Value-Based Pricing and Budget Impact Analysis for Multi-Indication Drugs: A Case Study of Immunotherapies

So-Young Ha, Dong-Won Kang, Hye-In Jung, Eui-Kyung Lee and Mi-Hai Park
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So-Young Ha: School of Pharmacy, Sungkyunkwan University, Suwon 16419, Korea
Dong-Won Kang: School of Pharmacy, Sungkyunkwan University, Suwon 16419, Korea
Hye-In Jung: School of Pharmacy, Sungkyunkwan University, Suwon 16419, Korea
Eui-Kyung Lee: School of Pharmacy, Sungkyunkwan University, Suwon 16419, Korea
Mi-Hai Park: School of Pharmacy, Sungkyunkwan University, Suwon 16419, Korea

IJERPH, 2022, vol. 19, issue 7, 1-10

Abstract: We aimed to calculate the value-based price of each indication and compare the drug price and budget impact among value-based pricing (VBP) scenarios, using immunotherapy as a case. Atezolizumab, nivolumab, and pembrolizumab prices were estimated for VBP scenarios, namely indication value-based pricing (IBP), IBP with refund, and weighted-average pricing (WAP). To estimate the value-based price of each indication, cost-effectiveness analyses were conducted by setting the incremental cost-effectiveness ratio of the first reimbursed indication to the threshold. The budget impact for each scenario was compared with that of the pricing system in Korea (which has a 4.75% price reduction). The value-based prices of non-reimbursed indications were lower for atezolizumab and higher for nivolumab than those for the reimbursed indication. The drug price fluctuations were the largest in IBP, varying between 28.56–328.81% of the current list price. The net price of the non-reimbursed indications decreased from 0% to 71.44% in IBP with refund, and the budget impact was the lowest among VBPs. Although the fluctuation in the budget impact in WAP was smaller than IBP, higher drug prices were identified for low-value indications. In conclusion, IBP with refund is a viable method for multi-indication drugs, because it has minimal drug price and budget impact changes.

Keywords: value-based pricing; multi-indication; immunotherapy; indication-based pricing; weighted-average pricing (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
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