Plain English Summary

Background:

An important question for health systems is how much they should pay for new pharmaceuticals. The UK has established methods for linking prices for new pharmaceuticals to the additional health gain they offer above and beyond existing treatments. However, the price paid per unit of health gain is based on historical precedent rather than a consideration of the implications of different payment levels for population health. 

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.

Developing appropriate pharmaceutical pricing policy is complicated by the fact that the number and quality of new innovations will depend on pharmaceutical pricing policies in multiple countries and the research and development activities in both the private and public sectors. In addition, policy makers may be pursuing multiple objectives when setting pharmaceutical pricing policy, including promotion of patient health and wider effects on the economy of investments in the pharmaceutical sector. This raises important questions about the trade-offs associated with pursuing economic goals using the NHS budget. 

Aims and objectives:

In this research we will further develop our framework for appropriate payment levels by considering different approaches to reflecting the effects of national pricing policies on other countries, the role of public sector research and development activities, and potential effects of pharmaceutical pricing that go beyond population health including effects on the UK economy. 

Methods:

We will develop quantitative frameworks informed by reviews of empirical studies. We will estimate the effects of different pricing policies on outcomes such as health outcomes measured in quality adjusted life years (QALYs) which account for quality of life and life expectancy benefits, health system costs, impacts on the wider economy and international effects. 

Policy relevance and dissemination:

This research will inform future pricing policies for new pharmaceuticals to better promote population health, and consider the trade-offs associated with pursuing economic goals using the NHS budget. For example, we will be able to show how appropriate payment levels change when investment in public sector R&D is accounted for. We will disseminate the research findings via peer reviewed publications, a workshop with relevant stakeholders and policy briefings.