The Centre for Health Economics at the University of York has published a research paper examining the principles of value-based pricing (VBP) in a collectively-funded health care system like the UK NHS.  It also develops a series of proposals for how these principles might be best implemented, highlighting particularly critical issues, and examines whether and how other aspects of value might be taken into account.

The following issues are discussed:

• Principles of value-based pricing
• Value-based pricing in a devolved NHS (including reducing postcode prescribing, the role of NICE, incentives for NHS prescribers, value-based rebate with volume agreements, and implications for NHS costs)
• Other aspects of value (including severity, burden and need; incentives for innovation; wider economic benefits; the value of evidence) 

In their conclusion the authors say that “the introduction of VBP after 2014 provides an opportunity to found pharmaceutical pricing and access to new health technologies on sound principles; reflective of social values and the reality of a budget constrained NHS. This requires: clarity on key issues of principle and social value; as well as critical details of how it will be implemented and operate.”  

The researchers say it is critical that an assessment of the health expected to be forgone elsewhere in the NHS due to additional costs of a drug displacing other NHS activities (ie, the cost-effectiveness threshold) is evidence based. Research is currently under way using recently available national data to provide these estimates. VBP agreement should be combined with national or, possibly, local sales volume agreements between the NHS and manufacturers to limit excess and cost-ineffective prescribing.  The triggers for renegotiation of VBPs must include the arrival of cheaper generic medicines and new evidence becoming available.

For further details, please see the full report at the link below.