Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word
Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word
During recent discussions, it has been argued that stratified cost-effectiveness analysis has a key role in reimbursement decision-making and value-based pricing (VBP). It has previously been shown that when manufacturers are price-takers, reimbursement decisions made in reference to stratified cost-effectiveness analysis lead to a more efficient allocation of resources than decisions based on whole-population cost-effectiveness analysis. However, we demonstrate that when manufacturers are price setters, reimbursement or VBP based on stratified cost-effectiveness analysis may not be optimal. Using two examples - one considering the choice of thrombolytic treatment for specific patient subgroups and the other considering the extension of coverage for a cancer treatment to include an additional indication - we show that combinations of extended coverage and reduced price can be identified that are advantageous to both payers and manufacturers. The benefits of a given extension in coverage and reduction in price depend both upon the average treatment benefit in the additional population and its size relative to the original population. Negotiation regarding trade-offs between price and coverage may lead to improved outcomes both for health-care systems and manufacturers compared with processes where coverage is determined conditional simply on stratified cost-effectiveness at a given price.
Adult, Aged, Cost-Benefit Analysis/methods, Fees and Charges, Humans, Insurance Coverage/economics, Insurance, Health, Middle Aged, Models, Statistical, Quality of Health Care/economics, Reimbursement Mechanisms/economics, Resource Allocation/economics, United Kingdom
688-698
Hawkins, Neil
1aa8112d-606d-4176-b306-9c22158c556d
Scott, David A
19b5fd34-9974-4ae4-8be0-27a693639e20
30 March 2011
Hawkins, Neil
1aa8112d-606d-4176-b306-9c22158c556d
Scott, David A
19b5fd34-9974-4ae4-8be0-27a693639e20
Hawkins, Neil and Scott, David A
(2011)
Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word.
Health Economics, 20 (6), .
(doi:10.1002/hec.1625).
Abstract
During recent discussions, it has been argued that stratified cost-effectiveness analysis has a key role in reimbursement decision-making and value-based pricing (VBP). It has previously been shown that when manufacturers are price-takers, reimbursement decisions made in reference to stratified cost-effectiveness analysis lead to a more efficient allocation of resources than decisions based on whole-population cost-effectiveness analysis. However, we demonstrate that when manufacturers are price setters, reimbursement or VBP based on stratified cost-effectiveness analysis may not be optimal. Using two examples - one considering the choice of thrombolytic treatment for specific patient subgroups and the other considering the extension of coverage for a cancer treatment to include an additional indication - we show that combinations of extended coverage and reduced price can be identified that are advantageous to both payers and manufacturers. The benefits of a given extension in coverage and reduction in price depend both upon the average treatment benefit in the additional population and its size relative to the original population. Negotiation regarding trade-offs between price and coverage may lead to improved outcomes both for health-care systems and manufacturers compared with processes where coverage is determined conditional simply on stratified cost-effectiveness at a given price.
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Published date: 30 March 2011
Keywords:
Adult, Aged, Cost-Benefit Analysis/methods, Fees and Charges, Humans, Insurance Coverage/economics, Insurance, Health, Middle Aged, Models, Statistical, Quality of Health Care/economics, Reimbursement Mechanisms/economics, Resource Allocation/economics, United Kingdom
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Local EPrints ID: 441408
URI: http://eprints.soton.ac.uk/id/eprint/441408
ISSN: 1099-1050
PURE UUID: 0f7f1b76-af1b-4bfe-8f27-c6baf0442c78
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Date deposited: 11 Jun 2020 16:39
Last modified: 17 Mar 2024 04:02
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Author:
Neil Hawkins
Author:
David A Scott
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