however, against price transparency for on-patent medicines. It will reduce access in low income countries. In generic markets, price transparency could improve efficiency, although it risks collusion by suppliers. There is therefore a case for buyers sharing, but not publishing, price data for off-patent medicines.

OHE has published a white paper discussing the relative merits and shortfalls of current approaches to defining, estimating, and applying cost-effectiveness thresholds in HTA.

This will be accompanied by a (forthcoming) research paper exploring bargaining in threshold setting

TB kills 1.6m people annually - the world’s deadliest infectious disease. The Market-Driven, Value-Based Advance Commitment (MVAC), creates and guarantees a market for better TB treatment. The final “blueprint” has four pillars: HTA to inform countries’ value-based purchase commitments; commitment guarantees underwritten by a development bank; industrial policy alignment; and a governance structure credible to MIC payers and industry.

OHE, in collaboration with RAND Europe, University College London (UCL) and University of Manchester (UoM), has been awarded a new research grant from Cancer Research UK in partnership with Greater Manchester Health & Social Care Partnership (GMHSCP) to further explore the potential of implementing outcome-based payments for cancer treatments.

Pages

Subscribe to RSS - Value-Based Pricing