We have just published a new OHE Briefing entitled ‘Multi-Indication Pricing: Practical Solutions and Steps to Move Forward’, which summarises the discussion of a panel session held at the HTAi 2017 meeting in Rome.
Multi-indication pricing (MIP) is based on the concept of rewarding the value of individual indications (or patient sub-groups) for which a product is authorised. MIP can increase both static and dynamic efficiency: prices will be set at a cost-effective level, thus opening treatment access to more patients, and will stimulate future research, because manufacturers can recoup R&D costs more easily.
Despite the theoretical attractiveness of MIP, health care system stakeholders perceive that the implementation of MIP is associated with a number of challenges. Previous work by the OHE, in Europe, and the Institute for Clinical and Economic Review (ICER), in the US, has identified concerns with respect to inadequate data capabilities to monitor the prescription of different indications, legal and regulatory hurdles, and inflexibility of formulary structure to accommodate multi-indications.
The speakers of this HTAi panel session discussed the approaches used to handle the price of medicines with multiple indications in Europe, while also sharing the most important challenges and success stories of MIP from the perspectives of the payers and the industry.
In Europe, multi-indication products are priced using the price of the first indication reimbursed across all indications (the Netherlands, Norway and Poland), a single price ‘weighted’ by the value of each indication (Germany, France, Belgium and Austria), or individual prices for each indication (Italy and the UK). De facto, only the second and the third approaches are designed to reflect the value of the product indications portfolio.
From the payers’ perspective, MIP may pose the risk of a higher budget impact if more patients gain access to treatment. In fact, MIP allows the industry to appropriate the consumer surplus during the patent period. In countries with an explicit cost-effectiveness threshold (e.g. the UK) companies may have an incentive to price at the maximum level allowed by the threshold. Therefore, payers also want to ensure that they can demand discounts based on budget impact and affordability.
However, implementing MIP over an optimal patent period can foster R&D and the development of in-class competition, which in turn has a lowering effect on the level of prices.
Payers are also concerned about the complexity of MIP and the resources (e.g. staff from the department of health) required to implement it. Despite the payers’ preference for simpler approaches, outcomes, and not only patient numbers, should be tracked in order to address the uncertainty attached to the product value. The online registries set up in Italy to collect data on patient eligibility and outcomes, and to support the implementation of outcome-based agreements, represent a successful MIP story.
From an industry perspective, without MIP there is an incentive to focus on small/high-value indications rather than expanding the use of existing molecules into further indications (within and outside the therapy area). Practically, the key challenge is the lack of data capabilities (in most systems) that can monitor different uses of the same medicine.
Steps to move forward with the adoption of MIP should aim at joining responsibility and goals of payers and industry. The role of stakeholders’ engagement will be a key factor in advancing this process.
For more information on this report please contact Margherita Neri.
Neri, M., Towse, A. and Garau, M., 2018. Multi-Indication Pricing (MIP): Practical Solutions and Steps to Move Forward. OHE Briefing. London: Office of Health Economics. RePEc
Mestre-Ferrandiz, J., Towse, A., Dellamano, R. and Pistollato, M., 2015. Multi-indication pricing: pros, cons and applicability to the UK. OHE Seminar Briefing. London: Office of Health Economics. RePEc.
Pearson, S.D., Dreitlein, W.B., Henshall, C. and Towse, A., 2017. Indication-specific pricing of pharmaceuticals in the US healthcare system. Journal of Comparative Effectiveness Research, 6(5), pp.397–404. DOI.
Cole, A. & Towse, A. & Lorgelly, P. & Sullivan, R., 2018. Economics of Innovative Payment Models Compared with Single Pricing of Pharmaceuticals. OHE Research Paper. London: Office of Health Economics. RePEc.
Towse, A., Cole, A. and Zamora, B., 2018. The Debate on Indication-Based Pricing in the US and Five Major European Countries. OHE Consulting Report. London: Office of Health Economics. RePEc.
Posted in Drug Development/R&D, Pricing and Reimbursement, Value-Based Pricing | Tagged Briefing