Optimal drug pricing, limited use conditions and stratified net benefits for Markov models of disease progression

Pricing Treatments Cost-Effectively when They Have Multiple Indications: Not Just a Simple Threshold Analysis

BACKGROUND

Economic evaluations of treatments increasingly employ price-threshold analyses. When a treatment has multiple indications, standard price-threshold analyses can be overly simplistic. We examine how rules governing indication-specific prices and reimbursement decisions affect value-based price analyses.

METHODS

We analyze a 2-stage game between 2 players: the therapy's manufacturer and the payer purchasing it for patients. First, the manufacturer selects a price(s) that may be indication specific. Then, the payer decides whether to provide reimbursement at the offered price(s). We assume known indication-specific demand. The manufacturer seeks to maximize profit. The payer seeks to maximize total population incremental net monetary benefit and will not pay more than their willingness-to-pay threshold. We consider game variants defined by constraints on the manufacturer's ability to price and payer's ability to provide reimbursement differentially by indication.

RESULTS

When both the manufacturer and payer can make indication-specific decisions, the problem simplifies to multiple single-indication price-threshold analyses, and the manufacturer captures all the consumer surplus. When the manufacturer is restricted to one price and the payer must make an all-or-nothing reimbursement decision, the selected price is a weighted average of indication-specific threshold prices such that reimbursement of more valuable indications subsidizes reimbursement of less valuable indications. With a single price and indication-specific coverage decisions, the manufacturer may select a high price where fewer patients receive treatment because the payer restricts reimbursement to the set of indications providing value commensurate with the high price. However, the manufacturer may select a low price, resulting in reimbursement for more indications and positive consumer surplus.

CONCLUSIONS

When treatments have multiple indications, economic evaluations including price-threshold analyses should carefully consider jurisdiction-specific rules regarding pricing and reimbursement decisions.

HIGHLIGHTS

With treatment prices rising, economic evaluations increasingly employ price-threshold analyses to identify value-based prices. Standard price-threshold analyses can be overly simplistic when treatments have multiple indications.Jurisdiction-specific rules governing indication-specific prices and reimbursement decisions affect value-based price analyses.When the manufacturer is restricted to one price for all indications and the payer must make an all-or-nothing reimbursement decision, the selected price is a weighted average of indication-specific threshold prices such that reimbursement of the more valuable indications subsidize reimbursement of the less valuable indications.With a single price and indication-specific coverage decisions, the manufacturer may select a high price with fewer patients treated than in the first-best solution. There are also cases in which the manufacturer selects a lower price, resulting in reimbursement for more indications and positive consumer surplus.

Literature Review on Health Emigration in Rare Diseases-A Machine Learning Perspective

The article deals with one of the effects of health inequalities and gaps in access to treatments for rare diseases, namely health-driven emigration. The purpose of the paper is to systematize knowledge about the phenomenon of health emigration observed among families affected by rare diseases, for which reimbursed treatment is available, but only in selected countries. The topic proved to be niche; the issue of "health emigration in rare diseases" is an area for exploration. Therefore, the further analysis used text mining and machine learning methods based on a database selected based on keywords related to this issue. The results made it possible to systematize the guesses made by researchers in management and economic fields, to identify the most common keywords and thematic clusters around the perspective of the patient, drug manufacturer and treatment reimbursement decision-maker, and the perspective integrating all the others. Since the topic of health emigration was not directly addressed in the selected sources, the authors attempted to define the related concepts and discussed the importance of this phenomenon in managing the support system in rare diseases. Thus, they indicated directions for further research in this area.

Launch prices for new pharmaceuticals in the heavily regulated and subsidized Spanish market, 1995-2007

This paper provides empirical evidence on the explanatory factors affecting introductory prices of new pharmaceuticals in a heavily regulated and highly subsidized market. We collect a data set consisting of all new chemical entities launched in Spain between 1997 and 2005, and model launch prices following an extended version of previous economic models. We found that, unlike in the US and Sweden, therapeutically "innovative" products are not overpriced relative to "imitative" ones after having controlled for other factors. Price setting is mainly used as a mechanism to adjust for inflation independently of the degree of innovation. The drugs that enter through the centralized EMA approval procedure are overpriced, which may be a consequence of market globalization and international price setting.

Pricing of medical devices under coverage uncertainty--a modelling approach

Product vendors and manufacturers are increasingly aware that purchasers of health care will fund new clinical treatments only if they are perceived to deliver value-for-money. This influences companies' internal commercial decisions, including the price they set for their products. Other things being equal, there is a price threshold, which is the maximum price at which the device will be funded and which, if its value were known, would play a central role in price determination. This paper examines the problem of pricing a medical device from the vendor's point of view in the presence of uncertainty about what the price threshold will be. A formal solution is obtained by maximising the expected value of the net revenue function, assuming a Bayesian prior distribution for the price threshold. A least admissible price is identified. The model can also be used as a tool for analysing proposed pricing policies when no formal prior specification of uncertainty is available.

Optimal vaccine stockpile design for an eradicated disease: application to polio

Eradication of a disease promises significant health and financial benefits. Preserving those benefits, hopefully in perpetuity, requires preparing for the possibility that the causal agent could re-emerge (unintentionally or intentionally). In the case of a vaccine-preventable disease, creation and planning for the use of a vaccine stockpile becomes a primary concern. Doing so requires consideration of the dynamics at different levels, including the stockpile supply chain and transmission of the causal agent. This paper develops a mathematical framework for determining the optimal management of a vaccine stockpile over time. We apply the framework to the polio vaccine stockpile for the post-eradication era and present examples of solutions to one possible framing of the optimization problem. We use the framework to discuss issues relevant to the development and use of the polio vaccine stockpile, including capacity constraints, production and filling delays, risks associated with the stockpile, dynamics and uncertainty of vaccine needs, issues of funding, location, and serotype dependent behavior, and the implications of likely changes over time that might occur. This framework serves as a helpful context for discussions and analyses related to the process of designing and maintaining a stockpile for an eradicated disease.

The impact of two pharmaceutical risk-sharing agreements on pricing, promotion, and net health benefits

OBJECTIVES

Health insurers are increasingly making use of risk-sharing agreements with drug manufacturers to manage uncertainties regarding the costs and effectiveness of new drugs. Several risk-sharing models exist including those based on sales volume, achievement of clinical thresholds, and achievement of cost-effectiveness thresholds. The objective of this article is to compare two risk-sharing arrangements and to investigate conditions under which each is preferable from the perspective of the payer and the manufacturer.

METHODS

We develop two two-period models to compare two risk-sharing arrangements between a payer and a drug manufacturer in which there is uncertainty about the effectiveness of the new drug. In the first risk-sharing agreement, the drug is listed on a formulary in the first period but delisted in the second period if the net monetary benefit in the first period is negative. In the second risk-sharing agreement, the manufacturer pays a rebate in each period if the net monetary benefit in that period is negative.

RESULTS

We show that the relative performance of the two arrangements depends on several factors and that neither arrangement is always preferred. Additionally, we are able to identify situations in which a payer and a manufacturer would prefer the same plan and other situations in which the two parties would disagree on which plan was most desirable.

CONCLUSIONS

Because neither risk-sharing arrangement is always preferred, payers and manufacturers must carefully consider the characteristics of their individual situation when entering into such contracts.