title: Reimbursement and value-based pricing: stratified cost-effectiveness analysis may not be the last word.
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.
authors.affiliation: Oxford Outcomes, Oxford, UK. neil.hawkins@oxfordoutcomes.com
authors.forename: Neil
authors.initials: N
authors.lastname: Hawkins
authors.forename: David A
authors.initials: DA
authors.lastname: Scott
mesh_terms: D000328:Adult; D000368:Aged; D003362:Cost-Benefit Analysis / Q000379:methods; D005249:Fees and Charges; D006801:Humans; D019458:Insurance Coverage / Q000191:economics; D007348:Insurance, Health; D008875:Middle Aged; D015233:Models, Statistical; D011787:Quality of Health Care / Q000191:economics*; D012051:Reimbursement Mechanisms / Q000191:economics* / Q000458:organization & administration; D040841:Resource Allocation / Q000191:economics; D006113:United Kingdom