OBJECTIVES: The concept of “value-based pricing” has taken different meanings depending on the type of stakeholder and perspective, leaving room for misalignment between manufacturer and healthcare budget-holders; which have at times resulted in failed pricing negotiations and postponed launches. There is a need for establishing a common framework for decision-making, in order to avoid delays in patient access to innovative therapies. This research explores how European payers define “value-based pricing” and to whom that “value” is created, to inform manufacturers' value demonstration strategies.

METHODS: Literature searches were conducted to identify definitions for “value-based pricing” used by different stakeholder archetypes. An online payer survey was then conducted to explore European payers’ definition of “value-based pricing”. Results were analyzed to identify differences.

RESULTS: The concept of “value-based pricing” has been described in the literature and by industry stakeholders from three different perspectives. 1) Economics perspective: value-based pricing is proposed as an alternative to competition-based pricing, where price is set by the end-customers’ perceived value of the product linked to the level of differentiation; and the full level of innovation should be reflected in the price. 2) US-centric healthcare perspective: “value-based pricing” often refers to an alternative to “free market-driven pricing” model, where the price of a drug is linked to the actual clinical benefit it provides, rather than being set at the maximum level the market will bear. 3) European payer perspective: price is set according to the estimated value of a product to the healthcare budget-holder, where value is assessed from a healthcare efficiency perspective.

CONCLUSIONS: The goal of “value-based pricing”, from an European healthcare payer perspective is to create “surplus value” for the healthcare system, and enable the reallocation of scarce resources into other priority areas. Broader recognition of the goals of healthcare payers is needed to ensure successful pricing negotiations and patient access