Theme 1: Empirical and conceptual work relating to medicines pricing
During EEPRU II we undertook work to assess the share of value of new branded medicines that accrues to manufacturers and NHS patients (published here) and what the appropriate share of value to assign to manufacturers would be under different policy objectives (described in detail here and summarised here).
The appropriate share of value was assessed using a model that accounted for the effects of payment on innovation and therefore future health, and also the health opportunity costs associated with different payment levels. As part of this research we undertook a systematic review to identify relevant empirical literature quantifying the relationship between payment levels for new pharmaceuticals and the number and quality of new drugs developed. This identified a number of studies examining the causal links between payment and innovation. This evidence was used within the model to estimate the optimal share of the long-term value of new pharmaceuticals that should be assigned to manufacturers to fulfil different policy objectives.
This project seeks to build on this work in two important ways. Firstly, we seek to address gaps in the underlying evidence relating payment to innovation to provide more robust estimates of the optimal share of value to allocate to manufacturers. Secondly, we seek to improve estimates of the share of value allocated to manufacturers under existing policies and explore the implications of different policies that could be used to modulate how value is shared.
To quantify the relationship between payment for new pharmaceuticals and innovation quantity, quality and cost of production
To assess the implications of the improved evidence base developed via aim (1) for the share of value to assign to manufacturers under different policy objectives
To assess the implications of different pharmaceutical pricing policy approaches for value sharing using a range of case study products
Karl Claxton, Beth Woods, Francesco Longo, Andrea Salas Ortiz, Carlos Rojas Roque
Karl Claxton karl.claxton@york.ac.uk
Background:
An important question for health systems is how much they should pay for new pharmaceuticals. Paying more for new drugs may increase incentives for manufacturers to invest in to researching and developing more new drugs. However, devoting more NHS budget to new drugs means that these monies are not available to address other health priorities. Published research by EEPRU has developed a framework for estimating the implications of alternative payment levels for pharmaceuticals for patient health and health care costs.
Aims and objectives:
In this research we seek to provide improved evidence on how payments for new pharmaceuticals are likely to influence drug development, and to use this to provide more informed evidence on appropriate payment levels and pricing policies.
Methods:
We will use data on payment levels and drug development to better understand how payment influences the number of new drugs developed, the health benefits offered by new drugs, and how much they cost to produce. This will help to improve our understanding of appropriate payment levels.
Using examples of existing pharmaceuticals, we will demonstrate how different pricing policies can be used to deliver appropriate payment levels.
Policy relevance and dissemination:
This research will inform future pricing policies for new pharmaceuticals. We will then disseminate the research findings via peer reviewed publications and policy briefings.