Value-based Pricing Research Articles

Estimation of Value-Based Price for Five High-Technology Medical Devices Approved by a Regional Health Technology Assessment Committee in Italy.

Background and objectivesValue-based pricing (VBP) is used quite frequently for medicines, but its application to medical devices is very limited. The objective of the present study was to conduct a pilot experience of systematic estimation of the value-based price of medical devices from the perspective of our national health system. Our experience was focused on high-technology devices (class IIb/III and active implantable). The objective was to evaluate the applicability of VBP in a real-world setting and to estimate the value-based price of devices in all cases where this estimation was feasible.MethodsThe dataset analysed in this work consists of 24 new devices approved consecutively in the Tuscany region over the period from January 2020 to December 2021. Since the calculation of value-based price requires the availability of a cost-effectiveness analysis, we searched for this information for each of these devices. The Cost-Effectiveness Analysis (CEA) Registry of Tufts Medical Center (US) and the health technology assessment (HTA) reports of our region were considered adequate sources of these data. Standard equations of cost-effectiveness were applied to determine the value-based price for these devices, and these prices were compared with the corresponding real prices charged in our region.ResultsWe found adequate information for five devices (21%) out of the total of 24. In three of these cases, the published analysis taken as a reference was based on Markov modelling. The comparison between value-based prices and real prices generally showed an acceptable concordance, though with a couple of outliers. An important finding is that, in a large proportion of cases (79%), the information needed for this calculation was lacking.ConclusionTo our knowledge, this is the first experience in which an institution of the healthcare system has tried a systematic application of VBP in the field of high-technology devices. Our results are encouraging and suggest a wider application of cost-effectiveness in this field.

Value-Based Pricing and Budget Impact Analysis for Multi-Indication Drugs: A Case Study of Immunotherapies.

We aimed to calculate the value-based price of each indication and compare the drug price and budget impact among value-based pricing (VBP) scenarios, using immunotherapy as a case. Atezolizumab, nivolumab, and pembrolizumab prices were estimated for VBP scenarios, namely indication value-based pricing (IBP), IBP with refund, and weighted-average pricing (WAP). To estimate the value-based price of each indication, cost-effectiveness analyses were conducted by setting the incremental cost-effectiveness ratio of the first reimbursed indication to the threshold. The budget impact for each scenario was compared with that of the pricing system in Korea (which has a 4.75% price reduction). The value-based prices of non-reimbursed indications were lower for atezolizumab and higher for nivolumab than those for the reimbursed indication. The drug price fluctuations were the largest in IBP, varying between 28.56–328.81% of the current list price. The net price of the non-reimbursed indications decreased from 0% to 71.44% in IBP with refund, and the budget impact was the lowest among VBPs. Although the fluctuation in the budget impact in WAP was smaller than IBP, higher drug prices were identified for low-value indications. In conclusion, IBP with refund is a viable method for multi-indication drugs, because it has minimal drug price and budget impact changes.

Cost-effectiveness of Aducanumab and Donanemab for Early Alzheimer Disease in the US

Several anti-amyloid monoclonal antibodies have been developed for slowing the progression of Alzheimer disease (AD). Among the furthest developed are aducanumab, which received accelerated approval from the US Food and Drug Administration in 2021, and donanemab, which is currently undergoing phase 3 trials. The cost-effectiveness of these treatments has not been established. To estimate the cost-effectiveness of aducanumab and donanemab relative to standard care for early AD in the US. A decision analytic model was used to estimate the lifetime health and economic outcomes of adults with early AD, from US healthcare sector and societal perspectives. Simulated patients had a mean (SD) age of 75.2 (5.5) years; 65% had mild cognitive impairment and 35% had mild dementia. Analyses were conducted from April 6, 2021, to January 20, 2022. Standard care, aducanumab (selected inputs including disease progression hazard ratio [HR] of 0.89 [95% CI, 0.63-1.15], annual price of $28 000, and twice-yearly monitoring with magnetic resonance imaging [MRI] of the brain), or donanemab (selected inputs including disease progression HR of 0.68 [95% CI, 0.44-0.99], annual price of $28 000, and twice-yearly monitoring with MRI of the brain and amyloid positron emission tomography [PET] monitoring). Donanemab was switched to placebo after substantial amyloid reduction on PET imaging, which occurred in 27% of patients at 6 months and 55% of patients at 12 months. Quality-adjusted life-years (QALYs); costs, in 2020 US dollars; incremental cost-effectiveness ratios (ICERs); and value-based prices, defined as the maximum price at which a treatment would be cost-effective given a cost-effectiveness threshold of ICER of $150 000/QALY. Lifetime QALYs increased by 0.133 with aducanumab and 0.408 with donanemab. Total health care sector and societal costs increased by $130 100 and $127 800, respectively, with aducanumab and by $78 700 and $71 600, respectively, with donanemab, driven largely by drug costs ($119 000 for aducanumab and $44 600 for donanemab). Health care sector and societal ICERs relative to standard care were $981 000/QALY and $964 000/QALY, respectively, for aducanumab and $193 000/QALY and $176 000/QALY, respectively, for donanemab. In sensitivity analysis, aducanumab's value-based price remained less than $50 000/y, even when assuming a 90% reduction in disease progression. Donanemab's value-based price surpassed $50 000/y once its efficacy exceeded 50%. These findings suggest that at current expected prices, neither aducanumab nor donanemab would be cost-effective for early AD in the US. Donanemab's dosing scheme, in which patients suspend treatment on achieving substantial amyloid reductions, may provide a rubric by which sufficiently effective anti-amyloid antibody treatments could be cost-effective even when priced comparably to other biologics.

Orphan Drug Prices and Epidemiology of Rare Diseases: A Cross-Sectional Study in Italy in the Years 2014-2019.

IntroductionIt is well acknowledged that the price of orphan drugs is normally higher than that resulting from the value-based pricing. A correlation between the cost of therapy for orphan drugs and the epidemiology (prevalence and incidence) of the related rare disease can be hypothesized.MethodsThis analysis includes all approved orphan drugs by European Medicines Agency whose reimbursement was granted for the first therapeutic indication in the years 2014–2019 in Italy. Regression and correlation analyses were performed to analyze the possible correlations between the logarithm of the annual therapy cost and the epidemiology of the rare diseases, between orphan drugs consumption and epidemiology of related rare disease and between therapy cost and the consumption.ResultsThe regression analysis between the annual cost of therapy estimated on the published ex-factory price and the prevalence showed a slightly decreasing, not statistically significant, trend (coefficient: −0.10, p-value: 0.41). The results were similar when using the price resulting from the application of Managed Entry Agreements (coefficient: −0.11, p-value: 0.40). The regression analysis between sales volume and prevalence showed a positive slope without an acceptable level of significance (p-value: 0.04). The correlation analysis between the therapy cost and the sales volume highlighted again an absence of significant association, similarly if considering only ATC L orphan drugs, or the incidence.DiscussionThe definition of the price of an orphan drug seems not to depend on the rarity of the disease, and sales volumes do not correlate with the epidemiology of the rare disease and with the annual cost of therapy.

Estimating Value-Based Price and Quantifying Uncertainty around It in Health Technology Assessment: Frequentist and Bayesian Approaches.

Although several statistical methods have been developed to inform decision making on reimbursement under uncertainty (e.g., expected net benefit, cost-effectiveness acceptability curves, and expected value of perfect information [EVPI]), those for value-based pricing are limited. This research develops methods for estimating the value-based price and quantifying the uncertainty around it in health technology assessment. We defined the value-based price of a medical product under assessment as the price at which the incremental cost-effectiveness ratio is just equal to a cost-effectiveness threshold. According to this definition, we derived an explicit form of the value-based price. Using this explicit form, we developed frequentist and Bayesian approaches to value-based pricing under uncertainty. Our proposed methods were illustrated via 2 hypothetical case studies. The value-based price can be expressed explicitly using cost, effectiveness, and a cost-effectiveness threshold and is a linear function of a cost-effectiveness threshold. In the frequentist framework, point estimation, interval estimation, and hypothesis testing for the value-based price are available. In the Bayesian framework, the best estimate of the value-based price under uncertainty is the weighted median value-based price with the weight of the expected consumption volume of a medical product under assessment. This is based on the opportunity loss incurred by a decision error in value-based pricing. This opportunity loss also provides a basis for the calculation of EVPI associated with value-based pricing. These methods provided estimates of the value-based prices of medical products and the uncertainty around them in 2 hypothetical case studies. Our developed methods can improve decision making on value-based pricing in health technology assessment.

Digital Therapeutic Care Apps With Decision-Support Interventions for People With Low Back Pain in Germany: Cost-Effectiveness Analysis.

BackgroundDigital therapeutic care apps provide a new effective and scalable approach for people with nonspecific low back pain (LBP). Digital therapeutic care apps are also driven by personalized decision-support interventions that support the user in self-managing LBP, and may induce prolonged behavior change to reduce the frequency and intensity of pain episodes. However, these therapeutic apps are associated with high attrition rates, and the initial prescription cost is higher than that of face-to-face physiotherapy. In Germany, digital therapeutic care apps are now being reimbursed by statutory health insurance; however, price targets and cost-driving factors for the formation of the reimbursement rate remain unexplored.ObjectiveThe aim of this study was to evaluate the cost-effectiveness of a digital therapeutic care app compared to treatment as usual (TAU) in Germany. We further aimed to explore under which circumstances the reimbursement rate could be modified to consider value-based pricing.MethodsWe developed a state-transition Markov model based on a best-practice analysis of prior LBP-related decision-analytic models, and evaluated the cost utility of a digital therapeutic care app compared to TAU in Germany. Based on a 3-year time horizon, we simulated the incremental cost and quality-adjusted life years (QALYs) for people with nonacute LBP from the societal perspective. In the deterministic sensitivity and scenario analyses, we focused on diverging attrition rates and app cost to assess our model’s robustness and conditions for changing the reimbursement rate. All costs are reported in Euro (€1=US $1.12).ResultsOur base case results indicated that the digital therapeutic care strategy led to an incremental cost of €121.59, but also generated 0.0221 additional QALYs compared to the TAU strategy, with an estimated incremental cost-effectiveness ratio (ICER) of €5486 per QALY. The sensitivity analysis revealed that the reimbursement rate and the capability of digital therapeutic care to prevent reoccurring LBP episodes have a significant impact on the ICER. At the same time, the other parameters remained unaffected and thus supported the robustness of our model. In the scenario analysis, the different model time horizons and attrition rates strongly influenced the economic outcome. Reducing the cost of the app to €99 per 3 months or decreasing the app’s attrition rate resulted in digital therapeutic care being significantly less costly with more generated QALYs, and is thus considered to be the dominant strategy over TAU.ConclusionsThe current reimbursement rate for a digital therapeutic care app in the statutory health insurance can be considered a cost-effective measure compared to TAU. The app’s attrition rate and effect on the patient’s prolonged behavior change essentially influence the settlement of an appropriate reimbursement rate. Future value-based pricing targets should focus on additional outcome parameters besides pain intensity and functional disability by including attrition rates and the app’s long-term effect on quality of life.

Game—Gimme a Better Price! A Negotiation Role Play on B2B Pricing in Hotel Revenue Management

We present a classroom role play to immerse students in the difficulties of applying value-based pricing principles to the practice of B2B price negotiations at different levels of the hotel value chain. The students assume roles as hotel chain and individual hotel management and as key business clients to the individual hotels. Through strategic and tactical preparations that rely on incremental additions of information on the goals, students prepare themselves to negotiate aspects linked with B2B pricing in a hotel revenue management context and collect points based on their success. After the negotiations, they systematically reflect on their performance vis-à-vis their set intentions. The role play is targeted to be an assignment in master’s level hotel revenue management teaching, but it could be modified to target bachelor’s students or other fields in which value-based pricing is still at its infancy. Based on our experience with running the game in a classroom as well as twice remotely because of COVID-19, it is compatible with both forms of learning and could potentially be extended to an asynchronous online learning environment.

Modeling Benefits, Costs, and Affordability of a Novel Gene Therapy in Hemophilia A.

The objective was to undertake an early cost-effectiveness assessment of valoctocogene roxaparvovec (valrox; Roctavian) compared to factor (F)VIII prophylaxis or emicizumab (Hemlibra; Roche HQ, Bazel, Switzerland) in patients with severe Hemophilia A (HA) without FVIII-antibodies. We also aimed to incorporate and quantify novel measures of value such as treatment durability, maximum value-based price (MVBP) and break-even time (ie, time until benefits begin to offset upfront payment). We constructed a Markov model to model bleeds over time which were linked to costs and quality-of-life decrements. In the valrox arm, FVIII over time was estimated combining initial effect and treatment waning and then linked to bleeds. In FVIII and emicizumab arms, bleeds were based on trial evidence. Evidence and assumptions were validated using expert elicitation. Model robustness was tested via sensitivity analyses. A Dutch societal perspective was applied with a 10-year time horizon. Valrox in comparison to FVIII, and emicizumab showed small increases in quality-adjusted life years at lower costs, and were therefore dominant. Valrox' base case MVBP was estimated at €2.65 million/treatment compared to FVIII and €3.5 million/treatment versus emicizumab. Mean break-even time was 8.03 years compared to FVIII and 5.68 years to emicizumab. Early modeling of patients with HA in The Netherlands treated with valrox resulted in estimated improved health and lower cost compared to prophylactic FVIII and emicizumab. We also demonstrated feasibility of incorporation of treatment durability and novel outcomes such as value-based pricing scenarios and break-even time. Future work should aim to better characterize uncertainties and increase translation of early modeling to direct research efforts.

Value-capture in digital servitization

PurposeDigital capabilities in operations and delivery through constant data acquisition and future predictions have accelerated digital servitization through reduced uncertainty. New flexibility in value-capture concepts like dynamic and value-based pricing is introduced, which was impossible before. This paper explores two things. Firstly, how embracing contractual flexibility of price-variance and contract lengths influences customer perceived value in artificial intelligence (AI) enabled digital offerings. Secondly, the role transparency plays in the perceived value of such offerings.Design/methodology/approachThe paper uses an experiment-based survey and quantitative assessment within a business-to-business setup with 137 respondents across a couple of industrial manufacturers in the Nordic region.FindingsThe authors observations indicate that value-capture-related flexibilities introduced by digital offerings, namely price fluctuations and longer contract lengths, are perceived to deliver more value to customers than standard offerings with known conditions. The authors findings indicate that introduced flexibilities are perceived as opportunities rather than uncertainties leading to higher perceived value by customers. The increased value perception can be explained by the transparency of these offerings provided by data-driven digital technologies'.Originality/valueThe paper is an original work to understand the value-capture implication of digital servitization. The authors discuss the possibilities of different value-capture strategies that companies can adopt within digital business models.

Cost-Effectiveness and Value-Based Pricing of Aducanumab for Patients With Early Alzheimer Disease.

Aducanumab was granted accelerated approval with a conflicting evidence base, near-unanimous Food and Drug Administration Advisory Committee vote to reject approval, and a widely criticized launch price of $56,000 per year. The objective of this analysis was to estimate its cost-effectiveness. We developed a Markov model to compare aducanumab in addition to supportive care to supportive care alone over a lifetime horizon. Results were presented from both the health system and modified societal perspective. The model tracked the severity of disease and the care setting. Incremental cost-effectiveness ratios were calculated and a threshold analysis was conducted to estimate at what price aducanumab would meet commonly used cost-effectiveness thresholds. Using estimates of effectiveness based on pooling of data from both pivotal trials, patients treated with aducanumab spent 4 more months in earlier stages of Alzheimer disease. Over the lifetime time horizon, treating a patient with aducanumab results in 0.154 more quality-adjusted life-years (QALYs) gained per patient and 0.201 equal value of life-years gained (evLYG) per patient from the health care system perspective, with additional costs of approximately $204,000 per patient. The incremental outcomes were similar for the modified societal perspective. At the launch price of $56,000 per year, the cost-effectiveness ranged from $1.02 million per evLYG to $1.33 million per QALY gained from the health care system perspective and from $938,000 per evLYG to $1.27 million per QALY gained in the modified societal perspective. The annual price to meet commonly used cost-effectiveness thresholds ranged from $2,950 to $8,360, which represents a discount of 85%-95% off from the annual launch price set by the manufacturer. Using estimates of effectiveness based only on the trial that suggested a benefit, the mean incremental cost was greater than $400,000 per QALY gained. Patients treated with aducanumab received minimal improvements in health outcomes at considerable cost. This resulted in incremental cost-effectiveness ratios that far exceeded commonly used value thresholds, even under optimistic treatment effectiveness assumptions. These findings are subject to the substantial uncertainty regarding whether aducanumab provides any true net health benefit, but evidence available currently suggests that an annual price of aducanumab of $56,000 is not in reasonable alignment with its clinical benefits.

POSA208 Recognising Value of Multi-Indication Therapies: Can Pricing by Indication Benefit Payers As Well As Patients? Results of a Modelling Exercise

It is broadly accepted that a medicine’s price should align with the value provided to patients and the healthcare system. This is challenging for the growing number of medicines that could serve multiple indications. There has been much discussion of payment models that recognise value at the indication-level, but a divergence of opinion on the implications. We ask: can value-based pricing at the indication-level support better patient access and value whilst protecting the financial sustainability of payers?

POSB44 Drivers of Value-Based Price (VBP) for a Multi-Cancer Early Detection (MCED) Test

MCED testing could increase detection of cancer at early stages when survival outcomes are better and treatment costs are lower, but is expected to increase screening costs. This modeling study explores key drivers of the potential range of VBP for a multi-cancer test in a US population.

POSC208 The Value-Based Contracting Cookbook: A Recipe for Successful Implementation

Value-based agreements (VBAs) link access, reimbursement or price to the real-world impact of a medicine, thereby enabling patient access while reducing clinical or financial uncertainty. Potential benefits include timely patient access, improved patient outcomes, efficient health systems, and sustainable research and innovation. While uptake is increasing globally, VBAs are not yet fully embedded in most healthcare systems. The objective of this research was to identify factors enabling implementation of VBAs in practice.

Performance-based risk-sharing arrangements for devices and diagnostics in the United States: a systematic review.

BACKGROUND: Performance-based risksharing arrangements (PBRSAs) have continued to emerge and evolve over the last 2 decades. To date, most of the attention and available literature have focused on pharmaceuticals. OBJECTIVE: To assess the current status and trends regarding the use of PBRSAs for diagnostics and devices in the United States. METHODS: We reviewed publicly available PBRSAs for diagnostics and devices using the University of Washington Performance Based Risk Sharing Database. We augmented the review using PubMed, Google, and payer and industry websites. Key words and phrases such as outcomes-based, value-based, coverage with evidence development, performance-based, and risk-sharing were used in combination with device or diagnostic. To characterize arrangements in terms of product and market attributes, we extracted data for each product, including arrangement descriptions, arrangement type, year, therapeutic area, product manufacturer, payer, and product type. Arrangements were analyzed using descriptive statistics. RESULTS: Fifty-two arrangements were identified between the years 2001 and 2019, with 30 (57.7%) for devices and 22 (42.3%) for diagnostic tests. Among these, 23 (44.2%) were coverage with evidence development (CED), only in research; 17 (32.7%) were performance-linked reimbursement (PLR); and 12 (23.1%) were CED, only with research. The majority of arrangements for devices were developed in cardiology (12, 40%), endocrinology (4, 13.3%), and radiology (3, 10%). Most of arrangements for identified diagnostic tests were in oncology (17, 77.3%). Over time, there has been a trend towards increasing adoption of PLR and CED, only with research, especially since 2014. CONCLUSIONS: This is the first study to comprehensively review PBRSA arrangements for diagnostics and devices in the United States. Our findings demonstrated that there is substantial PBRSA activity for devices and diagnostics, and the pace of PBRSA adoption appears to be increasing in terms of frequency and variety. These arrangements have implications for managed care into the future as the health care system shifts towards value-based care and value-based pricing to contain cost for payers and ensure value in the patient populations. DISCLOSURES: No funding supported this study. The authors have nothing to disclose.

Conditional Approval and Value-Based Pricing for New Health Technologies

Conditional Approval and Value-Based Pricing for New Health Technologies

Value-based pricing of an efficacious anti-Alzheimer’s treatment: disease-modifying or symptomatic relief, more than a $56,000 question

Value-based pricing of an efficacious anti-Alzheimer’s treatment: disease-modifying or symptomatic relief, more than a $56,000 question

How value-based policy interventions influence price negotiations for new medicines: An experimental approach and initial evidence

BackgroundVarious forms of value-based pricing policies for new medicines have recently been introduced in OECD countries. While these initiatives are expected to have a positive impact on societal outcomes such as availability, affordability and value for money, scientific evidence on this impact is scarce due to confidential agreements. ObjectiveWe aimed to assess the impact of value-based policy interventions in price negotiations on patient benefit in an experimental setting. MethodsAn online experiment was conducted (n = 269). Participants were randomly assigned into the active role of either a buyer or seller in two intervention groups (cost-benefit, risk-sharing) and one control group. Decisions had real monetary consequences on other participants and through donations to a patient association. ResultsPatient access, benefit and value for money were higher in the cost-benefit group than in the risk-sharing group. An available alternative to the agreement led to higher price offers. This effect was weaker in the cost-benefit group. ConclusionsOutcomes of price negotiations on patient benefit depend on the alternatives available for failed or delayed negotiations. A shared but voluntary valuation framework might increase patient access, benefit, and value for money. The cost containment effect of risk-sharing agreements may be offset by the negative impact on overall patient benefit. Further development of the approach could provide support for policy design of pharmaceutical pricing regulations.

How Far is Germany From Value-Based Pricing 10 Years After the Introduction of AMNOG?

How Far is Germany From Value-Based Pricing 10 Years After the Introduction of AMNOG?

Value-based pricing of a COVID-19 vaccine

AimThe purpose of this study is to determine the value-based price of a COVID-19 vaccine from a societal perspective in Germany. MethodsA decision model was constructed using, e.g., information on age-specific fatality rates, intensive care unit (ICU) costs and outcomes, and the full vaccination rate. Three strategies were analysed: vaccination (with 95 % and 50 % efficacy against death), a mitigation strategy, and no intervention. The base-case time horizon was 5 years. The value of a vaccine includes savings from avoiding COVID-19 mitigation measures and productivity loss, as well as health benefits from preventing COVID-19 related mortality. The value of an additional life year was borrowed from new, innovative oncological drugs, as cancer reflects a condition with a similar morbidity and mortality burden in the general population in the short term as COVID-19. ResultsA vaccine with a 95 % efficacy dominates the mitigation strategy strictly. The value-based price (€6,431) is thus determined by the comparison between vaccination and no intervention. The price is particularly sensitive to the full vaccination rate and the duration of vaccine protection. In contrast, the value of a vaccine with 50 % efficacy is more ambiguous. ConclusionThis study yields a value-based price for a COVID-19 vaccine with 95 % efficacy, which is considerably greater than the purchasing price.

Clinical and economic outcomes associated with respiratory syncytial virus vaccination in older adults in the United States

BackgroundRespiratory syncytial virus (RSV) is an important cause of lower respiratory infections and hospitalizations among older adults. We aimed to estimate the potential clinical benefits and economic value of RSV vaccination of older adults in the United States (US). MethodsWe developed an economic model using a decision-tree framework to capture outcomes associated with RSV infections in US adults aged ≥ 60 years occurring during one RSV season for a hypothetical vaccine versus no vaccine. Two co–base-case epidemiology sources were selected from a targeted review of the US literature: a landmark study capturing all RSV infections and a contemporary study reporting medically attended RSV that also distinguishes mild from moderate-to-severe disease. Both base-case analyses used recent data on mortality risk in the year after RSV hospitalizations. Direct medical costs and quality-adjusted life-years (QALYs) lost per case were obtained from the literature and publicly available sources. Model outcomes included the population-level clinical and economic RSV disease burden among older adults, potential vaccine-avoidable disease burden, and the potential value-based price of a vaccine from a third-party payer perspective. ResultsOur two base-case analyses estimated that a vaccine with 50% efficacy and coverage matching that of influenza vaccination would prevent 43,700–81,500 RSV hospitalizations and 8,000–14,900 RSV-attributable deaths per RSV season, resulting in 1,800–3,900 fewer QALYs lost and avoiding $557-$1,024 million. Value-based prices for the co–base-case analyses were $152-$299 per vaccination at a willingness to pay of $100,000/QALY gained. Sensitivity analyses found that the economic value of vaccination was most sensitive to RSV incidence and increased posthospitalization mortality risks. ConclusionsDespite variability and gaps in the epidemiology literature, this study highlights the potential value of RSV vaccination for older adults in the US. Our analysis provides contemporary estimates of the population-level RSV disease burden and insights into the economic value drivers for RSV vaccination.