SlideShare una empresa de Scribd logo
1 de 18
The Emerging Picture of “Value
       Based Pricing”
     Kakushin Web-Based Conference
            17 October 2012

              Jon Sussex
            Deputy Director
      Office of Health Economics
             www.ohe.org


                                     1
Agenda

• What we know about UK Government “VBP”
  proposals
• What that might mean in practice
• Centrality of “threshold” concept
• Non-linear pricing etc.
• Conclusions
At the NICE Annual Conference, 11 May 2011,
    Earl Howe (Minister of Health) stated:

 • “What Ministers are seeking are new arrangements to
   encourage the development of drugs to address areas of
   unmet need and bring prices and benefits into line”
 • “We've got to think about moving away from the drugs
   budget and towards a health budget”
 • Ministers “are not too afraid of increasing the drugs budget,
   as such”
“VBP” for all new medicines from 1/1/14
                      1. Pharmacoeconomic
                         evaluation - QALYs
                      2. “Burden of illness”                          July 2011
                      3. “Therapeutic
                         innovation &
                         improvements”
                      4. “Wider societal
December 2010
                         benefits”
                      5. Combined via
                         adjusted £/QALY
                         threshold
   http://www.dh.gov.uk/en/Consultations/Responsestoconsultations/DH_128226
“4.10 The Government proposes that the price threshold
structure is determined as follows:
i. there would be a basic threshold, reflecting the benefits
displaced elsewhere in the NHS when funds are allocated to new
medicines;
ii. there would be higher thresholds for medicines that tackle
diseases where there is greater “burden of illness”: the more the
medicine is focused on diseases with unmet need or which are
particularly severe, the higher the threshold;
iii. there would be higher thresholds for medicines that can
demonstrate greater therapeutic innovation and improvements
compared with other products;
iv. there would be higher thresholds for medicines that can
demonstrate wider societal benefits.”
Elements of “Value” internationally
                           E&W   Australia   Canada   France   Italy   Japan   Sweden
Clinical effectiveness                                                     
Cost effectiveness                                                            
Alternatives available /                                         
unmet need
Disease severity           EoL                                                 
New mode of action                                                       
Paediatric                                                               
Cost savings beyond                                                              
health care
Productivity                                                                     
VBP – Taxonomy of approaches
     What elements                     How measured                            How                          How linked to
       of value                         and valued                          aggregated                         price
    • QALYs                           • Natural units                   • Deliberative                    • Formula
    • Other types of                  • Categories                        process                         • Negotiation
      health gain                     • Yes/No                          • Weighted
    • Severity                                                            QALYs
    • ‘Unmet need’                    • Whose                           • MCDA*
    • ‘Innovation’                      values?                         • Net benefit £
    • Wider societal
      impacts

                                                                       *MCDA = Multi-Criteria Decision Analysis

For full info see OHE Research Paper 11/04; Sussex, Towse & Devlin; August 2011 at:
http://www.ohe.org/publications/recent-publications/list-by-title-20/detail/date////operationalising-value-based-pricing-of-medicines-a-
taxonomy-of-approaches.html
How to aggregate the elements of value
                               Pros                             Cons
Weighted QALYs   Incremental QALYS are major      ‘QALYs are not the only fruit….’
                 part of benefit of many          If incremental QALYs are
                 medicines                        small/zero, then other benefits
                 Familiarity of QALYs             forced to be small/zero too
                                                  Need a £ per weighted QALY
                                                  threshold value (opportunity
                                                  cost)
MCDA Points      Includes all categories of       Need a £ per point threshold
                 benefits, including QALYs and    value (opportunity cost)
                 non-QALY health gains, without
                 distortion
                 Pragmatic – used by PCTs
£ Net Benefit    Includes all categories of       Very explicit – valuing each type
                 benefits without distortion.     of benefit separately in £ terms
                 Goes directly to value of each   may be deemed politically more
                 benefit category                 difficult
NICE’s thinking
DH Response to the Consultation
• 5.8 “…we intend to maintain the effect of the funding direction…”
• 5.9 “…there are questions about the impact of medicine prices on
  companies’ decisions on where to allocate investments or conduct
  research…”
• 5.28 “..the Government does not agree that a new medicine should
  be automatically exempted..because its total budget impact is
  ..below an arbitrary threshold..”
• 5.47 “…the benefits of enabling pricing by indication are likely to be
  outweighed by the practical difficulties…explore alternatives..”
• 5.60 “..we recognise the value that incremental developments can
  bring…”
• 5.102 “…we have not ruled out the possibility that there may be a
  role for some type of Patient Access Scheme (PAS) arrangements…”
• 6.5 “Our preference ..would be..to achieve a negotiated
  settlement…”
Estimated NICE threshold ICER (£/QALY) in practice
                Devlin et al. 2010
                           100%


                           90%


                           80%


                           70%                                                                                                          Model         Threshold: ICER giving X% chance of
                                                                                                                                                                      rejection
Probability of rejection




                           60%                                                                                                                         (mean values for other parameter)

                           50%
                                                                                                                                                        50%          25%          75%
                           40%
                                                                                                                                        ICER only     £40,552      £27,066      £54,006
                           30%
                                                                                                                                        Basic Model   £40,345      £27,383      £53,271

                           20%                                                                                                          Min & max;     Min:         Min:         Min:
                                                                                                                                        All models    £40,206      £27,066      £52,856
                           10%                                                                                                                         Max:         Max:         Max:
                                                                                                                                                      £40,721      £27,446      £54,006
                            0%
                                  £0   £10,000        £20,000        £30,000       £40,000          £50,000         £60,000   £70,000
                                                                       ICER (cost/QALY)
                                                 Basic model
                                                 ICER only
                                                 ICER & total pts in RCTs
                                                 Basic with no. RCTs & mean pt numbers disaggregated
                                                 Omitting only Tx and pt group submission
                                                 Omitting only Tx and pt group submission and adding ICER-squared
Estimated threshold: cancer
                                                           Devlin et al. 2010
                           100%

                            90%

                            80%
                                                                                                                           •   ‘Cancer’ dummy
                            70%                                                                                                significant
Probability of rejection




                            60%                                                                                            •   102 cancer decisions
                            50%
                                                                                                              Cancer           included in the
                                                                                                              Not cancer
                                                                                                                               analysis
                            40%
                                                                                                                           •   92 pre-EOL (38 no, 54
                            30%
                                                                                                                               yes); 10 post EOL (7
                            20%                                                                                                no, 3 yes, of which 2
                            10%                                                                                                considered under
                            0%
                                                                                                                               EOL).
                                  £0   £10,000   £20,000   £30,000    £40,000   £50,000   £60,000   £70,000
                                                             ICER (cost/QALY)




                           • The estimate of the threshold (probability of rejection = 50%) is:
                                • £50,139 for cancer drugs
                                • £37,805 for non-cancer drugs
                                • NICE decisions reveal a willingness to ‘pay’ an additional > £10k per QALY gained
                                by cancer patients
“Thresholds” or converting benefits into £

• NB: If benefits include more than QALYs then idea of a
  unique £/QALY threshold becomes redundant
• NHS opportunity cost (OC)
• Social value of a QALY (SV)
• Equal in an ideal world but the world is not ideal
• SV of a QALY in UK appears to be around or a bit above
  NICE’s £20k-£30k range but there is much uncertainty
  as valuations vary wildly across individuals
• If SV>OC then health care budget spending is below
  socially desired levels
Subgroups: multiple prices, a single blended
       price or non-linear pricing?

 Price /
 Cost
                        Demand




           0                     Quantity
Different prices for different indications
           with different values?
• Single ‘blended’ price
• Or different prices for different indications:
  • NICE technology appraisal TA176 for cetuximab
    required a 16% discount when used with
    oxaliplatin (+ 5-fluorouracil and folinic acid)
  • But not for another (+5FU, folinic acid and
    irinotecan) where the patient cannot take
    oxaliplatin
Negotiation and PAS
• Imprecision / uncertainty / multiple indications =>
  plenty of scope for negotiation where the “value
  based price” is a binding constraint

• VBP does not imply no further role for Patient Access
  Schemes and non-linear pricing:
  Government VBP consultation response, July 2011:
  “We have not ruled out … ‘PAS’ arrangements in the
  new system.”
“VBP”: big change or name change?

• Wider scope of benefits and costs taken into
  account
• Chance for more openness or likelihood of
  less?
• Price negotiation for individual medicines, not
  regulation of company profit from total sales
  to NHS
To enquire about additional information and analyses, please
contact Jon Sussex at jsussex@ohe.org

To keep up with the latest news and research, subscribe to our blog, OHE
News
Follow us on Twitter @OHENews, LinkedIn and SlideShare

Office of Health Economics (OHE)
Southside, 7th Floor
105 Victoria Street
London SW1E 6QT
United Kingdom
+44 20 7747 8850
www.ohe.org
OHE’s publications may be downloaded free of charge for registered users of its
website.

©2012 OHE

Más contenido relacionado

Similar a Emerging Picture of Value Based Pricing

Future of Market Access – a Pharma Perspective
Future of Market Access – a Pharma PerspectiveFuture of Market Access – a Pharma Perspective
Future of Market Access – a Pharma PerspectivePM Society
 
Maureen Bisognano: An international perspective: Leading for better health care
Maureen Bisognano: An international perspective: Leading for better health careMaureen Bisognano: An international perspective: Leading for better health care
Maureen Bisognano: An international perspective: Leading for better health careThe King's Fund
 
Application of EQ-5D in Reimbursement Decision Making: The Case of NICE
Application of EQ-5D in Reimbursement Decision Making: The Case of NICEApplication of EQ-5D in Reimbursement Decision Making: The Case of NICE
Application of EQ-5D in Reimbursement Decision Making: The Case of NICEOffice of Health Economics
 
2013-01 Building a Framework for Sustainable ACO Enablement
2013-01 Building a Framework for Sustainable ACO Enablement2013-01 Building a Framework for Sustainable ACO Enablement
2013-01 Building a Framework for Sustainable ACO Enablementimagine.GO
 
Cbi Building Product Value (June 24 2010)Final
Cbi Building Product Value (June 24 2010)FinalCbi Building Product Value (June 24 2010)Final
Cbi Building Product Value (June 24 2010)FinalMark Jewell
 
HTA Training - Prof Cathal Walsh - March 27th 2015
HTA Training - Prof Cathal Walsh - March 27th 2015HTA Training - Prof Cathal Walsh - March 27th 2015
HTA Training - Prof Cathal Walsh - March 27th 2015ipposi
 
MCDA debate ISPOR NOLA 2019
MCDA debate ISPOR NOLA 2019MCDA debate ISPOR NOLA 2019
MCDA debate ISPOR NOLA 2019atowse
 
Is there a role for MCDA in assessing value for money in health care? MCDA v...
Is there a role for MCDA in assessing value for money in health care?MCDA v...Is there a role for MCDA in assessing value for money in health care?MCDA v...
Is there a role for MCDA in assessing value for money in health care? MCDA v...Office of Health Economics
 
Using MCDA for HTA, Opportunities, Challenges and Possible Ways Forward
Using MCDA for HTA, Opportunities, Challenges and Possible Ways ForwardUsing MCDA for HTA, Opportunities, Challenges and Possible Ways Forward
Using MCDA for HTA, Opportunities, Challenges and Possible Ways ForwardOffice of Health Economics
 
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...Health Catalyst
 
Pharmacoeconomics - 2020_New.pptx
Pharmacoeconomics - 2020_New.pptxPharmacoeconomics - 2020_New.pptx
Pharmacoeconomics - 2020_New.pptxHamadAlshabi
 
Laura Boland - Excel in Health
Laura Boland - Excel in HealthLaura Boland - Excel in Health
Laura Boland - Excel in HealthInnovation Agency
 
The Truth About Physician & Administrator Relations and How Can it Help You
The Truth About Physician & Administrator Relations and How Can it Help YouThe Truth About Physician & Administrator Relations and How Can it Help You
The Truth About Physician & Administrator Relations and How Can it Help YouRyan Broadhead, MHA, CPHQ, LSS
 
E Healthcare Business Model Innovation Research 2009
E Healthcare Business Model Innovation Research 2009E Healthcare Business Model Innovation Research 2009
E Healthcare Business Model Innovation Research 2009Koen Klokgieters
 
Health Scorecard Implementation: HealthLead Employer Case Study with DTE
Health Scorecard Implementation: HealthLead Employer Case Study with DTEHealth Scorecard Implementation: HealthLead Employer Case Study with DTE
Health Scorecard Implementation: HealthLead Employer Case Study with DTEHPCareer.Net / State of Wellness Inc.
 
Excel in Health: Proposition
Excel in Health: PropositionExcel in Health: Proposition
Excel in Health: PropositionInnovation Agency
 
Evolving Approaches to Measuring the Value of New Health Technologies in the US
Evolving Approaches to Measuring the Value of New Health Technologies in the USEvolving Approaches to Measuring the Value of New Health Technologies in the US
Evolving Approaches to Measuring the Value of New Health Technologies in the USOffice of Health Economics
 

Similar a Emerging Picture of Value Based Pricing (20)

Future of Market Access – a Pharma Perspective
Future of Market Access – a Pharma PerspectiveFuture of Market Access – a Pharma Perspective
Future of Market Access – a Pharma Perspective
 
Reflections_on_VBP_AKT_June2015
Reflections_on_VBP_AKT_June2015Reflections_on_VBP_AKT_June2015
Reflections_on_VBP_AKT_June2015
 
Maureen Bisognano: An international perspective: Leading for better health care
Maureen Bisognano: An international perspective: Leading for better health careMaureen Bisognano: An international perspective: Leading for better health care
Maureen Bisognano: An international perspective: Leading for better health care
 
Application of EQ-5D in Reimbursement Decision Making: The Case of NICE
Application of EQ-5D in Reimbursement Decision Making: The Case of NICEApplication of EQ-5D in Reimbursement Decision Making: The Case of NICE
Application of EQ-5D in Reimbursement Decision Making: The Case of NICE
 
2013-01 Building a Framework for Sustainable ACO Enablement
2013-01 Building a Framework for Sustainable ACO Enablement2013-01 Building a Framework for Sustainable ACO Enablement
2013-01 Building a Framework for Sustainable ACO Enablement
 
Cbi Building Product Value (June 24 2010)Final
Cbi Building Product Value (June 24 2010)FinalCbi Building Product Value (June 24 2010)Final
Cbi Building Product Value (June 24 2010)Final
 
HTA Training - Prof Cathal Walsh - March 27th 2015
HTA Training - Prof Cathal Walsh - March 27th 2015HTA Training - Prof Cathal Walsh - March 27th 2015
HTA Training - Prof Cathal Walsh - March 27th 2015
 
MCDA debate ISPOR NOLA 2019
MCDA debate ISPOR NOLA 2019MCDA debate ISPOR NOLA 2019
MCDA debate ISPOR NOLA 2019
 
Is there a role for MCDA in assessing value for money in health care? MCDA v...
Is there a role for MCDA in assessing value for money in health care?MCDA v...Is there a role for MCDA in assessing value for money in health care?MCDA v...
Is there a role for MCDA in assessing value for money in health care? MCDA v...
 
Using MCDA for HTA, Opportunities, Challenges and Possible Ways Forward
Using MCDA for HTA, Opportunities, Challenges and Possible Ways ForwardUsing MCDA for HTA, Opportunities, Challenges and Possible Ways Forward
Using MCDA for HTA, Opportunities, Challenges and Possible Ways Forward
 
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...
Will the Revenue Ever Return? COVID-19 and the Rise of the Insurers; the Case...
 
Pharmacoeconomics - 2020_New.pptx
Pharmacoeconomics - 2020_New.pptxPharmacoeconomics - 2020_New.pptx
Pharmacoeconomics - 2020_New.pptx
 
Health economics what is it
Health economics what is itHealth economics what is it
Health economics what is it
 
Laura Boland - Excel in Health
Laura Boland - Excel in HealthLaura Boland - Excel in Health
Laura Boland - Excel in Health
 
The Truth About Physician & Administrator Relations and How Can it Help You
The Truth About Physician & Administrator Relations and How Can it Help YouThe Truth About Physician & Administrator Relations and How Can it Help You
The Truth About Physician & Administrator Relations and How Can it Help You
 
How Much can eHealth Affect the Economic Growth
How Much can eHealth Affect the Economic GrowthHow Much can eHealth Affect the Economic Growth
How Much can eHealth Affect the Economic Growth
 
E Healthcare Business Model Innovation Research 2009
E Healthcare Business Model Innovation Research 2009E Healthcare Business Model Innovation Research 2009
E Healthcare Business Model Innovation Research 2009
 
Health Scorecard Implementation: HealthLead Employer Case Study with DTE
Health Scorecard Implementation: HealthLead Employer Case Study with DTEHealth Scorecard Implementation: HealthLead Employer Case Study with DTE
Health Scorecard Implementation: HealthLead Employer Case Study with DTE
 
Excel in Health: Proposition
Excel in Health: PropositionExcel in Health: Proposition
Excel in Health: Proposition
 
Evolving Approaches to Measuring the Value of New Health Technologies in the US
Evolving Approaches to Measuring the Value of New Health Technologies in the USEvolving Approaches to Measuring the Value of New Health Technologies in the US
Evolving Approaches to Measuring the Value of New Health Technologies in the US
 

Más de Office of Health Economics

OHE presents at G20 AMR-R&D meeting in Paris - Adrian Towse
OHE presents at G20 AMR-R&D meeting in Paris - Adrian TowseOHE presents at G20 AMR-R&D meeting in Paris - Adrian Towse
OHE presents at G20 AMR-R&D meeting in Paris - Adrian TowseOffice of Health Economics
 
Pricing in emerging markets: options to get value for money - Adrian Towse
Pricing in emerging markets: options to get value for money - Adrian TowsePricing in emerging markets: options to get value for money - Adrian Towse
Pricing in emerging markets: options to get value for money - Adrian TowseOffice of Health Economics
 
% GDP spending in UK, G5 countries and OECD upper middle income countries. W...
% GDP spending in UK, G5 countries and OECD upper middle income countries.  W...% GDP spending in UK, G5 countries and OECD upper middle income countries.  W...
% GDP spending in UK, G5 countries and OECD upper middle income countries. W...Office of Health Economics
 
The role of real world data and evidence in building a sustainable & efficien...
The role of real world data and evidence in building a sustainable & efficien...The role of real world data and evidence in building a sustainable & efficien...
The role of real world data and evidence in building a sustainable & efficien...Office of Health Economics
 
ISPOR Education Symposium- Go where the money is
ISPOR Education Symposium- Go where the money isISPOR Education Symposium- Go where the money is
ISPOR Education Symposium- Go where the money isOffice of Health Economics
 
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...Office of Health Economics
 
IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?
 IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY? IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?
IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?Office of Health Economics
 
Understanding what aspects of health and quality of life are important to people
Understanding what aspects of health and quality of life are important to peopleUnderstanding what aspects of health and quality of life are important to people
Understanding what aspects of health and quality of life are important to peopleOffice of Health Economics
 
Novel approaches for valuing health at the end of life
Novel approaches for valuing health at the end of lifeNovel approaches for valuing health at the end of life
Novel approaches for valuing health at the end of lifeOffice of Health Economics
 
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...Office of Health Economics
 
HTA and payment mechanisms for new drugs to tackle AMR
HTA and payment mechanisms for new drugs to tackle AMRHTA and payment mechanisms for new drugs to tackle AMR
HTA and payment mechanisms for new drugs to tackle AMROffice of Health Economics
 
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...Office of Health Economics
 
Pay for Performance for Specialised Care in England
Pay for Performance for Specialised Care in EnglandPay for Performance for Specialised Care in England
Pay for Performance for Specialised Care in EnglandOffice of Health Economics
 
Real option value drugs: is it really an option?
Real option value drugs: is it really an option?Real option value drugs: is it really an option?
Real option value drugs: is it really an option?Office of Health Economics
 
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...Office of Health Economics
 

Más de Office of Health Economics (20)

Annual lecture
Annual lecture Annual lecture
Annual lecture
 
Devlin ispor 2020 issues panel 20.05.20
Devlin ispor 2020 issues panel 20.05.20 Devlin ispor 2020 issues panel 20.05.20
Devlin ispor 2020 issues panel 20.05.20
 
Towse 2020 antimicrobials melbourne final
Towse 2020 antimicrobials melbourne finalTowse 2020 antimicrobials melbourne final
Towse 2020 antimicrobials melbourne final
 
Towse cgd price transparency seminar
Towse cgd price transparency seminarTowse cgd price transparency seminar
Towse cgd price transparency seminar
 
OHE presents at G20 AMR-R&D meeting in Paris - Adrian Towse
OHE presents at G20 AMR-R&D meeting in Paris - Adrian TowseOHE presents at G20 AMR-R&D meeting in Paris - Adrian Towse
OHE presents at G20 AMR-R&D meeting in Paris - Adrian Towse
 
Pricing in emerging markets: options to get value for money - Adrian Towse
Pricing in emerging markets: options to get value for money - Adrian TowsePricing in emerging markets: options to get value for money - Adrian Towse
Pricing in emerging markets: options to get value for money - Adrian Towse
 
% GDP spending in UK, G5 countries and OECD upper middle income countries. W...
% GDP spending in UK, G5 countries and OECD upper middle income countries.  W...% GDP spending in UK, G5 countries and OECD upper middle income countries.  W...
% GDP spending in UK, G5 countries and OECD upper middle income countries. W...
 
The role of real world data and evidence in building a sustainable & efficien...
The role of real world data and evidence in building a sustainable & efficien...The role of real world data and evidence in building a sustainable & efficien...
The role of real world data and evidence in building a sustainable & efficien...
 
ISPOR Education Symposium- Go where the money is
ISPOR Education Symposium- Go where the money isISPOR Education Symposium- Go where the money is
ISPOR Education Symposium- Go where the money is
 
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...
Role Substitution, Skill Mix, and Provider Efficiency and Effectiveness : Les...
 
IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?
 IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY? IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?
IS INDICATION BASED PRICING FEASIBLE AND/OR BENEFICIAL FOR SOCIETY?
 
Ispor 2019 poster - Patricia Cubi-Molla
Ispor 2019 poster - Patricia Cubi-MollaIspor 2019 poster - Patricia Cubi-Molla
Ispor 2019 poster - Patricia Cubi-Molla
 
Understanding what aspects of health and quality of life are important to people
Understanding what aspects of health and quality of life are important to peopleUnderstanding what aspects of health and quality of life are important to people
Understanding what aspects of health and quality of life are important to people
 
Novel approaches for valuing health at the end of life
Novel approaches for valuing health at the end of lifeNovel approaches for valuing health at the end of life
Novel approaches for valuing health at the end of life
 
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...
Assessing the Life-Cycle Value Added of Second Generation Antipsychotics in S...
 
HTA and payment mechanisms for new drugs to tackle AMR
HTA and payment mechanisms for new drugs to tackle AMRHTA and payment mechanisms for new drugs to tackle AMR
HTA and payment mechanisms for new drugs to tackle AMR
 
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...
Assessing the Life-cycle Value Added of Second-Generation Antipsychotics in S...
 
Pay for Performance for Specialised Care in England
Pay for Performance for Specialised Care in EnglandPay for Performance for Specialised Care in England
Pay for Performance for Specialised Care in England
 
Real option value drugs: is it really an option?
Real option value drugs: is it really an option?Real option value drugs: is it really an option?
Real option value drugs: is it really an option?
 
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...
MCDA OR WEIGHTED CEA BASED ON THE QALY? WHICH IS THE FUTURE FOR HTA DECISION ...
 

Último

MedMatch: Your Health, Our Mission. Pitch deck.
MedMatch: Your Health, Our Mission. Pitch deck.MedMatch: Your Health, Our Mission. Pitch deck.
MedMatch: Your Health, Our Mission. Pitch deck.whalesdesign
 
Male Infertility Panel Discussion by Dr Sujoy Dasgupta
Male Infertility Panel Discussion by Dr Sujoy DasguptaMale Infertility Panel Discussion by Dr Sujoy Dasgupta
Male Infertility Panel Discussion by Dr Sujoy DasguptaSujoy Dasgupta
 
pA2 value, Schild plot and pD2 values- applications in pharmacology
pA2 value, Schild plot and pD2 values- applications in pharmacologypA2 value, Schild plot and pD2 values- applications in pharmacology
pA2 value, Schild plot and pD2 values- applications in pharmacologyDeepakDaniel9
 
power point presentation of Clinical evaluation of strabismus
power point presentation of Clinical evaluation  of strabismuspower point presentation of Clinical evaluation  of strabismus
power point presentation of Clinical evaluation of strabismusChandrasekar Reddy
 
CPR.nursingoutlook.pdf , Bsc nursing student
CPR.nursingoutlook.pdf , Bsc nursing studentCPR.nursingoutlook.pdf , Bsc nursing student
CPR.nursingoutlook.pdf , Bsc nursing studentsaileshpanda05
 
blood bank management system project report
blood bank management system project reportblood bank management system project report
blood bank management system project reportNARMADAPETROLEUMGAS
 
Neurological history taking (2024) .
Neurological  history  taking  (2024)  .Neurological  history  taking  (2024)  .
Neurological history taking (2024) .Mohamed Rizk Khodair
 
Trustworthiness of AI based predictions Aachen 2024
Trustworthiness of AI based predictions Aachen 2024Trustworthiness of AI based predictions Aachen 2024
Trustworthiness of AI based predictions Aachen 2024EwoutSteyerberg1
 
Physiology of Smooth Muscles -Mechanics of contraction and relaxation
Physiology of Smooth Muscles -Mechanics of contraction and relaxationPhysiology of Smooth Muscles -Mechanics of contraction and relaxation
Physiology of Smooth Muscles -Mechanics of contraction and relaxationMedicoseAcademics
 
Different drug regularity bodies in different countries.
Different drug regularity bodies in different countries.Different drug regularity bodies in different countries.
Different drug regularity bodies in different countries.kishan singh tomar
 
Unit I herbs as raw materials, biodynamic agriculture.ppt
Unit I herbs as raw materials, biodynamic agriculture.pptUnit I herbs as raw materials, biodynamic agriculture.ppt
Unit I herbs as raw materials, biodynamic agriculture.pptPradnya Wadekar
 
Mental health Team. Dr Senthil Thirusangu
Mental health Team. Dr Senthil ThirusanguMental health Team. Dr Senthil Thirusangu
Mental health Team. Dr Senthil Thirusangu Medical University
 
Generative AI in Health Care a scoping review and a persoanl experience.
Generative AI in Health Care a scoping review and a persoanl experience.Generative AI in Health Care a scoping review and a persoanl experience.
Generative AI in Health Care a scoping review and a persoanl experience.Vaikunthan Rajaratnam
 
BENIGN BREAST DISEASE
BENIGN BREAST DISEASE BENIGN BREAST DISEASE
BENIGN BREAST DISEASE Mamatha Lakka
 
Adenomyosis or Fibroid- making right diagnosis
Adenomyosis or Fibroid- making right diagnosisAdenomyosis or Fibroid- making right diagnosis
Adenomyosis or Fibroid- making right diagnosisSujoy Dasgupta
 
ANATOMICAL FAETURES OF BONES FOR NURSING STUDENTS .pptx
ANATOMICAL FAETURES OF BONES  FOR NURSING STUDENTS .pptxANATOMICAL FAETURES OF BONES  FOR NURSING STUDENTS .pptx
ANATOMICAL FAETURES OF BONES FOR NURSING STUDENTS .pptxWINCY THIRUMURUGAN
 
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdf
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdfSGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdf
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdfHongBiThi1
 
Basic structure of hair and hair growth cycle.pptx
Basic structure of hair and hair growth cycle.pptxBasic structure of hair and hair growth cycle.pptx
Basic structure of hair and hair growth cycle.pptxkomalt2001
 

Último (20)

MedMatch: Your Health, Our Mission. Pitch deck.
MedMatch: Your Health, Our Mission. Pitch deck.MedMatch: Your Health, Our Mission. Pitch deck.
MedMatch: Your Health, Our Mission. Pitch deck.
 
Male Infertility Panel Discussion by Dr Sujoy Dasgupta
Male Infertility Panel Discussion by Dr Sujoy DasguptaMale Infertility Panel Discussion by Dr Sujoy Dasgupta
Male Infertility Panel Discussion by Dr Sujoy Dasgupta
 
pA2 value, Schild plot and pD2 values- applications in pharmacology
pA2 value, Schild plot and pD2 values- applications in pharmacologypA2 value, Schild plot and pD2 values- applications in pharmacology
pA2 value, Schild plot and pD2 values- applications in pharmacology
 
power point presentation of Clinical evaluation of strabismus
power point presentation of Clinical evaluation  of strabismuspower point presentation of Clinical evaluation  of strabismus
power point presentation of Clinical evaluation of strabismus
 
CPR.nursingoutlook.pdf , Bsc nursing student
CPR.nursingoutlook.pdf , Bsc nursing studentCPR.nursingoutlook.pdf , Bsc nursing student
CPR.nursingoutlook.pdf , Bsc nursing student
 
blood bank management system project report
blood bank management system project reportblood bank management system project report
blood bank management system project report
 
Neurological history taking (2024) .
Neurological  history  taking  (2024)  .Neurological  history  taking  (2024)  .
Neurological history taking (2024) .
 
Trustworthiness of AI based predictions Aachen 2024
Trustworthiness of AI based predictions Aachen 2024Trustworthiness of AI based predictions Aachen 2024
Trustworthiness of AI based predictions Aachen 2024
 
Physiology of Smooth Muscles -Mechanics of contraction and relaxation
Physiology of Smooth Muscles -Mechanics of contraction and relaxationPhysiology of Smooth Muscles -Mechanics of contraction and relaxation
Physiology of Smooth Muscles -Mechanics of contraction and relaxation
 
Different drug regularity bodies in different countries.
Different drug regularity bodies in different countries.Different drug regularity bodies in different countries.
Different drug regularity bodies in different countries.
 
Unit I herbs as raw materials, biodynamic agriculture.ppt
Unit I herbs as raw materials, biodynamic agriculture.pptUnit I herbs as raw materials, biodynamic agriculture.ppt
Unit I herbs as raw materials, biodynamic agriculture.ppt
 
American College of physicians ACP high value care recommendations in rheumat...
American College of physicians ACP high value care recommendations in rheumat...American College of physicians ACP high value care recommendations in rheumat...
American College of physicians ACP high value care recommendations in rheumat...
 
Mental health Team. Dr Senthil Thirusangu
Mental health Team. Dr Senthil ThirusanguMental health Team. Dr Senthil Thirusangu
Mental health Team. Dr Senthil Thirusangu
 
Generative AI in Health Care a scoping review and a persoanl experience.
Generative AI in Health Care a scoping review and a persoanl experience.Generative AI in Health Care a scoping review and a persoanl experience.
Generative AI in Health Care a scoping review and a persoanl experience.
 
Biologic therapy ice breaking in rheumatology, Case based approach with appli...
Biologic therapy ice breaking in rheumatology, Case based approach with appli...Biologic therapy ice breaking in rheumatology, Case based approach with appli...
Biologic therapy ice breaking in rheumatology, Case based approach with appli...
 
BENIGN BREAST DISEASE
BENIGN BREAST DISEASE BENIGN BREAST DISEASE
BENIGN BREAST DISEASE
 
Adenomyosis or Fibroid- making right diagnosis
Adenomyosis or Fibroid- making right diagnosisAdenomyosis or Fibroid- making right diagnosis
Adenomyosis or Fibroid- making right diagnosis
 
ANATOMICAL FAETURES OF BONES FOR NURSING STUDENTS .pptx
ANATOMICAL FAETURES OF BONES  FOR NURSING STUDENTS .pptxANATOMICAL FAETURES OF BONES  FOR NURSING STUDENTS .pptx
ANATOMICAL FAETURES OF BONES FOR NURSING STUDENTS .pptx
 
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdf
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdfSGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdf
SGK LEUKEMIA KINH DÒNG BẠCH CÂU HẠT HAY.pdf
 
Basic structure of hair and hair growth cycle.pptx
Basic structure of hair and hair growth cycle.pptxBasic structure of hair and hair growth cycle.pptx
Basic structure of hair and hair growth cycle.pptx
 

Emerging Picture of Value Based Pricing

  • 1. The Emerging Picture of “Value Based Pricing” Kakushin Web-Based Conference 17 October 2012 Jon Sussex Deputy Director Office of Health Economics www.ohe.org 1
  • 2. Agenda • What we know about UK Government “VBP” proposals • What that might mean in practice • Centrality of “threshold” concept • Non-linear pricing etc. • Conclusions
  • 3. At the NICE Annual Conference, 11 May 2011, Earl Howe (Minister of Health) stated: • “What Ministers are seeking are new arrangements to encourage the development of drugs to address areas of unmet need and bring prices and benefits into line” • “We've got to think about moving away from the drugs budget and towards a health budget” • Ministers “are not too afraid of increasing the drugs budget, as such”
  • 4. “VBP” for all new medicines from 1/1/14 1. Pharmacoeconomic evaluation - QALYs 2. “Burden of illness” July 2011 3. “Therapeutic innovation & improvements” 4. “Wider societal December 2010 benefits” 5. Combined via adjusted £/QALY threshold http://www.dh.gov.uk/en/Consultations/Responsestoconsultations/DH_128226
  • 5. “4.10 The Government proposes that the price threshold structure is determined as follows: i. there would be a basic threshold, reflecting the benefits displaced elsewhere in the NHS when funds are allocated to new medicines; ii. there would be higher thresholds for medicines that tackle diseases where there is greater “burden of illness”: the more the medicine is focused on diseases with unmet need or which are particularly severe, the higher the threshold; iii. there would be higher thresholds for medicines that can demonstrate greater therapeutic innovation and improvements compared with other products; iv. there would be higher thresholds for medicines that can demonstrate wider societal benefits.”
  • 6. Elements of “Value” internationally E&W Australia Canada France Italy Japan Sweden Clinical effectiveness        Cost effectiveness     Alternatives available /   unmet need Disease severity EoL    New mode of action  Paediatric  Cost savings beyond  health care Productivity 
  • 7. VBP – Taxonomy of approaches What elements How measured How How linked to of value and valued aggregated price • QALYs • Natural units • Deliberative • Formula • Other types of • Categories process • Negotiation health gain • Yes/No • Weighted • Severity QALYs • ‘Unmet need’ • Whose • MCDA* • ‘Innovation’ values? • Net benefit £ • Wider societal impacts *MCDA = Multi-Criteria Decision Analysis For full info see OHE Research Paper 11/04; Sussex, Towse & Devlin; August 2011 at: http://www.ohe.org/publications/recent-publications/list-by-title-20/detail/date////operationalising-value-based-pricing-of-medicines-a- taxonomy-of-approaches.html
  • 8. How to aggregate the elements of value Pros Cons Weighted QALYs Incremental QALYS are major ‘QALYs are not the only fruit….’ part of benefit of many If incremental QALYs are medicines small/zero, then other benefits Familiarity of QALYs forced to be small/zero too Need a £ per weighted QALY threshold value (opportunity cost) MCDA Points Includes all categories of Need a £ per point threshold benefits, including QALYs and value (opportunity cost) non-QALY health gains, without distortion Pragmatic – used by PCTs £ Net Benefit Includes all categories of Very explicit – valuing each type benefits without distortion. of benefit separately in £ terms Goes directly to value of each may be deemed politically more benefit category difficult
  • 10. DH Response to the Consultation • 5.8 “…we intend to maintain the effect of the funding direction…” • 5.9 “…there are questions about the impact of medicine prices on companies’ decisions on where to allocate investments or conduct research…” • 5.28 “..the Government does not agree that a new medicine should be automatically exempted..because its total budget impact is ..below an arbitrary threshold..” • 5.47 “…the benefits of enabling pricing by indication are likely to be outweighed by the practical difficulties…explore alternatives..” • 5.60 “..we recognise the value that incremental developments can bring…” • 5.102 “…we have not ruled out the possibility that there may be a role for some type of Patient Access Scheme (PAS) arrangements…” • 6.5 “Our preference ..would be..to achieve a negotiated settlement…”
  • 11. Estimated NICE threshold ICER (£/QALY) in practice Devlin et al. 2010 100% 90% 80% 70% Model Threshold: ICER giving X% chance of rejection Probability of rejection 60% (mean values for other parameter) 50% 50% 25% 75% 40% ICER only £40,552 £27,066 £54,006 30% Basic Model £40,345 £27,383 £53,271 20% Min & max; Min: Min: Min: All models £40,206 £27,066 £52,856 10% Max: Max: Max: £40,721 £27,446 £54,006 0% £0 £10,000 £20,000 £30,000 £40,000 £50,000 £60,000 £70,000 ICER (cost/QALY) Basic model ICER only ICER & total pts in RCTs Basic with no. RCTs & mean pt numbers disaggregated Omitting only Tx and pt group submission Omitting only Tx and pt group submission and adding ICER-squared
  • 12. Estimated threshold: cancer Devlin et al. 2010 100% 90% 80% • ‘Cancer’ dummy 70% significant Probability of rejection 60% • 102 cancer decisions 50% Cancer included in the Not cancer analysis 40% • 92 pre-EOL (38 no, 54 30% yes); 10 post EOL (7 20% no, 3 yes, of which 2 10% considered under 0% EOL). £0 £10,000 £20,000 £30,000 £40,000 £50,000 £60,000 £70,000 ICER (cost/QALY) • The estimate of the threshold (probability of rejection = 50%) is: • £50,139 for cancer drugs • £37,805 for non-cancer drugs • NICE decisions reveal a willingness to ‘pay’ an additional > £10k per QALY gained by cancer patients
  • 13. “Thresholds” or converting benefits into £ • NB: If benefits include more than QALYs then idea of a unique £/QALY threshold becomes redundant • NHS opportunity cost (OC) • Social value of a QALY (SV) • Equal in an ideal world but the world is not ideal • SV of a QALY in UK appears to be around or a bit above NICE’s £20k-£30k range but there is much uncertainty as valuations vary wildly across individuals • If SV>OC then health care budget spending is below socially desired levels
  • 14. Subgroups: multiple prices, a single blended price or non-linear pricing? Price / Cost Demand 0 Quantity
  • 15. Different prices for different indications with different values? • Single ‘blended’ price • Or different prices for different indications: • NICE technology appraisal TA176 for cetuximab required a 16% discount when used with oxaliplatin (+ 5-fluorouracil and folinic acid) • But not for another (+5FU, folinic acid and irinotecan) where the patient cannot take oxaliplatin
  • 16. Negotiation and PAS • Imprecision / uncertainty / multiple indications => plenty of scope for negotiation where the “value based price” is a binding constraint • VBP does not imply no further role for Patient Access Schemes and non-linear pricing: Government VBP consultation response, July 2011: “We have not ruled out … ‘PAS’ arrangements in the new system.”
  • 17. “VBP”: big change or name change? • Wider scope of benefits and costs taken into account • Chance for more openness or likelihood of less? • Price negotiation for individual medicines, not regulation of company profit from total sales to NHS
  • 18. To enquire about additional information and analyses, please contact Jon Sussex at jsussex@ohe.org To keep up with the latest news and research, subscribe to our blog, OHE News Follow us on Twitter @OHENews, LinkedIn and SlideShare Office of Health Economics (OHE) Southside, 7th Floor 105 Victoria Street London SW1E 6QT United Kingdom +44 20 7747 8850 www.ohe.org OHE’s publications may be downloaded free of charge for registered users of its website. ©2012 OHE