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Multi-Indication Pricing: Nice in Theory but Can it Work in Practice?

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Abstract

For medicines with different valued indications (uses), multi-indication pricing implies charging different prices for different uses. In this article, we assess how multi-indication pricing could help achieve overall strategic objectives of pricing controls, summarise its advantages and disadvantages (vs. uniform pricing) and estimate the hypothetical impact on prices of moving towards multi-indication pricing for specific oncologic medicines in Spain. International experience shows that multi-indication pricing can be implemented in real practice, and indeed a few initiatives are currently in use, albeit mostly applied indirectly through confidential pricing agreements that offer a way to discriminate prices across countries without altering list prices. However, some more sophisticated systems are in place in Italy, and more recently in Spain, where the objective is to monitor usage per patient/indication, and ultimately pay for outcomes. Based on the existing experience, we also outline six conditions required for multi-indication pricing. Multi-indication pricing is a useful tool to determine the relative prices of a drug for multiple (different-valued) indications, but by itself will not offer the ‘solution’ to what the absolute price should be. That will be driven, among other things, by cost-effectiveness thresholds, if they exist. Overall, we argue multi-indication pricing is nice in theory and it could work in practice, although changes in the manner in which medicines are priced, procured and monitored in clinical practice need to be applied.

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Authors and Affiliations

  1. Independent Economics Consultant, Madrid, Spain

    Jorge Mestre-Ferrandiz

  2. Weber Economía y Salud, Majadahonda, Madrid, Spain

    Néboa Zozaya & Bleric Alcalá

  3. Fundación Weber, Majadahonda, Madrid, Spain

    Álvaro Hidalgo-Vega

  4. Universidad de Castilla-La Mancha, Campus de Toledo, Toledo, Spain

    Álvaro Hidalgo-Vega

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  1. Jorge Mestre-Ferrandiz
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  2. Néboa Zozaya
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  3. Bleric Alcalá
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  4. Álvaro Hidalgo-Vega
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Contributions

All authors made substantial contributions to this article. JM-F and AH-V conceived the idea and developed the theory. NZ and BA performed the analytic calculations. All authors discussed the results and contributed to the final manuscript.

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No funding was received for the preparation of this article.

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Jorge Mestre-Ferrandiz, Néboa Zozaya, Bleric Alcalá and Álvaro Hidalgo-Vega have no conflicts of interest that are directly relevant to the contents of this article. Néboa Zozaya and Bleric Alcalá are employers of Weber, a consultancy firm that develops projects for pharmaceutical firms and other private and public clients.

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Mestre-Ferrandiz, J., Zozaya, N., Alcalá, B. et al. Multi-Indication Pricing: Nice in Theory but Can it Work in Practice?. PharmacoEconomics 36, 1407–1420 (2018). https://doi.org/10.1007/s40273-018-0716-4

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