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