Pricing of Pharmaceuticals: Current Trends and Outlook and the Role of Comparative Effectiveness Research

Abstract

The pricing of biopharmaceuticals has recently received increasing attention, with many calling into question the current model, particularly following the fiscal crunch that occurred in the wake of the 2008 financial crisis. In this article, we review the key elements of a global biopharmaceutical pricing approach – including its specificities compared to other product pricing, the approaches currently used to price biopharmaceuticals around the world, and the role of comparative effectiveness research (CER) – and discuss key trends and the potential future outlook for the pricing of pharmaceuticals. We argue that – despite significant payer pushback, negative press, and other challenges – the current pharmaceutical pricing model has been extremely successful in delivering transformative new medicines and there does not appear to be a credible alternative model. This is no small feat given the considerable uncertainty and complexity involved in biopharmaceutical decision-making for both payers and manufacturers. At the same time, some adjustments to the current pricing model and CER are identified as necessary to address current access hurdles and payer concerns. In particular, we discuss how the European Union payer-directed pricing model needs to evolve, and how innovators must become more adept at evaluating and communicating appropriately the value of their therapy, to ensure that patients worldwide can benefit from drug innovations without undue delay or barriers to access or reimbursement.