Presentation (CTI)

OBJECTIVES: Indication-based pricing (IBP) for multi-indication drugs is gaining traction, yet its population health impacts accounting for access, innovation and opportunity costs remain understudied. As spending on multi-indication drugs rises, understanding the trade-offs of alternative policies is crucial. This study evaluates the population health implications of three pricing policies: uniform pricing, IBP, and a hybrid policy based on current UK arrangements termed commercial flexibility. Under this policy, IBP is used only where application of uniform pricing would disincentivise an indication’s launch.
METHODS: A quantitative framework was developed to assess drug access, health benefits, innovation, and pharmaceutical costs over a product’s lifecycle. The primary outcome is net health effects, defined as health benefits minus the health opportunity costs of funding. The model incorporates UK-based cost-effectiveness thresholds (£30,000/quality-adjusted life years (QALY) for standard indications and £20,000/QALY for commercial flexibility) and is illustrated using numerical examples and case studies of nivolumab and pembrolizumab, with broader applicability across health systems.
RESULTS: Implementing IBP reduces overall population health by 521-5,719 QALYs (range across product value profiles, with and without innovation effects) compared to uniform pricing. Commercial flexibility showed mixed effects: without innovation incentives, it resulted in 0-229 fewer QALYs; with innovation, gains were 0-1,795 QALYs. For IBP to improve health in the UK (where R&D influence is minimal), thresholds ≤£20,000/QALY were required; commercial flexibility needed ≤£15,000/QALY. Introducing nivolumab under IBP projects 69,747 QALYs lost, exceeding the 17,333 QALYs lost under uniform pricing. Pembrolizumab’s introduction under IBP anticipates 102,467 QALYs lost, compared to 19,603 QALYs lost under uniform pricing.
CONCLUSIONS: IBP and commercial flexibility can improve access to new drugs but must be carefully designed to avoid cost increases that could harm overall population health. Lower cost-effectiveness thresholds are required for these policies to contribute positively to population health.