REIMBURSEMENT AND VALUE-BASED PRICING : STRATIFIED COST-EFFECTIVENESS ANALYSIS MAY NOT BE THE LAST WORD


Hawkins, N; Scott, DA; (2011) REIMBURSEMENT AND VALUE-BASED PRICING : STRATIFIED COST-EFFECTIVENESS ANALYSIS MAY NOT BE THE LAST WORD. Health economics, 20 (6). pp. 688-98. ISSN 1057-9230 DOI: 10.1002/hec.1625

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Abstract

: During recent discussions, it has been argued that stratified cost-effectiveness analysis has a key role in reimbursement decision-making and value-based pricing (VBP). It has previously been shown that when manufacturers are price-takers, reimbursement decisions made in reference to stratified cost-effectiveness analysis lead to a more efficient allocation of resources than decisions based on whole-population cost-effectiveness analysis. However, we demonstrate that when manufacturers are price setters, reimbursement or VBP based on stratified cost-effectiveness analysis may not be optimal. Using two examples - one considering the choice of thrombolytic treatment for specific patient subgroups and the other considering the extension of coverage for a cancer treatment to include an additional indication - we show that combinations of extended coverage and reduced price can be identified that are advantageous to both payers and manufacturers. The benefits of a given extension in coverage and reduction in price depend both upon the average treatment benefit in the additional population and its size relative to the original population. Negotiation regarding trade-offs between price and coverage may lead to improved outcomes both for health-care systems and manufacturers compared with processes where coverage is determined conditional simply on stratified cost-effectiveness at a given price.<br/>

Item Type: Article
Keywords: Stratified cost-effectiveness analysis, Value-based pricing, stratified cost-effectiveness analysis, value-based pricing, Adult, Aged, Cost-Benefit Analysis, methods, Fees and Charges, Great Britain, Humans, Insurance Coverage, economics, Insurance, Health, Middle Aged, Models, Statistical, Quality of Health Care, economics, Reimbursement Mechanisms, economics, organization & administration, Resource Allocation, economics
Faculty and Department: Faculty of Public Health and Policy > Dept of Health Services Research and Policy
PubMed ID: 20568075
Web of Science ID: 289379500005
URI: http://researchonline.lshtm.ac.uk/id/eprint/2534654

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