OBJECTIVES: Currently, drug prices are often set for treatments irrespective of patient benefit. Many drugs are effective in multiple indications and the degree of effectiveness may differ. A wide variety of pricing strategies have been adopted by different countries, these are broadly categorised as “indication-specific” or “uniform” pricing.

METHODS: A targeted literature review was conducted to evaluate pricing approaches used globally. A model was generated to assess the difference in outcomes across three indications under uniform pricing compared to indication-specific pricing. It is assumed that profit maximising behaviour was adopted and the price is set such that the estimated cost-effectiveness ratio equals the willingness-to-pay threshold, leading to zero net benefit.

RESULTS: The two pricing strategies result in different drug costs across the entire market. This cost difference is highly dependent on the specific market structure and is seen to vary in both magnitude and direction depending on the relative sizes of each included indication. The value to payers when using indication specific pricing will remain constant as the approved indications change as it is set independent of the market structure. Uniform pricing is set based upon the relative size of each indication and therefore should be updated as the market evolves to maintain the value to the payer.

CONCLUSIONS: Given that an efficient uniform price is dependent on the uptake in each indication, there are additional challenges to implement the optimal price in a market, compared to indication-specific pricing. The difference in the drug acquisition incurred for the payer under different strategies will lead to the profits for the manufacturer varying under the different pricing strategies. For an estimated efficient uniform price there may be reduced patient access and inefficient pricing if the indications reaching final approval are different to those used to set this price.