The impact of reimbursement negotiations on cost and availability of new pharmaceuticals: evidence from an online experiment

Dominik J Wettstein,Stefan Boes

doi:10.1186/s13561-020-00267-y

Abstract

BackgroundThe necessity to measure and reward “value for money” of new pharmaceuticals has become central in health policy debates, as much as the requirement to assess the “willingness to pay” for an additional, quality-adjusted life year (QALY). There is a clear need to understand the capacity of “value-based” pricing policies to impact societal goals, like timely access to new treatments, sustainable health budgets, or incentivizing research to improve patient outcomes. Not only the pricing mechanics, but also the process of value assessment and price negotiation are subject to reform demands. This study assesses the impact of a negotiation situation for life-extending pharmaceuticals on societal outcomes. Of interest were general effects of the bargaining behaviour, as well as differences caused by the assigned role and the magnitude of prices.MethodsWe ran an online experiment (n = 404) on Amazon Mechanical Turk (MTurk). Participants were randomly assigned into four treatment groups for a reimbursement negotiation between two roles (health minister, pharma representative) in two price framings. Payoff to players consisted of a fixed salary and a potential bonus, depending on their preferences, their price offer and the counter offer of a randomly paired negotiation partner. Success had real social consequences on other MTurk users (premium payers, investors) and via donations to a patient association.ResultsMargins between reservation prices and price offers increased throughout the game. Yet, 47% of players reduced at least once and 15% always their bonus probability to zero in favour of an agreement. 61% of simulated negotiation pairs could have reached an agreement, based on their preferences. 63% of these were successful, leaving 61% of patients with no access to the new treatment. The group with “real world” prices had lower prices and less agreements than the unconverted payoff group. The successful markets redistributed 20% of total assets from premium payers to investors over five innovation cycles.ConclusionsThe negotiation situation for pharmaceutical reimbursement has notable impact on societal outcomes. Further research should evaluate policies that align preferences and increase negotiation success.

Highlights

Health authorities and health care payers in Organisation for Economic Cooperation and Development (OECD) countries face an increasing number of new medicines offered at high prices [1, 2]
The policy outcomes, and the process of value assessment and price negotiation is subject to reform demands [1, 11,12,13,14,15]
Preferences in reimbursement negotiations This study builds on a previous study where we reported the effects of the negotiation situation on stated preferences [15]

Summary

Introduction

Health authorities and health care payers in OECD countries face an increasing number of new medicines offered at high prices [1, 2]. In oncology, the pipelines of pharmaceutical companies have grown in the past decade by almost 80%, reaching a “historic high level” of 849 molecules in late-stage [3, 4] This brings an increasing challenge for regulators and payers to secure access for patients to new, lifesaving treatments while controlling expanding costs. In recent years the heuristics and implications have been incorporated into public policy analysis and even policy implementation in different countries, including health care [21, 23,24,25,26,27] Just recently it has been argued, that “several behavioural economicrelated phenomena may affect price negotiations [...] between pharmaceutical ‘buyers’ and ‘sellers’” [14]. The main reason for this is that the respective interactions take place in a much more complex setting than in other markets [15]

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