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Multi-Indication Pricing: Nice in Theory but Can it Work in Practice?

Author

Listed:
  • Jorge Mestre-Ferrandiz

    (Independent Economics Consultant)

  • Néboa Zozaya

    (Weber Economía y Salud)

  • Bleric Alcalá

    (Weber Economía y Salud)

  • Álvaro Hidalgo-Vega

    (Fundación Weber, Majadahonda
    Universidad de Castilla-La Mancha, Campus de Toledo)

Abstract

For medicines with different valued indications (uses), multi-indication pricing implies charging different prices for different uses. In this article, we assess how multi-indication pricing could help achieve overall strategic objectives of pricing controls, summarise its advantages and disadvantages (vs. uniform pricing) and estimate the hypothetical impact on prices of moving towards multi-indication pricing for specific oncologic medicines in Spain. International experience shows that multi-indication pricing can be implemented in real practice, and indeed a few initiatives are currently in use, albeit mostly applied indirectly through confidential pricing agreements that offer a way to discriminate prices across countries without altering list prices. However, some more sophisticated systems are in place in Italy, and more recently in Spain, where the objective is to monitor usage per patient/indication, and ultimately pay for outcomes. Based on the existing experience, we also outline six conditions required for multi-indication pricing. Multi-indication pricing is a useful tool to determine the relative prices of a drug for multiple (different-valued) indications, but by itself will not offer the ‘solution’ to what the absolute price should be. That will be driven, among other things, by cost-effectiveness thresholds, if they exist. Overall, we argue multi-indication pricing is nice in theory and it could work in practice, although changes in the manner in which medicines are priced, procured and monitored in clinical practice need to be applied.

Suggested Citation

  • Jorge Mestre-Ferrandiz & Néboa Zozaya & Bleric Alcalá & Álvaro Hidalgo-Vega, 2018. "Multi-Indication Pricing: Nice in Theory but Can it Work in Practice?," PharmacoEconomics, Springer, vol. 36(12), pages 1407-1420, December.
  • Handle: RePEc:spr:pharme:v:36:y:2018:i:12:d:10.1007_s40273-018-0716-4
    DOI: 10.1007/s40273-018-0716-4
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    References listed on IDEAS

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    1. Towse, A. & Cole, A. & Zamora, B., 2018. "The Debate on Indication-Based Pricing in the U.S. and Five Major European Countries," Consulting Reports 002009, Office of Health Economics.
    2. Patricia M. Danzon, 2018. "Differential Pricing of Pharmaceuticals: Theory, Evidence and Emerging Issues," PharmacoEconomics, Springer, vol. 36(12), pages 1395-1405, December.
    3. Hampson, G. & Towse, A. & Dreitlein, B. & Henshall, C. & Pearson, S., 2018. "Real World Evidence for Coverage Decisions: Opportunities and Challenges," Research Papers 001997, Office of Health Economics.
    4. Cole, A. & Towse, A. & Lorgelly, P. & Sullivan, R., 2018. "Economics of Innovative Payment Models Compared with Single Pricing of Pharmaceuticals," Research Papers 002030, Office of Health Economics.
    5. Mestre-Ferrandiz, J. & Towse, A. & Dellamano, R. & Pistollato, M., 2015. "Multi-indication Pricing: Pros, Cons and Applicability to the UK," Seminar Briefings 001653, Office of Health Economics.
    6. Cole, A. & Garrison, L. & Mestre-Ferrandiz, J. & Towse, A., 2015. "Data Governance Arrangements for Real-World Evidence," Consulting Reports 001660, Office of Health Economics.
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