Pricing methods in outcome-based contracting: integration analysis of the six dimensions (6 δs)

Abstract

Aims

Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The six dimensions have been described separately: (δ1) cost-effectiveness analysis and cost-utility analysis-based pricing; (δ2) willingness-to-pay-based pricing; (δ3) reference-based pricing; (δ4) safety-based pricing; (δ5) risk of efficacy failure-based pricing; and (δ6) adherence-based pricing. The final step is to integrate the various dimension-specific pricing estimates into a composite estimate termed the All-Dimensional Price (ADP). We describe the methodology for this integration 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

For better accuracy in estimating the ADP, we used the prices generated from the six dimensions at scenario levels, not at the dimension-specific price (DSP) level. We pooled the price estimates and performed Monte Carlo Simulations (MCS) for the price scenarios generated by the six dimensions. We used the results of the proof-of-concept exercise involving osimertinib in NSCLC with EGFR mutation to estimate the ADP in two hypothetical contracts: 1-year (2019–2020) and 2-year contract (2019–2021).

Results

The average of the 30-day prescription estimates from the six dimensions averaged $10,819 (SD=$8,486) for the 1-year contract and $10,730 (SD=$8,500) for the 2-year contract. MCS yielded for the 1-year contract an ADP of $10,959 (or −25.02% the 2018 WAC price) and an ADP for the 2-year contract was $10,788 (or −26.19% the 2018 WAC price).

Conclusions

We demonstrated that the integration of the prices from the six dimensions of the Six Delta platform and market conditions is feasible and yields multidimensional prices estimates to support outcome-based pricing/contracting.

Keywords:

• Six delta platform
• 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

No assistance was received in the preparation of this article.