Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word

Hawkins, N. and Scott, D. A. (2011) Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word. Health Economics, 20(6), pp. 688-698. (doi: 10.1002/hec.1625) (PMID:20568075)

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During recent discussions, it has been argued that stratified cost-effectiveness analysis has a key role in reimbursement decision-making and value-based pricing (VBP). It has previously been shown that when manufacturers are price-takers, reimbursement decisions made in reference to stratified cost-effectiveness analysis lead to a more efficient allocation of resources than decisions based on whole-population cost-effectiveness analysis. However, we demonstrate that when manufacturers are price setters, reimbursement or VBP based on stratified cost-effectiveness analysis may not be optimal. Using two examples – one considering the choice of thrombolytic treatment for specific patient subgroups and the other considering the extension of coverage for a cancer treatment to include an additional indication – we show that combinations of extended coverage and reduced price can be identified that are advantageous to both payers and manufacturers. The benefits of a given extension in coverage and reduction in price depend both upon the average treatment benefit in the additional population and its size relative to the original population. Negotiation regarding trade-offs between price and coverage may lead to improved outcomes both for health-care systems and manufacturers compared with processes where coverage is determined conditional simply on stratified cost-effectiveness at a given price.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Hawkins, Professor Neil
Authors: Hawkins, N., and Scott, D. A.
College/School:College of Medical Veterinary and Life Sciences > School of Health & Wellbeing > Health Economics and Health Technology Assessment
Journal Name:Health Economics
ISSN (Online):1099-1050
Published Online:21 June 2010

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