OBJECTIVES: New drug with added value is eligible for a price premium over comparators in proportion to its additional value. Pharmaceuticals Pricing Rules published by Saudi Food and Drug Authority (SFDA) stated committee has the right to give a product with added value (i.e. therapeutic, safety, manufacturing) a 20% price premium with no specifications. The aim of this study is to analyze SFDA price premium decisions and develop a multidimensional value framework for price premium of a drug over comparators using Multi-criteria Decision Analysis (MCDA).

METHODS: An analysis of historical price premium decisions was made to determine criteria and magnitude of price premium. Then, literature search was conducted to determine value elements to incorporate in the price premium framework. MCDA approach was used to build the framework. Then, experts were consulted to determine magnitude of price premium, weight, and scoring system for each value element.

RESULTS: The analysis showed price premium decisions were made for drugs with therapeutic advantages (n=106); drugs with superior efficacy and\or superior dosage form, manufacturing advantages (n=97); drugs offering new packaging or dosage form, combined drugs, and\or addition of new substance, and\or marketing advantages (n=1); a brand product. Before MCDA, value elements and premium magnitude was not specified; some products received 130% premium. Then, value elements considered for the price premium framework were therapeutic, safety, manufacturing, and novel value elements. Using MCDA methodology, multi-dimensional sub-criteria and sub-sub-criteria were incorporated into the framework under each value element. Experts advised each value element should not exceed 20% as a price premium, and therapeutic advantages should hold the largest magnitude of price premium and the magnitude of each value element determined case-by-case.

CONCLUSIONS: Transparency on how added value of product is converted into a premium price is important. Advancing the evaluation process and using different approaches such as MCDA enables inclusive value assessment.