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

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Oncology

Background:

• Rising global pharmaceutical expenditure strains healthcare budgets, particularly in Croatia.
• Oncology drugs, often approved for multiple uses, present a challenge due to uniform pricing despite varying efficacy.
• This study explores indication-based pricing (IBP) as a strategy to manage drug costs.

Purpose of the Study:

• To investigate the potential of indication-based pricing (IBP) to control pharmaceutical expenditure in Croatia.
• To assess the feasibility and impact of IBP on drug pricing models.
• To gauge Croatian policymakers' awareness of differential medicine effectiveness.

Main Methods:

• Operationalized IBP by anchoring drug prices to the most/least beneficial indication or a cost-effectiveness threshold.
• Applied IBP to the oncology drug abiraterone across three distinct indications.
• Conducted interviews with Croatian policymakers regarding medicine pricing and effectiveness.

Main Results:

• The effectiveness of abiraterone varied significantly across its indications, measured by life-years gained (LYGs) and quality-adjusted life-years (QALYs).
• Depending on the IBP model applied, abiraterone's price could decrease by 74% or increase by up to 280%.
• Policymaker interviews provided insights into the understanding of differential drug effectiveness.

Conclusions:

• Indication-based pricing (IBP) demonstrates a significant potential to influence drug prices.
• The chosen IBP approach critically determines the resulting drug price adjustments.
• IBP offers a flexible framework for aligning drug value with cost in healthcare systems.