EXPLORING THE OPTIMAL SHARE OF PHARMACEUTICAL VALUE FOR INDUSTRY AND SOCIETY: AN APPLICATION TO THE US CONTEXT
Author(s)
WOOJUNG LEE, PharmD, PhD1, Dan Ollendorf, PhD, MPH1, James Lomas, PhD2, HuiHsuan Chan, MS3, Marie Phillips, BA1, Marina Richardson, PhD, MSc1, Karl Claxton, PhD, MSc2, Beth Woods, BA, MSc2;
1Institute for Clinical and Economic Review (ICER), Boston, MA, USA, 2University of York, York, United Kingdom, 3The Comparative Health Outcomes, Policy, and Economics (CHOICE) Institute, University of Washington, SEATTLE, WA, USA
1Institute for Clinical and Economic Review (ICER), Boston, MA, USA, 2University of York, York, United Kingdom, 3The Comparative Health Outcomes, Policy, and Economics (CHOICE) Institute, University of Washington, SEATTLE, WA, USA
OBJECTIVES: Pharmaceutical pricing must balance affordability with innovation incentives. Current cost-effectiveness analysis focuses on static efficiency, overlooking reward levels that maximize population health when future innovation is considered. We estimated value distribution and net population health under alternative US pricing scenarios, accounting for dynamic efficiency.
METHODS: Three pricing policy scenarios were explored: (a) status quo using actual net prices, (b) HBPB-based pricing using ICER's health benefit price benchmarks (HBPB) at $150,000/QALY gained, and (c) “dynamic-efficiency” using prices that optimize the manufacturer’s share of value to maximize net population health. For each scenario, we estimated the drug’s lifetime value shared to the original manufacturer and net population health benefits. We used frameworks developed by Woods et al., adapted for US-specific market characteristics. We analyzed a purposive sample of 18 pharmaceuticals approved in the US and reviewed by ICER.
RESULTS: Under the status quo, manufacturers captured an aggregated mean of 65% of total value across 18 drugs (range: −1,083% to 1,189%): 27% for the 8 drugs priced below the ICER’s HBPB and 348% for the 10 drugs priced above it. Applying HBPB-based pricing increased manufacturer shares to 75% for drugs priced below the HBPB and reduced them to 79% for drugs priced above, yielding an aggregated mean of 76% across all drugs. Under dynamic-efficiency pricing, the optimal manufacturer share was 23% across all drugs, which maximized net population health benefits at 113 million QALYs—compared with 73 million under the status quo and 63 million under HBPB-based pricing.
CONCLUSIONS: We quantified manufacturer value shares and population health impacts under alternative US pricing scenarios. Wide variation in current shares—and negative net health benefits for some high-priced drugs—highlights the need for alternative pricing policies. Future work should assess the feasibility of implementing dynamic-efficiency pricing in the US health system.
METHODS: Three pricing policy scenarios were explored: (a) status quo using actual net prices, (b) HBPB-based pricing using ICER's health benefit price benchmarks (HBPB) at $150,000/QALY gained, and (c) “dynamic-efficiency” using prices that optimize the manufacturer’s share of value to maximize net population health. For each scenario, we estimated the drug’s lifetime value shared to the original manufacturer and net population health benefits. We used frameworks developed by Woods et al., adapted for US-specific market characteristics. We analyzed a purposive sample of 18 pharmaceuticals approved in the US and reviewed by ICER.
RESULTS: Under the status quo, manufacturers captured an aggregated mean of 65% of total value across 18 drugs (range: −1,083% to 1,189%): 27% for the 8 drugs priced below the ICER’s HBPB and 348% for the 10 drugs priced above it. Applying HBPB-based pricing increased manufacturer shares to 75% for drugs priced below the HBPB and reduced them to 79% for drugs priced above, yielding an aggregated mean of 76% across all drugs. Under dynamic-efficiency pricing, the optimal manufacturer share was 23% across all drugs, which maximized net population health benefits at 113 million QALYs—compared with 73 million under the status quo and 63 million under HBPB-based pricing.
CONCLUSIONS: We quantified manufacturer value shares and population health impacts under alternative US pricing scenarios. Wide variation in current shares—and negative net health benefits for some high-priced drugs—highlights the need for alternative pricing policies. Future work should assess the feasibility of implementing dynamic-efficiency pricing in the US health system.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
EE314
Topic
Economic Evaluation
Disease
No Additional Disease & Conditions/Specialized Treatment Areas