Implementation of Value-based Pricing for Medicines

Abstract

Value-based pricing (VBP) is well established in markets for common goods and services, but wide consensus on VBP for pharmaceuticals is lacking. In principle, VBP implies that prices are mainly driven by a drug's value (value for money) and that the impact on budget (sustainability) is a second-order driver of price regulation. Although the literature provides descriptive analyses on regulations governing medicine price negotiation, there are few insights on whether and how price negotiation regulations have been implemented. The goal of this article was to cover this information gap for 5 European countries and the United States. VBP has been applied according to two models: (1) direct models in which cost-effectiveness is a driver; and (2) indirect, multi-attribute models characterized by greater discretion on the integration between the different value domains and the evaluation of consistency between costs and value. In these models, cost-effectiveness is not a driver. In addition, it is hard to evaluate within these models the actual implementation of VBP. Identifying whether and how VBP is applied requires a clear predefined link between added value and the premium price, as well as transparency in the way added value is converted into a premium price. In general, for these countries, it remains difficult to determine whether pricing is mostly driven by value (value-for-money) or impact on budget (sustainability). In instances in which thresholds on the incremental cost-effectiveness ratio are used, it becomes easier to understand whether VBP has been implemented. If VBP relies on a multicriteria approach, greater transparency on which criteria have been used to assess a new drug and how they have been converted into a reasonable price may help in understanding whether a value-based approach has been used.

Time to reimbursement and negotiation condition in Italy for drugs approved by the European Medicines Agency during the period 2014-2019

“…This could highlight the AIFA's accurate commitment to evaluating important drugs for Italian patients. Considering that the majority of the drugs with a price/DDD higher than 100 Euros (59%) were orphan (and therefore with an implicit unmet medical need) and 35% have been recognised by the AIFA CTS as innovative (vs. 1/36 on the other cluster), our data could also suggest the engagement of AIFA in starting the implementation of a valuebased pricing system (16). The analysis shows that the HD percentage negotiated is higher for drugs with high cost/DDD and for neither innovative nor ODs.…”

Health Technology Assessment of Advanced Therapy Medicinal Products: Comparison Among 3 European Countries

“…Generally, the HTA evaluates the added therapeutic benefits and risks for covering a new technology in the context of local standard of care (van Nooten et al, 2012), based on clinical (efficacy and safety), economic, ethical, and organizational aspects in support of policy decision-making about price and reimbursement decisions (Angelis et al, 2018). The heterogeneity of HTA recommendations, thereafter probably reflected in national reimbursement decisions and pricing agreements, is related to differences in assessment methodologies and healthcare systems' organization but also to the available evidence and, above all, willingness to accept uncertainty (Jommi et al, 2020).…”

Quality of health economic evaluations submitted to the Italian Medicines Agency: current state and future actions

“…In principle, HEEs, possibly integrated with budget impact analyses (BIA), are deemed useful tools for pursuing allocative efficiency in healthcare systems, which is one of the value-pillars of the emerging value(s)-based health care approach in the European public debate (5). Currently, in few countries the results from HEEs are the main driver of decisions (e.g., England and Australia); whereas, more generally, they have a less explicit role within a multi-criteria decision-analysis approach (e.g., Germany, France, and Italy) (6)(7)(8).…”