PCP27 - Evidence-Based Valuation: A Novel Framework for Drug Pricing

Abstract

Value demonstration in healthcare remains a challenge. We examined traditional approaches to pricing and the evolution of value-based pricing (VBP), to inform development of a new framework for evidence-based valuation (EBV). EBV incorporates clinical, economic and humanistic factors, as well as stakeholder perception of key product attributes, to estimate a comprehensive value-based price range for medicines. EBV provides a healthcare-specific structured framework for estimating an intervention’s price based on its value to various stakeholders. The EBV framework quantifies four key variables – comparator cost, differentiation, quality of evidence and market forces – to derive a valuation reflecting utility gained healthcare stakeholders. In practice, utilization of EBV includes: identifying key clinical and non-clinical value attributes; assessing evidence requirements; and leveraging elements of HEOR, multicriteria decision analysis, and primary research to quantify value of key attributes. We tested this model in 7 oncology products across different indications: three drugs indicated for renal cell carcinoma, three drugs for prostate cancer, and one drug for melanoma. HTAs, published trial results, and publications archived in PubMed between 2005 and 2017 were analyzed to identify key value attributes. The following five attributes were considered: overall survival (OS); progression free survival (PFS); population size; trial comparator; and adverse events. An aggregate value was generated for each product using the selected attributes based upon the published trial results and after assigning scores based on qualitative criteria. Initial value scores had a moderately positive correlation with WAC (r=0.67). While it is not expected that EBV should be perfectly correlated with WAC, limitations may include lack of inclusion of discounts from WAC, small qualitative sample size and limited set of product attributes included in the exercise. The method described offers a means to appraise pharmaceuticals in an environment increasingly focused on evidence-based medicine and value-based healthcare.