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Incorporating Dynamic Pricing in Cost-Effectiveness Analysis: Are Known Unknowns Valuable?

Author

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  • R. Brett McQueen

    (University of Colorado Anschutz Medical Campus)

  • Kelly E. Anderson

    (University of Colorado Anschutz Medical Campus)

  • Joseph F. Levy

    (Bloomberg School of Public Health, Johns Hopkins University)

  • Josh J. Carlson

    (University of Washington School of Pharmacy)

Abstract

Background Current practice in health technology assessment (HTA) of pharmaceuticals conducts cost-effectiveness analyses (CEAs) based on a static price or the estimated price at market launch. Recent publications suggest incorporating dynamic pricing. To test the feasibility and importance of including dynamic pricing, we compared the standard static approach to four dynamic scenarios by replicating US-based HTA evaluations with dynamic pricing inputs. Methods The four case examples included omalizumab (Xolair®) for the treatment of allergic asthma, elagolix (Orilissa®) for the treatment of endometriosis, ocrelizumab (Ocrevus®) for the treatment of primary progressive multiple sclerosis (PPMS), and dupilumab (Dupixent®) for the treatment of atopic dermatitis (AD). The primary outcome was the relative percentage change in incremental cost-effectiveness ratios (ICERs) per quality-adjusted life-year (QALY) for two dynamic pricing scenarios versus static pricing. Secondary outcomes included the absolute difference in ICERs versus base-case and an assessment of decision uncertainty. Results Base-case ICERs were $327,000, $102,000, $700,000, and $102,000 for allergic asthma, endometriosis, PPMS, and AD, respectively. Across scenarios and case examples, the range of ICERs versus base-case varied from decreases of 56% to increases of 232%. The absolute difference in ICERs versus base-case ranged from decreases of $120,000 to increases of $758,000. Conclusions on cost effectiveness were altered in 2/16 scenarios across the four case examples. Conclusions Given the decision context that US payers face, with prices varying over time, findings suggest further research to reduce uncertainty around price trajectories, as well as conducting or updating multiple assessments over the lifecycle of pharmaceutical products.

Suggested Citation

  • R. Brett McQueen & Kelly E. Anderson & Joseph F. Levy & Josh J. Carlson, 2023. "Incorporating Dynamic Pricing in Cost-Effectiveness Analysis: Are Known Unknowns Valuable?," PharmacoEconomics, Springer, vol. 41(3), pages 321-327, March.
    • Handle: RePEc:spr:pharme:v:41:y:2023:i:3:d:10.1007_s40273-022-01230-x
    DOI: 10.1007/s40273-022-01230-x
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    References listed on IDEAS

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    1. Rena M. Conti & Ernst R. Berndt, 2016. "Specialty Drug Prices and Utilization after Loss of U.S. Patent Exclusivity, 2001–2007," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 273-321, National Bureau of Economic Research, Inc.
    2. Gerard T. Vondeling & Qi Cao & Maarten J. Postma & Mark H. Rozenbaum, 2018. "The Impact of Patent Expiry on Drug Prices: A Systematic Literature Review," Applied Health Economics and Health Policy, Springer, vol. 16(5), pages 653-660, October.
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