Implications of Value-Based Pricing
Afschin Gandjour, MD, PhD, MA
Professor of Health Management
Frankfurt School of Finance & Management
• VBP refers to regulation of reimbursement or pricing of pharmaceuticals (new and existing) on the basis of their therapeutic value.
• Given the high costs of innovative new drugs, most European countries have introduced VBP and international reference pricing.
• First country to introduce VBP in Europe was the U.K. (1999).
• VBP countries in Europe: Netherlands, Norway, Sweden, and U.K. based on formal economic evaluation; Belgium, France, and Germany based on added medical benefits categorization; and Italy, Denmark, and Spain.
2
Value-Based Pricing (VBP) in Europe
2
Cost Containment Policies
Source: Stadhouders N. Health Policy 2016 Note: Numbers are based on a literature search
33
4
Average Time From Regulatory Approval to First Sales and from First Sales to National P&MA Approval
Source: IMS Health. Pricing & Market Access Outlook (2014 data) 4
Consider not only time to reimbursement but also underuse with reimbursement!
Criteria for HTA
5Source: Angelis A, Kanavos P. Social Science & Medicine 2017
Unmet need/
OS/cancer-specific/PFS
Implementing VBP
• HTA
• Managed-entry agreements (MEAs)– Outcomes-based agreements (risk-sharing
agreements) using patient registries: address uncertainty in therapeutic value and overuse
– Financial-based agreements (e.g., price-volume agreements): address uncertainty in drug spending
6
• Delay in access due to time-intensive HTA
• Restriction on use (reimbursement only for certain subgroups, e.g., 2nd or 3rd line use, or initial prescription from a specialist).
• Even market withdrawal in case of low price and international reference pricing.
• MEAs allow policy-makers to obtain lower prices. They can also facilitate earlier market access in case of limited evidence about added therapeutic value of the medicine (outcome-based agreements).
• Financial-based agreements (e.g., price-volume agreements) may reduce or increase access.
• CAVE: reduction in access due to opportunity costs! 7
Possible Impact of VBP on Access
8
The Rise of Oncology MEAs
https://pharmaphorum.com/views-and-analysis/transparently-opaque-drug-list-prices-versus-net-prices/
9Data: 2008 – 2015Source: Pauwels K. Front. Pharmacol., 04 April 2017
Typology of Oncology MEAs in Europe
outcome-based agreements< financial-based agreements
Key Aspect of VBP: Willingness to Pay (Here: for a Life Year)
Average health care(cost containment)
Nearly ‘flat-of-the-curve’ health care
(growth containment)
Intervention Conventional CEA €21,473-€29,030
€111,843
Life-cycle or dynamicCEA (price drop [off-patent generic/branded], overuse, newindications and cohorts, option value)
€31,308-€42,326
€163,065