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Multi-indication and Combination Pricing and Reimbursement of Pharmaceuticals: Opportunities for Improved Health Care through Faster Uptake of New Innovations

Author

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  • Ulf Persson

    (The Swedish Institute for Health Economics (IHE)
    Lund University)

  • J. M. Norlin

    (The Swedish Institute for Health Economics (IHE))

Abstract

Many pharmaceuticals are effective in multiple indications and the degree of effectiveness may differ. A product-based pricing and reimbursement system with a single price per product is insufficient to reflect the variable values between different indications. The objective of this article is to present examples of actual pricing and reimbursement decisions using current value-based pricing in Sweden and to discuss their implications and possible solutions. The value of several cancer drugs was estimated for various indications based on a willingness-to-pay threshold of 1 million SEK (EUR 104,000) per QALY gained. For some drugs, the estimated value was higher than the drug acquisition cost in several indications, whilst in others, the estimated value was lower than the drug acquisition cost. Drugs used in combination present a special case. If a drug prolongs survival and consequently also a continued use of the anchor drug, the combination use may not be cost effective even at a zero price. In a product-based pricing and reimbursement system, patients may not get access to drugs or access may be delayed and manufacturers may be discouraged to invest in future indications. To overcome these issues, there are several approaches to link price and value. One approach is a “weighted-average” price based on an average of the value across all indications. Another is “multi-indication pricing,” which enables price differentiation between indications. However, there are several barriers for applying multi-indication pricing and reimbursement schemes. One barrier is the lack of existing administrative infrastructure to track patients’ indications.

Suggested Citation

  • Ulf Persson & J. M. Norlin, 2018. "Multi-indication and Combination Pricing and Reimbursement of Pharmaceuticals: Opportunities for Improved Health Care through Faster Uptake of New Innovations," Applied Health Economics and Health Policy, Springer, vol. 16(2), pages 157-165, April.
    • Handle: RePEc:spr:aphecp:v:16:y:2018:i:2:d:10.1007_s40258-018-0377-7
    DOI: 10.1007/s40258-018-0377-7
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    References listed on IDEAS

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    1. S. Olofsson & U.-G. Gerdtham & L. Hultkrantz & U. Persson, 2018. "Measuring the end-of-life premium in cancer using individual ex ante willingness to pay," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(6), pages 807-820, July.
    2. Ulf Persson, 2012. "Value Based Pricing in Sweden: Lessons for Design?," Seminar Briefing 000141, Office of Health Economics.
    3. Josh Carlson & Katharine Gries & Kai Yeung & Sean Sullivan & Louis Garrison, 2014. "Current Status and Trends in Performance-Based Risk-Sharing Arrangements Between Healthcare Payers and Medical Product Manufacturers," Applied Health Economics and Health Policy, Springer, vol. 12(3), pages 231-238, June.
    4. 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.
    5. Jorge Mestre-Ferrandiz;Renato Dellamano;Michele Pistollato;Adrian Towse, 2015. "Multi-indication Pricing: Pros, Cons and Applicability to the UK," Seminar Briefing 001653, Office of Health Economics.
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    2. Kurt R. Brekke & Odd Rune Straume & Dag Morten Dalen, 2023. "Taking the competitor´s pill: when combination therapies enter pharmaceutical markets," NIPE Working Papers 12/2023, NIPE - Universidade do Minho.
    3. Paula K Lorgelly, 2018. "The Impact of Brexit on Pharmaceuticals and HTA," PharmacoEconomics - Open, Springer, vol. 2(2), pages 87-91, June.
    4. 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.

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