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Implementation of Value-based Pricing for Medicines.

Claudio Jommi1, Patrizio Armeni1, Francesco Costa1

  • 1Cergas (Centre for Research on Health and Social Care Management), SDA Bocconi School of Management, Bocconi University, Milan, Italy.

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|December 29, 2019
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Summary
This summary is machine-generated.

Value-based pricing (VBP) for pharmaceuticals lacks consensus, with two models applied: direct (cost-effectiveness driven) and indirect (multi-attribute). Implementation clarity remains a challenge, especially regarding budget impact versus drug value.

Keywords:
Incremental cost-effectiveness ratioMedicinesMulti criteria decision analysisRegulationValue-based pricing

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Area of Science:

  • Health Economics
  • Pharmaceutical Policy
  • Drug Pricing Regulation

Background:

  • Value-based pricing (VBP) is common for goods but debated for pharmaceuticals.
  • Consensus on VBP for medicines is lacking, with differing views on price drivers.
  • Existing literature describes medicine price negotiation regulations but lacks implementation insights.

Purpose of the Study:

  • To investigate the implementation of value-based pricing regulations for pharmaceuticals.
  • To analyze how drug prices are determined in relation to value and budget impact.
  • To cover this information gap for 5 European countries and the United States.

Main Methods:

  • Comparative analysis of pharmaceutical pricing regulations in 5 European countries and the US.
  • Categorization of VBP models into direct (cost-effectiveness driven) and indirect (multi-attribute).
  • Assessment of transparency and predefined links between added value and premium pricing.

Main Results:

  • Two VBP models identified: direct (cost-effectiveness) and indirect (multi-attribute).
  • Implementation of VBP is difficult to evaluate, especially in indirect models.
  • Transparency in linking added value to premium pricing is crucial but often lacking.
  • Distinguishing between value-driven pricing and budget impact is challenging.

Conclusions:

  • Clearer definitions and transparent processes are needed for effective VBP implementation in pharmaceuticals.
  • Using incremental cost-effectiveness ratio thresholds aids VBP understanding.
  • Multi-criteria approaches require transparency on assessment criteria and price conversion.