Value-Based Pricing For Pharmaceuticals In The Trump Administration

Everyone seems to agree: Drug prices are too damn high. Scandalous prices for new drugs and enormous price hikes on old drugs have focused public ire on the pharmaceutical industry. A bipartisan consensus has emerged that something must be done to tackle drug prices. There’s less consensus, however, about what that something ought to be. Allowing Medicare to negotiate drug prices is one popular possibility; outright price controls are also under discussion. But with Republicans in control of both Congress and the White House, neither appears to be on the policy agenda. But one market-friendly alternative, “value-based pricing,” may hold more promise. Many different groups—from drug companies to patient advocates to policy shops—would like to pivot away from a pricing model that links sales revenue to volume. Instead, they would like to explore paying for prescription drugs based on how well they work. What Is Value-Based Pricing? Value-based pricing is an umbrella term, encompassing a number of different possible payment arrangements. At its administratively simplest, a company could link the single price it charges for a given drug to an assessment of how well it works. More sophisticated versions of value-based pricing in the marketplace would allow insurers and patients to receive rebates from drug manufacturers if a drug failed to work, an arrangement known as “outcome-based pricing.” Another variant would involve “indication-based pricing,” in w...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Drugs and Medical Innovation Medicaid and CHIP Medicare Payment Policy Centers for Medicare and Medicaid Services drug pricing outcome-based pricing valued-based pricing Source Type: blogs