OBJECTIVES: It is broadly accepted that a medicine’s price should align with the value provided to patients and the healthcare system. This is challenging for the growing number of medicines that could serve multiple indications. There has been much discussion of payment models that recognise value at the indication-level, but a divergence of opinion on the implications. We ask: can value-based pricing at the indication-level support better patient access and value whilst protecting the financial sustainability of payers? METHODS: We develop a model to demonstrate the indication-expansion journey of a hypothetical medicine and compare the outcomes associated with uniform pricing versus payment by indication. Outcomes include: patient access and benefit; incentives for innovation; and budget impact for payers. RESULTS: By quantifying the projected revenue with or without the ability to modify price, we demonstrate incentives to invest in the R&D required to launch five distinct indications of a hypothetical medicine. Over the 10-year time horizon modelled, indication-level pricing is associated with greater patient benefit (509 further quality-adjusted life years generated) and increased incentives for innovation (two further indications) versus uniform pricing. If prices are set to correspond with the indication-level value-based price, this would require a higher investment of up to EUR 18m for the hypothetical medicine. However, in practice prices are likely to be set below these value-based price “ceilings”, through more directive payer procurement, negotiation, and budget management at the indication-level, or naturally as a consequence of increased competition. This means that patients will benefit from expanded access and payers / health systems will benefit as well. CONCLUSIONS: Payment models that recognise value at the indication-level provide payers with more granular information to support value-based budget management. By providing better incentives for innovation, patients access and health benefit can be maximised.