Pricing methods in outcome-based contracting: δ4: safety-based pricing

Abstract

Aims

Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The fourth dimension (δ4) estimates prices on the basis of assessments of the safety of the drug using an ex ante analysis based on clinical trial data. We describe this dimension’s methodology and present a proof-of-concept application to the treatment of non-small cell lung cancer (NSCLC) with EGFR mutation with osimertinib.

Materials and methods

The safety-based pricing dimension utilizes a four-step method: 1) pooling adverse events (AE), standardizing, estimating 95%Cis, and adjusting for time; 2) estimating correction factors and corrected probabilities of AEs; 3) estimating the probability of at least one adverse event (AE) occurring and leading to treatment discontinuation; and 4) estimating ranges for payback percentages and performing Monte Carlo Simulation to estimate a DSP_Safety. A proof-of-concept exercise with osimertinib in NSCLC was performed for two hypothetical outcome-based contracts: 1-year (2019–2020) and 2-year (2019–2021). We estimated the DSP_Safety based on the grade 3/4 AEs observed for osimertinib and standard of care. The 2018 wholesale acquisition cost (WAC) of osimertinib at $14,616 for a 30-day prescription was used.

Results

AEs3/4 were retrieved from the FLAURA trial. In the 1-year contract, the DSP_Safety of osimertinib was estimated at $14,627 (or +0.08% the 2018 WAC) for a 30-day prescription. In the 2-year contract, the DSP_Safety of osimertinib was estimated at $14,516 (or −0.68% the 2018 WAC) for a 30-day prescription.

Conclusions

We demonstrated that ex ante pricing methods-based paybacks for safety issues leading to treatment discontinuation can be integrated into our proposed Six Delta platform for outcome-based pricing/contracting.

Keywords:

• Safety
• outcome-based-contracting
• pricing methods
• osimertinib
• lung cancer

JEL classification codes:

• D40
• C00

View correction statement:

The six Delta platform for outcome-based contracting for pharmaceuticals

This article is part of a series including:

Pricing methods in outcome-based contracting: δ1: cost effectiveness analysis and cost-utility analysis-based pricing

Transparency

Declaration of funding

The work reported herein was performed without sponsorship or grant funding.

Declaration of financial/other relationships

The authors have no financial relationships to declare.

JME peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Author contributions

All named authors meet the International Committee of Medical Journal Editors (ICMJE) criteria for authorship of this manuscript.

Acknowledgements

The authors thank Amber Koslucher and Rayan Maldonado from the College of Public Health, University of Arizona, for validating the mathematical equations and for performing independent revisions of the assumptions, equations, and calculations.

Notes

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