PCV74 - Three-Part Pricing to Reward Pharmaceutical Innovation and Increase Access: Case of PCSK9 Inhibitors

Abstract

High launch prices of new drugs may inhibit access to innovative treatments, especially in cases where budget impact is substantial. We use PCSK9 inhibitors (PCSK9i) for hypercholesterolemia to present a novel three-part pricing strategy that simultaneously improves access while better rewarding effective therapies. We propose a novel three-part pricing (TPP) schedule that introduces three phases prior patent expiration: evaluation, reward, and access. In the evaluation phase, the drug is priced at 50% off list price to encourage rapid adoption. In the reward phase, the prices are determined based on drug’s performance during the evaluation phase, measured by risk reduction in myocardial infarction and stroke. Prices fall close to the generic level in the access phase to facilitate widespread adoption. We use a widely-published microsimulation, the Future Elderly Model (FEM), to estimate clinical benefits associated with various efficacy scenarios for PCSK9i, and develop an economic model to demonstrate the results of TPP versus traditional fee-per-dose (status quo) pricing. Efficacy thresholds of PCSK9i are estimated based on a key randomized clinical trial (FOURIER). If PCSK9i efficacy in the evaluation phase is worse than clinical trial data suggest, TPP reduces total spending by $30 billion versus fee-per-dose pricing. If the drug demonstrates comparable efficacy, TPP generates comparable discounted cash flow to the manufacturer (by design) but delivers revenues faster. If the drug shows better efficacy, discounted cash flow to the manufacturer increases by $30 billion, but this increase is driven by higher uptake. Overall, TPP reduces the cost per adverse event avoided under both the expected and low efficacy scenarios (by $50,000 and $296,000, respectively). By tying reimbursement to efficacy targets, three-part pricing can improve access to PCSK9i and lower spending risk to payers over traditional fee-for-dose pricing. The model shows promise for other innovative treatments as well.