Intended for healthcare professionals

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Analysis

Value based pricing for NHS drugs: an opportunity not to be missed?

BMJ 2008; 336 doi: https://doi.org/10.1136/bmj.39434.500185.25 (Published 31 January 2008) Cite this as: BMJ 2008;336:251

Rapid Response:

Drug reimbursement policies: prospective vs. retrospective application of the value for money principle

In handling the complex issue of drug reimbursement, the principle
of value for money can take different forms.

Case A (“traditional cost-effectiveness approach”) is the most
frequent one. Under these circumstances, the effectiveness data for the
innovative drug provide a reliable estimate of its incremental benefit in
comparison with the previous treatment (e.g. mean survival gain = 6
months per patient). The average is thus drawn on the side of
effectiveness (e.g. an average gain of 6 months per patient can result
from 50 non-responders who gain nothing in terms of survival plus 50
responders who gain 12 months each). Then, this average magnitude of the
(incremental) benefit is converted into an economic (incremental)
countervalue. In the above example, if each month gained is valued up to
£ 2,000, the (mean) survival gain of 6 months per patient translates
into the conclusion that this benefit can be worth up to £12,000 per
treatment (irrespective of whether the individual patient who receives
this innovative treatment is a responder or a non-responder).

Case B (“risk sharing ” or “payment by results”) is less frequent,
but in recent times regulatory agencies have been using it more and more.
Under these circumstances, no average is drawn on the side of
effectiveness. Instead, all patients are assessed individually using an
all-or-none classification (e.g. responder vs non-responder where, for
example, each responder gains 12 months while each non-responder gains
none); then, the outcomes are individually converted into an economic
countervalue (e.g. £24,000 for responders vs £ 0 for non-responders). This
risk-sharing policy accepts to pay $24,000 for each responder and pays
nothing for non-responders (alternatively, according to some modifications
of the risk-sharing approach, non-responders are initially paid at
£24,000 each, but then this amount of money is requested as a pay-back
from the manufacturer). Anyhow, if there are 50 responders and 50 non-
responders, drawing the average of the 100 individual economic
countervalues (50 cases valued at £24,000 plus 50 cases valued 0) gives
the same result as in Case A (maximum “acceptable” expenditure = £12,000
per patient).

The approach according to Case A is particularly suitable for
circumstances where the clinical evidence is sound so that the national
health system and the manufacturer are willing to share the same
expectation about the treatment outcome. The application of the economic
agreement can therefore be prospective.

In contrast, the approach according to Case B is suitable for
circumstances where the clinical evidence is not sound, and so the
national health system and the manufacturer tend to have different
expectations about the treatment outcome. The controversy can therefore
be solved by adopting this “payment by results” approach wherein the
value for money principle is applied retrospectively.

Case B could be an excellent approach for handling the cost of
expensive but poorly documented medical devices; however, no experience
has yet been made in this area.

Competing interests:
None declared

Competing interests: No competing interests

02 June 2008
Andrea Messori
Coordinator
Laboratory of Pharmacoeconomics, SIFO, c/o ASL 3, Pistoia, Italy