Value in Health

Virtual Collections: Pricing and Reimbursement

Do the Current Performance-Based Schemes in Italy Really Work? "Success Fee:" A Novel Measure for Cost-Containment of Drug Expenditure

Andrea Navarria, Valentina Drago, Lucia Gozzo, Laura Longo, Silvana Mansueto, Giacomo Pignataro, Filippo Drago

Value in Health. 2015.18(1):131–136.

BACKGROUND
Drug costs have risen rapidly in the last decade, driving third-party payers to adopt performance-based agreements that provide either a discount before payment or an ex post reimbursement on the basis of treatments' effectiveness and/or safety issues.

OBJECTIVES
This article analyses the strategies currently approved in Italy and proposes a novel model called "success fee" to improve payment-by-result schemes and to guarantee patients rapid access to novel therapies.

METHODS
A review of the existing risk-sharing schemes in Italy has been performed, and data provided by the Italian National report (2012) on drug use have been analyzed to assess the impact on drug expenditure deriving from the application of "traditional" performance-based strategies since their introduction in 2006.

RESULTS
Such schemes have poorly contributed to the fulfillment of the purpose in Italy, producing a trifling refund, compared with relevant drugs costs for the National Health System : €121 million out of a total of €3696 million paid. The novel risk-sharing agreement called "success fee" has been adopted for a new high-cost therapy approved for idiopathic pulmonary fibrosis, pirfenidone, and consists of an ex post payment made by the National Health System to the manufacturer for those patients who received a real benefit from treatment.

CONCLUSIONS
"Success fee" represents an effective strategy to promote value-based pricing, making available to patients a rapid access to innovative and expensive therapies, with an affordable impact on drug expenditure and, simultaneously, ensuring third-party payers to share with manufacturers the risk deriving from uncertain safety and effectiveness.

Analysis of Medicine Prices in New Zealand and 16 European Countries

Sabine Vogler, Kate Kilpatrick, Zaheer-Ud-Din Babar

Value in Health. 2015.18(4):484–492.

OBJECTIVE
To compare prices of medicines, both originators and generics, in New Zealand and 16 European countries.

METHODS
Ex-factory price data as of December 2012 from New Zealand and 16 European countries were compared for a basket of 14 medicines, most of which were at least partially funded by the state in the 17 countries. Five medicines had, at least in some countries, generic versions on the market whose prices were also analyzed. Medicine price data for the 16 European countries were provided by the Pharma Price Information service. New Zealand medicine prices were retrieved from the New Zealand Pharmaceutical Schedule. Unit prices converted into euro were compared at the ex-factory price level.

RESULTS
For the 14 medicines surveyed, considerable price differences at the ex-factory price level were identified. Within the European countries, prices in Greece, Portugal, the United Kingdom, and Spain ranked at the lower end, whereas prices in Switzerland, Germany, Denmark, and Sweden were at the upper end. The results for New Zealand compared with Europe were variable. New Zealand prices were found in the lowest quartile for five medicines and in the highest quartile for seven other products. Price differences between the originator products and generic versions ranged from 0% to 90% depending on the medicine and the country.

CONCLUSIONS
"Success fee" represents an effective strategy to promote value-based pricing, making available to patients a rapid access to innovative and expensive therapies, with an affordable impact on drug expenditure and, simultaneously, ensuring third-party payers to share with manufacturers the risk deriving from uncertain safety and effectiveness.

Unifying Research and Reimbursement Decisions: Case Studies Demonstrating the Sequence of Assessment and Judgments Required

Claire McKenna, Marta Soares, Karl Claxton, Laura Bojke, Susan Griffin, Stephen Palmer, Eldon Spackman

Value in Health. 2016.18(6):865–875.

BACKGROUND
The key principles regarding what assessments lead to different types of guidance about the use of health technologies (Only in Research, Approval with Research, Approve, or Reject) provide an explicit and transparent framework for technology appraisal.

OBJECTIVE
We aim to demonstrate how these principles and assessments can be applied in practice through the use of a seven-point checklist of assessment.

METHODS
The value of access to a technology and the value of additional evidence are explored through the application of the checklist to the case studies of enhanced external counterpulsation for chronic stable angina and clopidogrel for the management of patients with non–ST-segment elevation acute coronary syndromes.

RESULTS
The case studies demonstrate the importance of considering 1) the expected cost-effectiveness and population net health effects; 2) the need for evidence and whether the type of research required can be conducted once a technology is approved for widespread use; 3) whether there are sources of uncertainty that cannot be resolved by research but only over time; and 4) whether there are significant (opportunity) costs that once committed by approval cannot be recovered.

CONCLUSIONS
Medicine prices varied considerably between European countries and New Zealand as well as among the European countries. These differences are likely to result from national pricing and reimbursement policies.

The Questionable Economic Case for Value-Based Drug Pricing in Market Health Systems

Mark V. Pauly

Value in Health. 2017.20(2):278–282.

This article investigates the economic theory and interpretation of the concept of "value-based pricing" for new breakthrough drugs with no close substitutes in a context (such as the United States) in which a drug firm with market power sells its product to various buyers. The interpretation is different from that in a country that evaluates medicines for a single public health insurance plan or a set of heavily regulated plans. It is shown that there will not ordinarily be a single value-based price but rather a schedule of prices with different volumes of buyers at each price. Hence, it is incorrect to term a particular price the value-based price, or to argue that the profit-maximizing monopoly price is too high relative to some hypothesized value-based price. When effectiveness of treatment or value of health is heterogeneous, the profit-maximizing price can be higher than that associated with assumed values of quality-adjusted life-years. If the firm sets a price higher than the value-based price for a set of potential buyers, the optimal strategy of the buyers is to decline to purchase that drug. The profit-maximizing price will come closer to a unique value-based price if demand is less heterogeneous.

Thirty Years of Media Coverage on High Drug Prices in the United States—A Never-Ending Story or a Time for Change?

Christine Leopold, James D. Chambers, Anita K. Wagner

Value in Health. 2016.19(1):14–16.

In recent years drug prices have increasingly become a topic of debate for patients, providers, payers and policy makers.

To place the current drug price debate into historical context, we searched the New York Times and Wall Street Journal from 1985 – 2015 and found that concerns about drug prices have commonly featured in the press over the study period with recently stronger calls for change.

Price levels, types of innovations, stakeholder responses, and strategies to address high prices discussed in the media suggest that concerted efforts are required to enable affordable and high-value innovations.

Pharmaceutical Pricing in Germany: How Is Value Determined within the Scope of AMNOG?

Victoria Desirée Lauenroth, Tom Stargardt

Value in Health. 2017.20(7):927–935.

OBJECTIVES
To analyze how value is determined within the scope of the German Pharmaceutical Restructuring Act, which came into effect in 2011.

METHODS
Using data from all pharmaceuticals that had undergone assessment, appraisal, and price negotiations in Germany before June 30, 2016, we applied generalized linear model regression to analyze the impact of added benefit on the difference between negotiated prices and the prices of comparators. Data were extracted from the Federal Joint Committee's appraisals and price databases. We specified added benefit in various ways. In all models, we controlled for additional criteria such as size of patient population, European price levels, and whether the comparators were generic.

RESULTS
Our regression results confirmed the descriptive results, with price premiums reflecting the extent of added benefit as appraised by the Federal Joint Committee. On the substance level, an added benefit was associated with an increase in price premium of 227.2% (P < 0.001) compared with no added benefit. Moreover, we saw increases in price premium of 377.5% (P < 0.001), 90.0% (P < 0.001), and 336.8% (P < 0.001) for added benefits that were "considerable," "minor," and "not quantifiable," respectively. Beneficial effects on mortality were associated with the greatest price premium (624.3%; P < 0.001), followed by such effects on morbidity (174.7%; P < 0.001) and adverse events (93.1%; P = 0.019).

CONCLUSIONS
Price premiums, or "value," are driven by health gain, the share of patients benefiting from a pharmaceutical, European price levels, and whether comparators are generic. No statement can be made, however, about the appropriateness of the level of price premiums.


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