Will indication value-based pricing become a reality in Europe?
groupH’s Market Access practice, headed by Nicolas Touchot, has recently been part of a collaboration to research the feasibility and attractiveness of indication value-based pricing (IBP) in key EU countries.
Many targeted medicines are developed for different diseases and indications with common underlying biological mechanisms. The product benefit and therefore the ‘value’ is almost certain to vary by indication and by treatment.
At present there is no system in place to allow payers to fully capture this difference in value found across indications. This could lead ultimately to products never being developed in an indication for which they could represent a major therapeutic advance, simply because this would lead to a lower price than that achieved or achievable in other indications.
IBP has been proposed in the United States as a tool to address this issue, and is in the early phases of implementation there. However, in Europe, the picture is more patchy and implementation on a broader basis appears to be lagging behind the US.
Our latest research assessed how the reimbursement and pricing environment could allow for IBP in seven European countries, evaluating both incentives and hurdles.
Our findings suggest that broad implementation – including community-based practices – will be difficult in most countries covered, because of legal, data collection, and billing hurdles.
However, implementation at a smaller scale and scope e.g. for specialty products in hospitals could be feasible because of much lower hurdles.
Other mechanisms, such as use of managed entry agreements and volume-weighted average pricing defined through HTA outcome across indications, are likely to continue to be used to account for the difference in value across indications for most broadly prescribed treatments.
We believe, however, that indication based pricing is here to come because it is attractive in principle to all stakeholders. For community-prescribed pharmaceutical products it currently still encounters logistical and IT challenges, but for hospital-based specialty products there is a good chance. This will be the area where we see the first pilots.
Please click here to view the article, published this month in the Journal of Market Access & Health Policy.
For more information, please contact Nicolas Touchot.