Pricing methods in outcome-based contracting: δ2: willingness-to-pay-based pricing

Area of Science:

• Health Economics
• Pharmaceutical Pricing
• Outcome-Based Contracting

Background:

• Outcome-based pricing models are crucial for aligning drug value with cost.
• Existing models may not fully capture market dynamics and patient willingness-to-pay (WTP).

Purpose of the Study:

• To describe the methodology of the second dimension (δ2) of the Six Delta platform, which estimates prices based on WTP thresholds.
• To present a proof-of-concept application of this dimension to osimertinib for EGFR-mutated non-small cell lung cancer (NSCLC).

Main Methods:

• Eight WTP scenarios were created using GDP per capita levels and market conditions (monopolistic vs. competitive).
• Predictive equations and Monte Carlo Simulation (MCS) were used to estimate the dimension-specific price based on WTP (DSPWTP).
• The model was applied to hypothetical 1-year and 2-year outcome-based contracts for osimertinib, using its 2018 wholesale acquisition cost (WAC).

Main Results:

• For a 1-year contract, the estimated DSPWTP was $4,547, representing a 68.89% decrease from the 2018 WAC.
• For a 2-year contract, the estimated DSPWTP was $4,704, a 67.82% decrease from the WAC.
• Sensitivity analyses and MCS provided price estimates across WTP thresholds and market conditions.

Conclusions:

• The Six Delta platform's WTP-based dimension can generate adaptable price estimates.
• These estimates can be integrated into outcome-based pricing and contracting strategies.
• The methodology demonstrates a flexible approach to pharmaceutical pricing in diverse market settings.