Product Value: Are you thinking about it enough?

The pharmaceutical industry is flooded with talk of value; value dossiers, the value story, value messages, value demonstration and value-based pricing. Value is now even more pertinent with the new NHS value-based pricing system launching early next year. This follows the expiration of the current Pharmaceutical Price Regulation Scheme in January 2014. The new scheme aims to have a greater focus on the value medicines offer to NHS patients and the wider community.

The Government’s response to the latest report from the Health Select Committee states that suggested changes to the pricing system appear modest and there are yet to be any final decisions as to how the new system will be used in practice. The Government report advises any such uncertainties should be resolved by the end of this month (March 2013).

What is value?

As value is strongly linked to the price of a new treatment it is important to fully understand what value means in this setting. When assessing the overall value of a medicine, clinical, economic and patient factors must be considered.

Clinical value is defined by the product’s efficacy data from clinical trials and how these compare to existing and future competitors. The safety profile, method of administration and effect when used alongside other treatments are also important.

Economic value can be demonstrated using cost-effectiveness analyses, such as a budget impact model. Indirect costs or out-of-pocket expenses for the patient may also be evaluated.

Value to the patient and carers includes the impact on quality of life, adverse events and ability to perform daily activities. Patient reported outcome tools, such as the EQ-5D, can be used to measure these end-points.

Real world value is a new concept, where the product is evaluated in practice – Do doctors prescribe it? Do pharmacists recommend it? Do patients prefer it? Data from real world studies will help payers re-assess the value of products that are already available.

What does this mean for pharma?

Pharmaceutical companies have an enormous challenge ahead – products will have to demonstrate value in early clinical trials to prevent high research and development costs which may not be able to be recovered. It is also no longer enough for a new medicine to display similar properties to existing products – innovation and an increase in efficacy, reduction in cost, or improved quality-of-life evidence is required.

References

1. NICE. NICE “central” to value-based pricing of medicines. 22 March 2013. Accessed 24 March 2013. Available at: http://www.nice.org.uk/newsroom/news/NICECentralToValueBasedPricingOfMedicines.jsp

2. HM Government. The Government’s Response to the Health Select Committee’s Eighth Report of Session 2012-13 on the National Institute for Health and Clinical Excellence. March 2013 Available at: http://www.officialdocuments.gov.uk/document/cm85/8568/8568.pdf ISBN: 9780101856829