Abstract
BackgroundValue demonstration in health care remains a challenge. This paper examines traditional approaches to pricing and the evolution of value-based pricing (VBP), and proposes a new framework for evidence-based valuation (EBV). The main objective of EBV is to estimate the value-based pricing range for the new medicine, identify key product attributes that drive value as perceived by various stakeholders, and then elucidate the requisite evidence to support those value claimsMethodsEBV centers on a structured framework for estimating a drug’s price based on its perceived value to various stakeholders. The EBV framework consists of identifying key value attributes that drive adoption of a drug in a given therapeutic area; gaining insights into stakeholder value considerations and evidence requirements; and quantifying stakeholders’ perceptions of specific value attributes within pricing premiumsResultsAn example demonstrates the application of the EBV framework in a simplified manner for 3 drugs indicated for renal cell carcinoma, 3 drugs for prostate cancer, and 1 drug for melanoma. HTAs, published trial results, and publications archived in PubMed between 2005 and 2013 were analyzed to identify key value attributes. The following 5 attributes were considered: overall survival (OS), progression-free survival (PFS), population size, trial comparator, and adverse eventsConclusionsThe method described offers a means to appraise pharmaceuticals in an environment increasingly focused on evidence-based medicine and value-based health care
Highlights
Value demonstration in health care remains a challenge
We included 3 drugs indicated for renal cell carcinoma (RCC; drugs A, B, C), 3 drugs indicated for prostate cancer, and 1 drug indicated for melanoma
Health Technology Assessments (HTAs), published trial results, and publications archived in PubMed between 2005 and 2013 were analyzed to identify key value attributes
Summary
Value demonstration in health care remains a challenge. This paper examines traditional approaches to pricing and the evolution of value-based pricing (VBP), and proposes a new framework for evidence-based valuation (EBV). The main objective of EBV is to estimate the value-based pricing range for the new medicine, identify key product attributes that drive value as perceived by various stakeholders, and elucidate the requisite evidence to support those value claims. The EBV framework consists of identifying key value attributes that drive adoption of a drug in a given therapeutic area; gaining insights into stakeholder value considerations and evidence requirements; and quantifying stakeholders’ perceptions of specific value attributes within pricing premiums. A valuebased price is one that accurately reflects the utility gained by the end-user of the product, and in many cases the societal utility when considered from a broader population health perspective. Net benefits have traditionally been captured through health economic analysis This aims to estimate cost differentials or health gain accrued by use of a product over time versus a comparator
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