Reducing Uncertainty in Value-Based Pricing Using Evidence Development Agreements

Abstract

Value-based pricing (VBP), whereby prices are set according to the perceived benefits offered to the consumer at a time when costs and benefits are characterized by considerable uncertainty and are then reviewed ex post, is a much discussed topic in pharmaceutical reimbursement. It is usually combined with coverage with evidence development (CED), a tool in which manufacturers are granted temporary reimbursement but are required to collect and submit additional health economic data at review. Many countries, including the UK, are signalling shifts in this direction. Several countries, including Sweden, have already adopted this approach and offer good insight into the benefits and pitfalls in actual practice. To describe VBP reimbursement decision making using CED in actual practice in Sweden. Decision making by The Dental and Pharmaceutical Benefits Agency (TLV) in Sweden was reviewed using a case study of continuous intraduodenal infusion of levodopa/carbidopa (Duodopa®) in the treatment of advanced Parkinson's disease (PD) with severe motor fluctuations. The manufacturer of Duodopa® applied for reimbursement in late 2003. While the proper economic data were not included in the submission, TLV granted reimbursement until early 2005 to provide time for the manufacturer to submit a formal economic evaluation. The re-submission with economic data was considered inadequate to judge cost effectiveness, so TLV granted an additional extension of reimbursement until August 2007, at which time conclusive data were expected. The manufacturer initiated a 3-year, prospective health economic study and a formal economic model. Data from a pre-planned interim analysis of the data were loaded into the model and the cost-effectiveness ratio was the basis of the next re-submission. TLV concluded that the data were suitable for making a definite decision and that the drug was not cost effective, deciding to discontinue reimbursement for any new patients (current patients were unaffected). The manufacturer continued to collect data and to improve the economic model and re-submitted in 2008. New data and the improved model resulted in reduced uncertainty and a lower cost-effectiveness ratio in the range of Swedish kronor (SEK)430,000 per QALY gained in the base-case analysis, ranging up to SEK900,000 in the most conservative sensitivity analysis, resulting in reimbursement being granted. The case of Duodopa® provides excellent insight into VBP reimbursement decision making in combination with CED and ex post review in actual practice. Publicly available decisions document the rigorous, time-consuming process (four iterations were required before a final decision could be reached). The data generated as part of the risk-sharing agreement proved correct the initial decision to grant limited coverage despite lack of economic data. Access was provided to 100 patients while evidence was generated. Economic appraisal differs from clinical assessment, and decision makers benefit from analysis of naturalistic, actual practice data. Despite reviewing the initial trial-based, 'piggy-back' economic analysis, TLV was uncertain of the cost effectiveness in actual practice and deferred a final decision until observational data from the DAPHNE study became available. Second, acceptance of economic modelling and use of temporary reimbursement conditional on additional evidence development provide a mechanism for risk sharing between TLV and manufacturers, which enabled patient access to a drug with proven clinical benefit while necessary evidence to support claims of cost effectiveness could be generated.