Value of information and pricing new health care interventions

Journal Article


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Abstract


  • Previous application of value-of-information methods to optimal clinical

    trial design have predominantly taken a societal decision-making

    perspective, implicitly assuming that healthcare costs are covered through public

    expenditure and trial research is funded by government or donation-based

    philanthropic agencies. In this paper, we consider the interaction between

    interrelated perspectives of a societal decision maker (e.g. the National

    Institute for Health and Clinical Excellence [NICE] in the UK) charged with the

    responsibility for approving new health interventions for reimbursement and

    the company that holds the patent for a new intervention. We establish optimal

    decision making from societal and company perspectives, allowing for

    trade-offs between the value and cost of research and the price of the new

    intervention.

    Given the current level of evidence, there exists a maximum (threshold)

    price acceptable to the decision maker. Submission for approval with prices

    above this threshold will be refused. Given the current level of evidence and

    the decision maker’s threshold price, there exists a minimum (threshold) price

    acceptable to the company. If the decision maker’s threshold price exceeds the

    company’s, then current evidence is sufficient since any price between the

    thresholds is acceptable to both. On the other hand, if the decision maker’s

    threshold price is lower than the company’s, then no price is acceptable to

    both and the company’s optimal strategy is to commission additional research.

    The methods are illustrated using a recent example from the literature.

Publication Date


  • 2012

Citation


  • A. R. Willan & S. Eckermann, "Value of information and pricing new health care interventions", PharmacoEconomics 30 6 (2012) 447-459.

Scopus Eid


  • 2-s2.0-84861050774

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1248&context=gsbpapers

Ro Metadata Url


  • http://ro.uow.edu.au/gsbpapers/245

Number Of Pages


  • 12

Start Page


  • 447

End Page


  • 459

Volume


  • 30

Issue


  • 6

Abstract


  • Previous application of value-of-information methods to optimal clinical

    trial design have predominantly taken a societal decision-making

    perspective, implicitly assuming that healthcare costs are covered through public

    expenditure and trial research is funded by government or donation-based

    philanthropic agencies. In this paper, we consider the interaction between

    interrelated perspectives of a societal decision maker (e.g. the National

    Institute for Health and Clinical Excellence [NICE] in the UK) charged with the

    responsibility for approving new health interventions for reimbursement and

    the company that holds the patent for a new intervention. We establish optimal

    decision making from societal and company perspectives, allowing for

    trade-offs between the value and cost of research and the price of the new

    intervention.

    Given the current level of evidence, there exists a maximum (threshold)

    price acceptable to the decision maker. Submission for approval with prices

    above this threshold will be refused. Given the current level of evidence and

    the decision maker’s threshold price, there exists a minimum (threshold) price

    acceptable to the company. If the decision maker’s threshold price exceeds the

    company’s, then current evidence is sufficient since any price between the

    thresholds is acceptable to both. On the other hand, if the decision maker’s

    threshold price is lower than the company’s, then no price is acceptable to

    both and the company’s optimal strategy is to commission additional research.

    The methods are illustrated using a recent example from the literature.

Publication Date


  • 2012

Citation


  • A. R. Willan & S. Eckermann, "Value of information and pricing new health care interventions", PharmacoEconomics 30 6 (2012) 447-459.

Scopus Eid


  • 2-s2.0-84861050774

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1248&context=gsbpapers

Ro Metadata Url


  • http://ro.uow.edu.au/gsbpapers/245

Number Of Pages


  • 12

Start Page


  • 447

End Page


  • 459

Volume


  • 30

Issue


  • 6