Value effectiveness analyses (CEA) intention to look at how a brand new well being applied sciences affect well being outcomes and prices over a affected person’s lifetime. Whereas extrapolating long-run well being advantages and measuring potential value offsets are essential, one other essential merchandise to estimate is how the price of the brand new well being know-how is more likely to evolve over instances. That is significantly related for prescription drugs.
Whittington et al. (2024) write:
A drug’s web value typically will increase following launch and should later fall as rivals enter the market. Costs normally fall extra noticeably after the drug loses exclusivity and generic substitutes change into accessible. Nevertheless, CEAs up to now have hardly ever accounted for these prospects and as a substitute assume {that a} drug’s value stays fixed over time.
Why is it essential to include dynamic pricing? FDA estimated that generic medicine accepted in 2022 yielded $18.9 billion in whole financial savings in the course of the 12 months after their approvals.
…a CEA evaluating a brand new drug to a reasonable various can overstate the brand new drug’s added value over its life cycle if it assumes that the drug’s introductory value will persist indefinitely. By neglecting to regulate for the “downstream” drop in value, the CEA might incorrectly recommend the brand new drug represents unfavorable worth. Importantly, assumptions about drug value dynamics must also apply to comparator therapies in an evaluation. Assuming no change in comparator drug costs can overstate the worth of the brand new drug if the comparator therapy is nearing its lack of market exclusivity. A static drug pricing assumption fails to account for anticipated financial savings from the genericization of the choice therapy…
Nonetheless, 95 p.c of printed CEAs, together with these performed by ICER, assume that drug costs stay fixed of their base case.
The necessity for dynamic pricing is especially essential when evaluating pharmaceutical to non-pharmaceutical well being applied sciences.
…omitting anticipated value declines could make a drug look no extra engaging than an equally efficient non-drug intervention (for instance, surgical procedure) with the identical preliminary value, regardless that value declines following lack of exclusivity imply that the drug (in contrast to the surgical procedure) might be cheaper over the long term.
The commentary continues by including that IRA has make the trajectory of drug pricing extra predictable as a result of (i) value will increase are restricted to inflation and (ii) IRA permits CMS to barter chosen medicine earlier than lack of exclusivity.
To learn the authors suggestions for incorporating dynamic pricing into CEA, you may learn the complete article right here.
