The impact of value-based pricing policies for new medicines on negotiation behaviour and societal outcomes: implications from three economic experiments

This dissertation - with the exception of Chapter 2 and the Appendices to Chapter 2 - is published under a CC BY license (http://creativecommons.org/licenses/by/4.0/). Chapter 2 was reprinted with permission of Springer Nature Customer Service Centre GmbH (License Number: 5220840909311). The reuse of Chapter 2 is subject to the publisher's terms and conditions. Abstract Background: Since the financial crisis, there has been a substantial increase in reform discussion and efforts of pricing policies for new medicines. Various forms of value-based pricing policies have been introduced in the last decade in OECD countries. These initiatives are expected to have a positive impact on societal outcomes such as availability, affordability and value for money, but there is little scientific evidence of these impacts due to confidential arrangements in many countries. Objective: The overall objective of this dissertation is to explore how experimental economics could be used to inform reforms of value-based pharmaceutical pricing policies. A methodological framework for experimental policy analysis is proposed. On this basis, an experimental design for the analysis of price negotiations for medicines and value-based policy interventions is developed and tested. Methods: First a systematic literature review was performed to assess the available evidence. This was followed by three controlled economic experiments on social preferences (n=202, n=404), bargaining behaviour (n=404) and the effects of two value-based policy interventions (N=367) in pricing negotiations for new medicines. Results: No evidence was found in the literature reviewed on the effectiveness of valuebased pricing policies on societal outcomes, nor on the impact of other pricing policies on health outcomes in particular. The experiments conducted showed that the preferences in the negotiation situation allowed agreements in favour of the patients. However, as soon as final offers were stated, the chances of success dropped markedly, which negatively affected access and benefit for patients as well as value for money for the overall population. Further, price offers were influenced both by the magnitude of the given price range (“real world” oncology prices vs unconverted payoffs) as well as by available alternatives (“standard of care”). A voluntary valuation framework (cost-benefit tool) seemed to mitigate the adverse behavioural effects and improve overall patient access, benefit and value for money. The cost-containment effect of a mandatory risk-sharing agreement on the other hand was offset by the negative effects on the overall patient benefit. Conclusion: This dissertation shows how testing health policy measures in controlled laboratory experiments could contribute to reform discussions on pharmaceutical price regulation. As is already being done in other policy areas. According to the results presented, valuebased pricing policies could improve patient access to medicines and increase the value for money of price negotiations. Provided that negotiations are based on a common valuation framework oriented towards value for money