Indication-based pricing of the pharmaceuticals in Croatia: case-study

Rising pharmaceutical expenditure worldwide, including in Croatia, is putting considerable pressure on healthcare budgets. Oncology drugs, often used in several indications with varying efficacy, contribute to this challenge, and a single price is paid regardless of the indication. This study investigates whether indication-based pricing (IBP), a method of pricing the same drug for different indications based on its relative value in different treatment applications, could be a potential solution to contain drug expenditure.

We operationalized IBP in two ways: by anchoring all drug prices according to the indication that provides the most or least benefit, and second, by anchoring drug prices to a cost-effectiveness threshold estimated for Croatia. We also interviewed policymakers in Croatia to determine whether they are familiar with the problem of differential effectiveness of medicines with multiple indications.

Applying IBP to the oncology drug abiraterone in three indications, as measured by life-years gained (LYGs) and quality-adjusted life-years (QALYs), shows the effectiveness of abiraterone varies considerably by indication. Depending on the IBP approach chosen, drug prices can be reduced by 74% or increased by up to 280%.

Drug prices can vary dramatically depending on the IBP approach chosen.