Value-Based Pricing

OHE’s active involvement in a number of recent conferences and meetings has contributed to discussions on a range of important issue in health economics.

This research explores which approaches to pricing can produce the greatest efficiency and access to medicines within and across countries.
OHE collaborated on two articles published in the journal Health Economics recently.

OHE's contributions focused on approaches to implementing UK value-based assessment and the details of creating an EQ-5D-5L value set for England.
The Health Economists’ Study Group (HESG), based in the UK, was founded in 1972 to support and promote the work of health economists. Its members are from academic, commercial, and government settings.

Four types of economic incentives for drugs and diagnostics are essential to encouraging more rapid progress in personalised medicine.

Adrian Towse, OHE’s Director, and Lou Garrison, a professor at the University of Washington, summarise the critical economic issues in the development of evidence of value for drugs and diagnostics that are part of personalised medicine.

Performance-based risk sharing arrangements for prescription medicines and other treatments are attractive to payers because they promise to base what is paid for a treatment on whether/how well it actually works. Programmes typically include data collection and either implicitly or explicitly link pricing, reimbursement and/or revenue to what the data show.

OHE’s Dr Jorge Mestre-Ferrandiz is a visiting lecturer in the Department of Economics at City University London. As part of his 2013 activities, he recently gave a comprehensive lecture on the economics of the market for medicines in the UK. His presentation covers the key issues, from drug development through health technology assessment and market access.

Value based pricing (VBP) is increasingly common in health care systems worldwide. OHE continues to make important contributions to the debate about VBP approaches and application through its research, publications and participation in discussions. For example, Adrian Towse was invited to participate in a January conference on translation genomics—the conversion of genomic insights into clinically useful applications—where he discussed approaches to valuing genomic medicines.

With Prof Patricia Danzon of the Wharton School, University of Pennsylvania, OHE's Adrian Towse and Jorge Mestre-Ferrandiz have released an important working paper that addresses how to achieve efficient pricing for pharmaceuticals within and across countries.

The proposals from the UK Department of Health (DH) for value based pricing (VBP) include a process whereby higher prices would be granted to medicines that tackle the most burdensome diseases – i.e. those that are most severe or are associated with the greatest unmet need. The DH’s VBP consultation document defines unmet need in terms of the degree to which alternative treatments exist. Little empirical evidence is available, however, on whether the general public supports the use of this particular definition of unmet need as a basis for setting health care priorities. To address this gap in the evidence, Koonal Shah and Nancy Devlin of OHE completed a small exploratory study.

The OHE has been very active in conceptualising approaches incorporating a broader assessment of the elements of value (often called "value based pricing" or "VBP"), as its publications to date illustrate. During the last quarter of 2012, OHE has been active in discussions of VBP in a variety of forums.

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