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Can and should value-based pricing be applied to molecular diagnostics?

Martina Garau1, Adrian Towse2, Louis Garrison3

  • 1Office of Health Economics, Southside, 7th Floor, 105 Victoria Street, London, SW1E 6QT, UK. mgarau@ohe.org.

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|May 23, 2018
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Summary

Value-based pricing can improve diagnostic efficiency. Applying this framework ensures diagnostics are priced effectively, reflecting their true health and economic value.

Keywords:
companion diagnosticscost–effectivenesshealth technology assessmentmolecular diagnosticsreimbursementvalue-based pricing

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Area of Science:

  • Health economics
  • Medical diagnostics
  • Health policy

Background:

  • Current diagnostic pricing and reimbursement systems are inefficient.
  • Pricing is often based on administrative practices and production costs, not value.
  • Diagnostics offer significant health gains, cost savings, and patient decision support.

Purpose of the Study:

  • To explore the application of value-based pricing frameworks for diagnostics.
  • To adapt principles used for medicines to diagnostic pricing and assessment.
  • To propose a novel approach for evaluating diagnostic value.

Main Methods:

  • Review of current pricing and reimbursement systems for diagnostics.
  • Analysis of value-based pricing frameworks used for medicines.
  • Proposal of a two-part value assessment approach for diagnostics.

Main Results:

  • Value-based pricing offers a more efficient system for diagnostics.
  • Companion diagnostics require integration into new drug assessment processes.
  • A dedicated committee should assess other diagnostics using value-based principles.

Conclusions:

  • Value-based pricing can optimize diagnostic use and pricing.
  • A differentiated assessment strategy is needed for companion vs. standalone diagnostics.
  • Implementing value-based pricing will enhance the efficient use of diagnostic technologies.