Life Sciences Blog

Value-based pricing: What should we expect based on ISPOR discussions?

Value-based pricing for pharmaceuticals, or VBP, was due to be introduced in the United Kingdom for newly-approved NCEs and new indications starting from 1 January 2014, in accordance with a government white paper published back in 2010. But, as the deadline for implementation approaches, the rhetoric around VBP has quietly died down, leaving industry players and observers to wonder if--and in what form --VBP will be introduced in the UK. The recent ISPOR meeting in Dublin, Ireland, has allowed us to gain new insights on the VBP vision and implementation.

It should be noted from the outset that VBP was not high on the agenda of the ISPOR meeting. And this is hardly surprising: there has been relatively little news coming out of the UK in recent months that could shed light on the progress made with VBP introduction. The latest news was that the Department of Health is discussing VBP with the pharmaceutical industry … or rather negotiating the terms of VBP introduction.

The NICE view: Business as usual At ISPOR, VBP came up briefly in one presentation from a representative of NICE. And if anyone should know how VBP, is going it should be NICE, considering the latter’s central role in conducting VBP evaluations was confirmed by the UK’s Department of Health more than a year ago. In her presentation at the ISPOR Second Plenary Session on 5 November, a senior NICE representative stated “We don’t anticipate significant changes in evidence requirements from scientific advice in the first instance” and advised pharmaceutical manufacturers to carry on with development work in the same manner as now. Business as usual then it seems following the launch of VBP, from the perspective of NICE.

The academic view: We are nearly there in terms of methodology A little more information on how development of the VBP methodology is progressing came in a presentation by Karl Claxton, Professor of Economics at the University of York’s Centre for Health Economics during ISPOR Third Plenary Session. As part of his argument that multi-criteria decision analysis (MCDA) is already being used in the UK as part of the NICE review of drugs, Prof Claxton stated that EQ5Ds (in which patients rate Health Related Quality of Life under 5 dimensions with 3 performance levels each) are a form of MCDA and these are taken into account in NICE appraisals. He highlighted the risk of using MCDA unless the weight of the different criteria is clearly defined in advance. He further stated that they were asked 3 years ago by the government to help define these weights and initially thought this was impossible, but are now on the brink of defining them successfully. As a reminder, the UK government’s white paper in which VBP was mentioned for the first time was published three years ago – and the main concern raised by NICE at the time was that accurate weighting of criteria was essential to ensure there was no double-counting of certain benefits of a new treatment, particularly of those harder-to-define societal benefits. True, this is not much to judge the progress of VBP on, but it is the most definitive statement on progress in this area made in many months.

Our critical view: Is there still room for VBP? So what should we expect next? My views on VBP have evolved over the past few months – in line with the silence descending on public VBP discussions in the UK. While work is being done on VBP behind the scenes – at the NICE level and also as part of government-industry negotiations – the fact that no official reports on progress have been made suggests that VBP may be introduced with a delay. There were already some allusions to a possible delay for VBP – although implementation was still meant to happen in 2014 – as part of the recent announcement of the new PPRS scheme in the UK. Interestingly the PPRS document also indicates that manufacturers will have the right to ask for a VBP assessment of a new drug. This is a far cry from the earliest discussions of VBP in which the government described it as something that all new NCEs and new indications of already approved NCEs will be subjected to – whether the manufacturer wants to or not.

If current indications are correct, we should be prepared for a rather watered-down version of VBP to be introduced at some point in 2014. The VBP-related challenge for the industry won’t be as dramatic as initially anticipated, but tracking the progress of VBP remains essential as change is the one constant thing in healthcare and pharma regulations.

About The Author

Milena Izmirlieva is head of the Life Sciences research team at IHS Markit. Her areas of expertise include market access, pricing and reimbursement, HTA, generics and biosimilars, corporate strategies, and pharma promotion and advertising.