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A New Reimbursement System for Innovative Pharmaceuticals Combining Value-Based and Free Market Pricing

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  • Ulf Persson
  • Johanna Svensson
  • Billie Pettersson

Abstract

Sweden has experienced a national value-based pricing (VBP) system for innovative outpatient drugs operated by the Pharmaceutical Benefits Board — LFN (now called the Dental and Pharmaceutical Benefits agency — TLV) since 2002. VBP has the character of a monopoly system, leading to reimbursement decisions where usage of new medicines is limited to subgroups and not the population for which the drug is approved. VBP relies on a broad societal perspective, encouraging innovations by signaling to firms that value-adding treatments are demanded. However, the VBP system is operated without a drug budget responsibility. The budget responsibility lies at the regional level, not operating VBP, thus an intrinsic conflict is built into the system. The aim of this article is to suggest a modification to the current reimbursement system in Sweden where payment for pharmaceuticals is split between the regional and national levels. The system is expected to make new innovative pharmaceuticals accessible to a larger number of patients and provide more consumer surplus without reducing the producer surplus. In short, the county councils pay the marginal cost of production while the state pays for the innovation. Copyright Springer International Publishing AG 2012

Suggested Citation

  • Ulf Persson & Johanna Svensson & Billie Pettersson, 2012. "A New Reimbursement System for Innovative Pharmaceuticals Combining Value-Based and Free Market Pricing," Applied Health Economics and Health Policy, Springer, vol. 10(4), pages 217-225, July.
    • Handle: RePEc:spr:aphecp:v:10:y:2012:i:4:p:217-225
    DOI: 10.2165/11633930-000000000-00000
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    References listed on IDEAS

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    1. Lundin Douglas & Ramsberg Joakim, 2008. "Dynamic Cost-Effectiveness: A More Efficient Reimbursement Criterion," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-17, November.
    2. Anders Anell & Ulf Persson, 2005. "Reimbursement and clinical guidance for pharmaceuticals in Sweden," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 6(3), pages 274-279, September.
    3. Karl Claxton, 2007. "Oft, Vbp: Qed?," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 545-558, June.
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    Cited by:

    1. Hanna, E. & Toumi, M. & Dussart, C. & Borissov, B. & Dabbous, O. & Badora, K. & Auquier, P., 2018. "Funding breakthrough therapies: A systematic review and recommendation," Health Policy, Elsevier, vol. 122(3), pages 217-229.
    2. Rick A Vreman & Thomas F Broekhoff & Hubert GM Leufkens & Aukje K Mantel-Teeuwisse & Wim G Goettsch, 2020. "Application of Managed Entry Agreements for Innovative Therapies in Different Settings and Combinations: A Feasibility Analysis," IJERPH, MDPI, vol. 17(22), pages 1-20, November.
    3. Mikael Svensson & Fredrik Nilsson & Karl Arnberg, 2015. "Reimbursement Decisions for Pharmaceuticals in Sweden: The Impact of Disease Severity and Cost Effectiveness," PharmacoEconomics, Springer, vol. 33(11), pages 1229-1236, November.

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