Value-Based Pricing

In the contentious debate around US drug prices, less well understood is: if the price of a drug is a fair, value-based, price, how we assess if insurance coverage provides patients with ‘fair access’ to that drug? This paper from ICER and OHE authors seeks to define fair access. It proposes Ethical Goals for Access and Fair Design Criteria for cost-sharing and prior authorisation protocols.

A new Editorial reviews three solutions to the price and value challenge to reimbursing combination products. Higher thresholds are not justifiable. Evidence to support use of shorter regimens will take time to develop. Multi-use pricing is the best option to explore.

Using medicines in combination can deliver better outcomes for patients across different tumour types and disease stages. Yet many HTA agencies do not find that the expected additional benefits from adding a new medicine to a currently reimbursed medicine represents value for money to the health system. In markets that utilise cost-per-QALY approaches for assessing value, a clinically effective medicine might even be found to be “not cost-effective at zero price” when used as part of a regimen that increases treatment duration.

As the world is figuring out how to deal with COVID-19, it is worth taking stock of the broader value that existing vaccines bring to societies suffering from this pandemic. We illustrate this broader value by considering how existing vaccines can help protect people from other respiratory conditions or from COVID-19 co-infections and relieve overburdened healthcare systems.

In the focus on US drug prices, ICER has contributed thinking on determining when price aligns with patient benefits. Less debated is whether insurance coverage provides patients with fair access to a drug with a fair, value-based price. But how do we define fair access? This paper from ICER and OHE authors develops a fair access framework, proposing Ethical Goals for Access and Fair Design Criteria for cost sharing and prior authorization protocols.

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.

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