Value-based Pricing Research Articles

P42 Value-Based Pricing for Drugs with Accelerated Approval Incorporating Uncertainty and Risk Aversion

P42 Value-Based Pricing for Drugs with Accelerated Approval Incorporating Uncertainty and Risk Aversion

HTA45 Value-Based Price Forecasting: An Accurate Method for Orphan Drugs?

Orphan products are associated with increased evidence uncertainty for HTA decision-making. Therefore, HTA agencies have adopted orphan-specific pathways or considerations. However, as usually there is no appropriate comparator, forecasting price of novel orphan products with existing methods is challenging. This research aimed to determine accuracy of using a value-price model to forecast price of an orphan product across different payer archetypes.

Livestock feed markets across agro-ecological zones of Burkina Faso: feed provenance, price and quality

Livestock form a major means of livelihood in Burkina Faso where almost 80% of the rural population keep sheep and goats. However, the major constraint to livestock productivity is seasonal feed scarcity. To bridge the increasing feed gap, particularly in the dry season, livestock keepers are increasingly turning to purchase of feeds from markets, which has led to emergence of feed markets in peri-urban towns and cities in the Sahel. To characterize the dynamics of these livestock feed markets, to inform and guide the development of efficient feeding systems in peri-urban livestock production, we conducted surveys in feed markets in four major towns and cities of Burkina Faso across all the agro-ecological zones. Results from this study showed that the feed types on sale included browse, bush hay, bran of maize, millet, sorghum, rice and wheat, legume residues, cereal straw and agro-industrial by-products such as cottonseed cake and concentrate feed for ruminants. The average number of feeds sold per vendor ranged from 1.5 ± 0.1 in early dry season to 3.5 ± 0.4 in late dry season. More than 80% of the feed sellers in each location reported that generation of additional income for the household was the principal reason for feed sale. The price of livestock feeds sold at different locations in Burkina Faso varied significantly with season, market location and feed type. Cottonseed cake had the highest crude protein content in all locations and across seasons ranging from an average of 16.3 to 31.9% while cereal straw (millet, maize and sorghum straw) had the lowest crude protein content of 3.5%. The results also showed a lack of a clear trend in terms of relationship between price and nutritional quality which confirms the absence of quality standardization for feeds on sale in our study sites. In developing feed industry in the region, the issue of quality standardization needs to be addressed to facilitate establishment of nutritive value-based pricing and to ensure that consumers pay a premium for quality products.

A Model-Based Estimate of the Cost-Effectiveness Threshold in Germany.

Value-based pricing of new, innovative health technologies defined as pricing through economic evaluation requires the use of a basic cost-effectiveness threshold. This study presents a cost-effectiveness model that determines the cost-effectiveness threshold for life-extending new, innovative technologies based on health system opportunity costs. To estimate health system opportunity costs, the study used German data and examined the period between 1896 and 2014. To this end, it determined intertemporal differences in the remaining lifetime spending and life expectancy by age and gender. To account for the age composition of the population, it weighted age-specific intertemporal changes in the remaining lifetime spending and life expectancy by the age-specific population size. To estimate life expectancy gains solely attributable to the health care system, it used aggregated data on amenable mortality. It calculated the cost-effectiveness ratio of health care spending in the German health care system on average and at the margin. Based on the cost-effectiveness ratio of health care spending at the margin, the threshold value for life-prolonging new, innovative technologies was at least €42,634 per life-year gained, with a point estimate of €88,107 per life-year gained. Based on the average ratio, the threshold value dropped below €34,000 per life-year gained. This study provides new evidence on the cost-effectiveness threshold for value-based pricing of new, innovative technologies. Data from Germany suggest that a threshold value based on health care spending at the margin is considerably higher than that based on the average ratio.

Usulan Strategi Penetapan Value Based Pricing pada UMKM

way possible. Interviews with purposive sample determination and observation were conducted using the descriptive qualitative approach. The data was analyzed using a variety of approaches, including the Sustainable Competitive Advantage (SCA) framework, the VRIO framework, and TOWS analysis Then the researcher conducted a content analysis to propose a pricing strategy. The recommended proposal is a pricing strategy with a Value-Based Pricing approach.
 Keywords: Pricing Strategy, Value-Based Pricing

Determinants of cancer drug pricing and how to overcome the cancer premium

The high and increasing prices of cancer drugs are a public health challenge. To disrupt the cancer premium and improve patient access to cancer drugs, different action steps are indicated: more transparency on the price determination process and actual prices, value-based pricing, and "price with evidence development."

Cost-effectiveness and Value-based Pricing of Trastuzumab Deruxtecan in Metastatic Breast Cancer With Low HER2 Expression

BackgroundRecently, the DESTINY-Breast04 trial revealed that trastuzumab deruxtecan (T-DXd) significantly prolonged overall survival in patients with human epidermal growth factor receptor 2 (HER2)-low metastatic breast cancer (MBC). Considering the extraexpensive price of the new drug, a cost-effectiveness analysis of T-DXd is necessary to perform in the United States. In addition, because T-DXd has not been marketed in China, the pricing is a very important driver for the cost-effectiveness of T-DXd. The range of drug costs for which T-DXd could be considered cost-effective from a Chinese healthcare system perspective was explored. MethodsWe developed a Markov model to evaluate the cost-effectiveness of T-DXd versus physician's choice of chemotherapy (PCC). The simulation time horizon for this model was the life-time of patients. Transition probabilities were based on data from the DESTINY-Breast04 trial. Health utility data were derived from published studies. Outcome measures were costs (in 2022 US$), life-years (LYs), quality-adjusted LYs (QALYs), and the incremental cost-effectiveness ratio (ICER). One-way and probabilistic sensitivity analyses assessed the uncertainty of key model parameters and their joint impact on the base-case results. ResultsThe model predicted that T-DXd provided an improvement of 0.84 LYs and 0.58 QALYs compared to PCC, with an ICER of $259,452.05 per QALY in the United States and $87,646.40 per QALY in China. The one-way sensitivity analysis demonstrated that the price of T-DXd had the greatest impact on ICERs. Probabilistic sensitivity analysis predicted that the probabilities of T-DXd being cost-effective compared to PCC were 7.2% and 0% at a willingness-to-pay of $150,000 per QALY in the United States and $36,475 per QALY (3 times the per capita gross domestic product) in China, respectively. Subgroup analyses showed that T-DXd was more effective for patients without visceral disease at baseline, followed by patients with Asian ethnic, patients without prior CDK 4/6 inhibitors therapy, and patients with HER2-1+ (IHC detection) status. ConclusionT-DXd was unlikely to offer a reasonable value for the money spent compared to PCC for patients with HER2-low MBC in the United States. A value-based price for T-DXd was reduced by 51% in the United States and less than $1950 per cycle in China.

UNDERSTANDING GEN Z CONSUMER PREFERENCES FOR PRICING METHODS: A CASE STUDY IN CEBU, PHILIPPINES

This study investigates how pricing methods affect the likelihood of purchase decisions made by Generation Z (Gen Z). Data from a sample of Gen Z buyers were gathered using a descriptive survey method in order to examine the different pricing indicators on their purchase behavior. The findings revealed that pricing strategies significantly play a role in the purchasing behavior of Gen Z consumers, and the mean scores of the different pricing categories indicate their importance in the decision-making process. The study identifies that value-based pricing is critical to Gen Z consumers, who place significant emphasis on the perceived value of products. Hence, aligning pricing with product value can increase the likelihood of purchase. The findings also indicate that regular discounts or promotional offers can trigger the behavioral tendency of motivating Gen Z consumers to make purchases. The results also suggest that pricing strategy has a substantial impact on consumer loyalty and brand-switching behaviors. Companies can use pricing as a tool to encourage brand loyalty and reduce the likelihood of customers switching to competitor products. Offering personalized pricing and loyalty rewards are some ways to strengthen brand-consumer relationships. Finally, the findings suggest that pricing strategies are crucial to the purchasing decisions of Gen Z consumers. Businesses must prioritize pricing as a vital component of their marketing strategy and tailor it to meet the needs and preferences of this demographic. The study contributes to the existing literature by providing insights into the role of pricing on Gen Z consumer behavior and providing recommendations for businesses seeking to target this demographic. KEYWORDS: Gen Z, purchasing decisions, pricing, descriptive survey method, value-based pricing, discount pricing, brand loyalty, brand switching, marketing strategy, competitive advantage.

Cost effectiveness of innovative anti-cancer drugs and reimbursement decisions in China

ObjectivesBecoming the bottleneck of patient access to new drugs, the reimbursement coverage process in China started to engage health economic evaluations. This study aimed to quantify the potential impacts of cost-effectiveness profiles on reimbursement coverage in China. MethodsCost and effectiveness measures of both reimbursable and non-reimbursable indications of newly covered anti-cancer drugs from 2017 to 2021 were collected from the literature since official documents were not accessible. The measures included incremental costs-effectiveness ratios (ICERs), incremental quality-adjusted life years (QALYs), incremental costs, acquisition costs, population sizes of target patient groups, availability of overall survival evidence in clinical trials, the language of literature, country of origin of the drug, and the year of initial coverage. Logistic regressions were used to examine the impacts of cost and effectiveness measures. ResultsSeventy-four anti-cancer drugs were newly covered from 2017 to 2021. We identified 64 and eight ICERs of reimbursable and non-reimbursable indications of the newly covered anti-cancer drugs. Of note, nine reimbursable indications of the newly covered anti-cancer drugs did not have corresponding literature evidence. The regression results suggested that ICER was not associated with reimbursement coverage. By contrast, incremental QALYs and patient population size by cancer type were positively associated with coverage, while acquisition costs were negatively associated with coverage. ConclusionsClinical benefits, acquisition costs, and the disease burden of the target population associated with new anti-cancer drugs are likely important considerations of reimbursement decisions in China. However, the importance of value-based pricing should be reinforced and investigated in the future when official documents become accessible. Public interest summaryAccess to new health technologies through reimbursement is critical to the public. Since 2017, Chinese healthcare and health insurance agencies have adopted health technology appraisals to expedite reimbursement decisions of new drugs, among which anti-cancer drugs accounted for the greatest proportion. The appraisals largely relied on health economic evaluations. In the current study, we quantified the potential impacts of cost-effectiveness profiles on the reimbursement of new anti-cancer drugs in China. We did not identify any significant association between reimbursement and incremental cost-effectiveness ratio, the latter of which is the primary measure of drug economic profiles. On the upside, incremental quality-adjusted life years (QALYs) were positively associated with reimbursement coverage, whereas acquisition costs had a negative association. To secure patient access to high-value anti-cancer drugs via reimbursement in China, it is vital to reinforce the consideration of cost-effectiveness evidence.

Price fairness: square equity and mean pricing

Prices have a leverage effect on firm profits. Prices, however, have also an impact on customer’s perceived price fairness and thus indirectly on firm’s bottom line. A growing body of literature shows this. Papers on the level of the fair price, however, are rather scarce. Based on different concepts of justice, two levels of fair prices are proposed: square equity and mean prices. I run an experiment which shows that both are considered fairer than cost-based or value-based prices. The results can be used to assess fairness implications of prices ex ante and hence complement traditional pricing approaches.

Recent advances in addressing the market failure of new antimicrobials: Learnings from NICE's subscription-style payment model.

Antimicrobial resistance (AMR) is a growing threat to global health. With pathogenic bacteria inevitably becoming more resistant to existing antimicrobials, mortality and costs due to AMR will significantly increase over the next few decades if adequate action is not taken. A major challenge in addressing AMR is the lack of financial incentives for manufacturers to invest in developing new antimicrobials. This is partly because current approaches in health technology assessment (HTA) and standard modeling methods fail to capture the full value of antimicrobials. We explore recent reimbursement and payment frameworks, particularly pull incentives, aimed to address the market failures in antimicrobials. We focus on the "subscription-style" payment model recently used in the UK and discuss the learnings for other European countries. A pragmatic literature review was conducted to identify recent initiatives and frameworks between 2012 and 2021, across seven European markets. The National Institute for Health and Care Excellence (NICE) technology appraisals for cefiderocol and for ceftazidime with avibactam were reviewed to evaluate how the new UK model has been applied in practice and identify the key challenges. The UK and Sweden are the first European countries to pilot the feasibility of implementing pull incentives through fully and partially delinked payment models, respectively. The NICE appraisals highlighted the complexity and large areas of uncertainty of modeling antimicrobials. If HTA and value-based pricing are part of the future in tackling the market failure in AMR, European-level efforts may be needed to overcome some of the key challenges.

Disruptive technologies: How to influence price sensitivity triggering consumers’ behavioural beliefs

The adoption of new technologies generates an attractive offer of innovative products that flood the markets. Are these products perceived as expensive or cheap? What determines the price range accepted by consumers? This research identifies behavioural variables that can modify the price perception of new technological products, that is, increase or decrease critical price thresholds. As direct value-based pricing method, Van Westendorp’s price sensitivity meter is receiving increasing attention to identify critical price thresholds for new technologies. We rely on arguments from the theory of planned behaviour to explore what changes consumers’ acceptable price levels. Considering a set of disruptive technologies (augmented reality smart glasses, 3D printers, writing robots, self-driving cars, hoverboard robots), a structural approach is used to explore consumers’ perceived threshold prices. The main results sugest that social pressure increases the perceived minimum price and price sensitivity can be decreased evoking perceived ease of use.

Impact of Drug Price Regulation on Patient Access to Medicines: A Systematic Review

This systematic review explored the multifaceted impact of drug price regulation on patient access to essential medicines. Recognizing the complexity of this relationship, the paper investigates the influence of various types of drug price regulation mechanisms, the disparities across different geographical regions and health-care systems, and the differential effects between branded and generic drugs. Our findings illustrate that the effects of drug price regulation are not universally uniform or predictable, but rather, they are highly context dependent. Direct price control measures can, on the one hand, improve accessibility through affordability; yet on the other hand, potentially disrupt drug supply. Indirect price control methods, such as reference pricing and value-based pricing, while designed to spur competition, can be hampered by administrative complexities and potentially stifle pharmaceutical innovation. Despite the pervasive use of drug price regulation, access to essential medicines remains disparate and inequitable, indicating a need for a comprehensive approach that includes health system reforms, improved health literacy, and greater collaboration between stakeholders. Future research should further investigate the enduring disparities in patient access to medicines, the long-term effects of various pricing mechanisms, and their interplay with the evolving pharmaceutical industry and health-care landscapes.

Demonstrating proof of concept for value-based agreements in Europe: two real-world cases.

Value-based agreements (VBAs) link access, reimbursement, or price to the real-world usage and impact of a medicine, thereby enabling patient access while reducing clinical or financial uncertainty for the payer. VBAs have the potential to support improved patient outcomes, given the value-oriented approach to care, and lead to overall savings, while enabling payers to share risk and reduce uncertainty. This commentary outlines the key challenges, enablers, and a framework for successful implementation by comparing the experience of two VBAs for AstraZeneca medicines, aiming to increase confidence in their future use. Engagement by payers, manufacturers, physicians, and provider institutions, and robust data collection systems that are accessible, simple to use, and add little burden to physicians were key to successfully negotiating a VBA that worked for all stakeholders. In both country systems, a legal/policy framework enabled innovative contracting. These examples demonstrate proof of concept for VBA implementation in different settings, and may inform future VBAs.

Alternatives to the quality-adjusted life year: How well do they address common criticisms?

To analyze whether other outcome measures used in health technology assessment (HTA) address the criticisms of quality-adjusted life years (QALYs). HTA methods guidance from 11 US comparator countries (the G10 and Australia) and six value frameworks from US organizations were reviewed to identify health outcome measures currently used to evaluate the benefits of a drug. The study involved a documentary analysis of guidelines to identify outcome measures used by the sampled HTA organizations. Similar outcomes were grouped together into outcome types. Each type was analyzed to determine the extent to which it replicates key advantages and responds to criticisms of QALYs extracted from the literature. Outcomes were included if guidance from at least one HTA organization identified the outcome as acceptable for HTA. Outcomes measuring or evaluating the benefit, clinical effect, or impact of a drug or health technology was included; methods of calculating costs were excluded. Seven types of outcome measures were identified falling into three groups: preference-based, single-dimension outcomes, and outcomes using non-health perspectives. Among the seven QALY alternative outcome measures currently used for HTA by the sampled countries, no one outcome measure addresses all the QALY criticisms while retaining the advantageous features of the QALY. Proposals to adopt health technology assessment (HTA) to support value-based pricing of prescription drugs in the US have faced pushback over the use of the QALY. There is no single "right" outcome measure, and the criticisms of QALYs apply to other outcome measures used to evaluate health. The measures identified have different features and strengths, which may be appropriate for specific decision making goals, but the QALY remains the best option for decision making that requires comparisons of the overall societal value of health gains.

Influence of Marketing Strategy on Church Sustainability: The Anglican Church of Kenya

The Anglican Church of Kenya (ACK) is the oldest church in Kenya and the largest protestant denomination in the country. Since religions were liberalized after the attainment of political independence in AD 1964, the church has experienced declining congregations due to the registration of new denominations, especially the Pentecostal ones. The decline has been noticeable from the beginning of the 21st Century but there are no reports of strategies to resolve the phenomenon. Since congregation members are the customers for a church, the declining phenomenon indicates a marketing problem that requires a marketing strategy. This research investigated how the ACK is operationalizing a marketing strategy and its influence on its sustainability. The ACK operates on standardized structures and a diocese is the highest independent unit. This research was conducted in the diocese of Kirinyaga as the unit of analysis with Wanguru Archdeaconry as the unit of observation. The independent variables were the elements of the marketing mix, namely Product, Promotion, Position and Price strategies while the dependent variable was the church sustainability. Data collection involved 308 participants drawn from the 19 parishes in the Wanguru archdeaconry and included the church leadership and the congregation members. The research instruments were a semi-structured questionnaire and interviews. For the Product variable, the research applied the Maslow Hierarchy of needs theory while for the promotion variable, it was the AIDA Model (Attention, Interest, Desire and Action). For the positioning strategy, the Segmentation, Targeting and Positioning (STP) Model was applied while the Value-Based Pricing theory was used for the price strategy. For church sustainability, the research applied the Triple Bottom Line model. Data analysis was conducted using Structural Package for Social Sciences (SPSS). The results indicated that the ACK has not operationalized an effective marketing strategy for while the Gospel as the marketing product of the church was highly rated, there were low scores for Promotion, Position and Price strategies.

Value-Based Pricing of US Prescription Drugs

This cross-sectional study estimates how annual US drug spending would change if prices for prescription drugs were set at the value-based price.

EE100 An Approach to Value-Based Pricing for Digital Health Applications in Germany

In December 2019, legislative changes established a fast-track market access and pricing process for digital health applications (DiGAs) in the German statutory health insurance (SHI). Accordingly, after one year of free pricing by manufacturers, DiGA prices must account for the applications’ positive healthcare effects (pVE) in terms of a medical benefit or improvements in care structure and processes. However, the regulations do not indicate how the patient-relevant benefits of a DiGA should be translated into a reasonable, value-based price. Therefore, this study aims to present and discuss an approach for the practical implementation of value-based DiGA pricing.

PP14 Value-Based Pricing For Advanced Therapy Medicinal Products: Emerging Affordability Solutions

IntroductionThe emergence of advanced therapy medicinal products (ATMPs), a disruptive class of health technologies, is generating important challenges in terms of value assessment, and their high prices introduce critical access and affordability concerns.MethodsThe aim of this oral presentation is to expose the challenges of traditional value assessment and pricing and reimbursement methods in the evaluation of ATMPs, and to characterize the current and prospective financing solutions that may ensure patient access to and affordability for these health technologies.ResultsStandard health technology assessment (HTA) is not designed for assessing ATMPs and may delay access to these therapies; thus, a broader concept of value is required. As a result, value-based pricing methodologies have been gaining prominence as a way to cope with the specific challenges of ATMPs. The pricing and reimbursement framework should ensure a balance between encouraging innovation and maximizing value for money for payers through the attribution of a fair price to new health technologies. The provision of early scientific advice to developers by regulatory and HTA bodies is key, as it will help diminish the perspective gap between developers, regulators, and payers.ConclusionsThe high efficacy and high price dynamic of many ATMPs necessitates novel financing models, both in the European Union and in the USA. Managed entry agreements, where financing is conditional upon the submission of additional evidence, linked with leased payments may offer effective strategies to address the uncertainties caused by the evidence gap associated with ATMPs, ensuring affordable and sustained access to these therapies.

PP123 Fair Drug Pricing: Review Of Literature And Models

IntroductionConstantly rising costs of pharmaceuticals and biologics spurred a debate in recent years leading to increasingly persistent public calls to overhaul the existing system of pricing and distributing health technologies. The COVID-19 pandemic exposed the controversies of the current model of access to health commodities in all evidence when the existing discrepancy between the global supply and the global demand in health technology can be viewed as an illustration of a conflict between the neoliberal free market ideal of health innovation genesis and ownership and the original democratic principles of what would now be called sustainable human development.MethodsPresented here is an integrative literature review of over 265 publications in peer-reviewed journals on Pubmed and Web of Science, academic and “grey” literature, mainly publicism, published in English. We reviewed and analyzed included literature for the purposes of identifying leading ideas with regards to ethical frameworks for evaluating or referencing value for pricing health commodities.ResultsSeven drug pricing models were analyzed in terms of them satisfying the three most common criteria of price adequacy – its fairness (viewed from the point of view of main schools of ethical thought), accountability-for-reasonableness (including transparency of decisions, relevance, existing mechanisms of revisions and governance to ensure compliance), and price functionality. One of the central ideas under controversy is value, its relative character for different contexts due to the high weight of the willingness-to-pay in the value-based health technology assessment (HTA) decisions and the relative value of money, and the attempts to quantify value in a universal way for institutions, patients, and originators.ConclusionsWhile the review scored the pricing models on their “public fairness” with volume-based rather than value-based pricing models leading the rating, the main conclusion of the review is that the main meaningful divide is between value creation and value extraction when pricing health innovation.