PP152 The Assessment Of The Price Of A Medicine: The Possible Application Of Cost-Based Pricing Methods

Abstract

Introduction

Before admission to the insured package, the price of a medicine is usually assessed on the basis of the value of the medicine for the patient: the effect size on health and survival must be in line with the costs. That seems like a fair starting point, but the use of such ‘value-driven’ models sometimes results in unrealistic prices. These prices in turn lead to discussions about limitations within the healthcare budget and may result in delays in the accessibility of medicines. The aim of this study was to review several alternative pricing models and propose possible applications of the models.

Methods

Six pricing models were selected that encompassed cost-based or cost- and value-based aspects. The models were reviewed within the context of the published group of medicines, followed by a discussion on their potential to aid in creating benchmarks for pricing negotiations.

Results

Five cost-based pricing models and one value-based model with a cost-based aspect were found with potential applications. (i) The AIM-model for innovative medicines. (ii) The adjusted AIM-model for repurposed medicines. (iii) The Cancer drug pricing model for innovative oncolytics with information about health benefit. (iv) The discounted cash flow model for orphan medicines with information about health benefit. (v) The value-based rate of return pricing for innovative orphan medicines with information about health benefit. (vi) The P-quad model for drugs with a high budget impact for which there is no generic competition after intellectual property an regulatory exclusivity end.

Conclusions

We argue that it would be more logical for different categories of medicines to base prices on average costs, possibly combined with a bonus for innovation: the cost-based pricing method. The next step is to discuss the possible application of cost-plus methods with stakeholders including patients, industry, payers, and healthcare professionals.