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Can and Should Value Based Pricing Be Applied to Molecular Diagnostics?


  • Garau, M.
  • Towse, A.
  • Garrison, L.
  • Housman, L.
  • Ossa, D.


Diagnostics not only facilitate health gain and cost savings, but also provide information to inform patients' decisions on interventions and to clarify how their behaviour may affect their health. Current pricing and reimbursement systems for diagnostics, however, are not efficient and provide poor incentives for new diagnostic approaches. Prices often are driven by administrative practice and expected production cost, rather than assessments of value. The purpose of this paper is to discuss how a value based pricing (VBP) framework for efficient use and pricing of medicines also might be applied to diagnostics. We recommend a two-part approach. First, in the case of companion diagnostics introduced at the launch of the drug, the process would follow the new drug assessment processes. It would consider a broad range of value elements and be based on a balanced analysis of diagnostic impact. Second, for diagnostics not paired specifically with a drug at launch, review would be by a diagnostics-dedicated committee using VBP principles [View related slide presentation]( assessment of co-dependent technologies. A revised version of this paper has been published in Personalized Medicine and can be downloaded from - Please cite as - Garau, M., Towse, A., Garrison, L., Housman, L. and Ossa, D., 2013. Can and should value-based pricing be applied to molecular diagnostics? Personalized Medicine, 10(1), pp.61-72.

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  • Garau, M. & Towse, A. & Garrison, L. & Housman, L. & Ossa, D., 2012. "Can and Should Value Based Pricing Be Applied to Molecular Diagnostics?," Research Papers 000160, Office of Health Economics.
  • Handle: RePEc:ohe:respap:000160

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    References listed on IDEAS

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    Cited by:

    1. Rejon-Parrilla, J.C & Hernandez-Villafuerte, K. & Shah, K. & Mestre-Ferrandiz, J. & Garrison, L. & Towse, A., 2014. "The Expanding Value Footprint of Oncology Treatments," Consulting Reports 000050, Office of Health Economics.
    2. James Buchanan & Sarah Wordsworth, 2015. "Welfarism Versus Extra-Welfarism: Can the Choice of Economic Evaluation Approach Impact on the Adoption Decisions Recommended by Economic Evaluation Studies?," PharmacoEconomics, Springer, vol. 33(6), pages 571-579, June.
    3. David J. Mott & Grace Hampson & Martin J. Llewelyn & Jorge Mestre-Ferrandiz & Michael M. Hopkins, 2020. "A Multinational European Study of Patient Preferences for Novel Diagnostics to Manage Antimicrobial Resistance," Applied Health Economics and Health Policy, Springer, vol. 18(1), pages 69-79, February.
    4. Gregory S. Zaric, 2016. "Cost Implications of Value-Based Pricing for Companion Diagnostic Tests in Precision Medicine," PharmacoEconomics, Springer, vol. 34(7), pages 635-644, July.

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    More about this item


    Judging value for money and improving decision making;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health


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