Price effectiveness analyses (CEA) purpose to look at how a brand new well being applied sciences influence well being outcomes and prices over a affected person’s lifetime. Whereas extrapolating long-run well being advantages and measuring potential value offsets are necessary, one other necessary merchandise to estimate is how the price of the brand new well being know-how is prone to evolve over occasions. That is notably related for prescription drugs.
Whittington et al. (2024) write:
A drug’s internet value typically will increase following launch and will later fall as opponents enter the market. Costs often fall extra noticeably after the drug loses exclusivity and generic substitutes turn out to be out there. Nonetheless, CEAs up to now have not often accounted for these potentialities and as a substitute assume {that a} drug’s value stays fixed over time.
Why is it necessary to include dynamic pricing? FDA estimated that generic medication accredited in 2022 yielded $18.9 billion in complete financial savings through the 12 months after their approvals.
…a CEA evaluating a brand new drug to an affordable different 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 counsel 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 remedy 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 remedy…
Nonetheless, 95 p.c of revealed CEAs, together with these performed by ICER, assume that drug costs stay fixed of their base case.
The necessity for dynamic pricing is especially necessary 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 (not like the surgical procedure) will probably be inexpensive 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 medication earlier than lack of exclusivity.
To learn the authors suggestions for incorporating dynamic pricing into CEA, you possibly can learn the complete article right here.
