Value-based pricing in pharmaceuticals - hype or hope?

The industry is under the public and political microscope, with demands for an alternative to the traditional, sales-led approach to marketing. One payment model receiving increasing attention is value-based pricing (VBP).

Within a VBP arrangement, risk is shared between pharmaceutical companies and payers, which should focus all parties on appropriateness of use and on outcomes.

 Hype?

Value-based pricing (VBP) of pharma products has exciting potential to help improve patient outcomes – at an affordable cost. The concept of VBP has been around for some time, but healthcare stakeholders are still grappling with what it means from a practical implementation perspective.

 Or hope?

We believe that, by following these three key tips below, pharma companies and payers can unlock the "value" component of VBP:

1. Keep it simple: VBP can be highly complex, so an emphasis on simplicity should help all parties more accurately measure the effectiveness of this approach.
2. Focus on appropriateness of care: Choose the right drugs for the right patients at the right time, to give a better chance of positive outcomes.
3. Keep transaction costs at reasonable levels: Both pharma companies and payers may have to invest significantly in VBP, so robust cost management can help deliver an affordable cost of treatment.

In this paper, we look at the challenges facing VPB implementation, notably the need to define and measure outcomes and overcome any regulatory and legal barriers.  We discuss pragmatic ways to achieve successful and widespread adoption and feature a case study."