OBJECTIVES: Many countries are now considering value-based pricing (VBP) to curb the rising cost of pharmaceuticals and health care spending, while maximizing the value of the drug to the population. One of the most well-used tools to implement VBP in healthcare is using cost-effectiveness analysis (CEA) directly to drive the pricing strategy that sets the right incentives for healthcare systems, or indirectly as part of their multi-criteria decision analysis.

METHODS: A targeted literature search was conducted to (1) review the pricing guidelines of HTA bodies, (2) identify HTA bodies using CEA directly as a VBP strategy, and (3) the evidence that HTA bodies use it to exercise monopsony power. The search included published studies, white papers, policy briefs, and published HTA guidelines. Overall, 30 studies and reports were identified and reviewed.

RESULTS: Canada, United Kingdom (UK) and Japan provide explicit policies on how pricing is based on CEA results (using some form of VBA), whereas Australia, and New Zealand use CEA to drive the confidential pricing negotiations. CEA has proven to be very effective in balancing static and dynamic efficiency in pharmaceutical prices, especially in those countries with a fixed budget (UK, Japan, New Zealand). However, it is observed that countries have used CEA to signal more lucrative markets to pharmaceutical companies by setting higher willingness-to-pay (WTP) thresholds for rare diseases and cancers, setting complicated pricing policies and submissions, influencing the level of competition in the market, and regulating levels of pharmaceutical investment.

CONCLUSIONS: While CEA is a valuable tool to determine reasonable pharmaceutical prices for the added value in the market, it can also be used by single-payer countries to exercise monopsony power to directly and indirectly influence the prices and competition in the market.