Advanced Search
MyIDEAS: Login to save this article or follow this journal

Optimal drug pricing, limited use conditions and stratified net benefits for Markov models of disease progression

Contents:

Author Info

  • Gregory S. Zaric

    (Richard Ivey School of Business, University of Western Ontario, London, Canada)

Registered author(s):

    Abstract

    Limited use conditions (LUCs) are a method of directing treatment with new drugs to those populations where they will be most cost effective. In this paper we investigate how a drug manufacturer could determine pricing and LUCs to maximize profits. We assume that the payer makes formulary decisions on the basis of net monetary benefits, that the disease can be modeled using a Markov model of disease progression, and that the drug reduces the probability of progression between states of the Markov model. LUCs are expressed as a range of probabilities of disease progression over which patients would have access to the new drug. We assume that the manufacturer determines the price and LUCs in order to maximize profits. We show that an explicit trade-off exists between the drug's price and the use conditions, that there is an upper bound on the drug price, that the proportion of the population targeted by the LUC does not depend on quality of life or costs in each health state or the payer's willingness to pay, and that high drug prices do not always correspond with high profits. Copyright © 2008 John Wiley & Sons, Ltd.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1002/hec.1332
    File Function: Link to full text; subscription required
    Download Restriction: no

    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 17 (2008)
    Issue (Month): 11 ()
    Pages: 1277-1294

    as in new window
    Handle: RePEc:wly:hlthec:v:17:y:2008:i:11:p:1277-1294

    Contact details of provider:
    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. George Laking & Joanne Lord & Alastair Fischer, 2006. "The economics of diagnosis," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1109-1120.
    2. Douglas Coyle & Martin J. Buxton & Bernie J. O'Brien, 2003. "Stratified cost-effectiveness analysis: a framework for establishing efficient limited use criteria," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 421-427.
    3. Nancy Devlin & David Parkin, 2004. "Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 437-452.
    4. Karl Claxton, 2007. "Oft, Vbp: Qed?," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 545-558.
    5. Tambour, Magnus & Zethraeus, Niklas & Johannesson, Magnus, 1997. "A Note on Confidence Intervals in Cost-Effectiveness Analysis," Working Paper Series in Economics and Finance 181, Stockholm School of Economics.
    6. Mark Sculpher & Amiram Gafni, 2001. "Recognizing diversity in public preferences: The use of preference sub-groups in cost-effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 10(4), pages 317-324.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Puig-Junoy, Jaume & López-Valcárcel, Beatriz González, 2014. "Launch prices for new pharmaceuticals in the heavily regulated and subsidized Spanish market, 1995–2007," Health Policy, Elsevier, vol. 116(2), pages 170-181.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:17:y:2008:i:11:p:1277-1294. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.