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

Figures & data

Figure 1. Outcome-based price assessment framework. *DSPAdherence is subject to change based on real-world effectiveness results. In the framework, δ1 and δ2 were based on long-term assessment; δ3–δ6 were based on short-term assessment. Abbreviations. DSP, dimension-specific price; ADP, average of all dimensional prices integrated and simulated by Monte Carlo Simulation.

Table 1. Inputs integrated into the six-delta platform.

Dimensional price scenarios	1-year contract (2019–2020)	2-year contract (2019–2021)
Dimension 1. Cost-effectiveness analysis and cost utility analysis-based pricing^1
Certainty of cost-effectiveness analysis (CEA)
0% certainty of CEA	$0	$0
50% certainty of CEA	$14,680	$14,721
100% certainty of CEA	$41,666	$41,782
Certainty of cost-utility analysis (CUA)
0% certainty of CUA	$0	$0
50% certainty of CUA	$14,680	$14,721
100% certainty of CUA	$28,072	$28,150
Dimension 2. Willingness-to-pay-based pricing^2
<1xGDP
Monopolistic market	$0	$0
Competitive market	$0	$0
1xGDP
Monopolistic market	$0	$0
Competitive market	$0	$0
3xGDP
Monopolistic market	$5,281	$5,864
Competitive market	$2,592	$2,890
>3xGDP
Monopolistic market	$14,680	$14,721
Competitive market	$14,680	$14,721
Dimension 3. Reference-based pricing^3
Based on PPP (UK, CAN)	$10,827 $5,595	$10,867 $5,636
Based on real GDP per capita (UK, CAN)	$10,095 $9,115	$10,136 $9,156
Based on percentage (%) of GDP spent on pharmaceuticals (UK, CAN)	$13,712 $7,647	$13,753 $7,688
Based on minimum foreign price	$6,944	$6,963
Based on average foreign prices	$7,201	$7,221
Dimension 4. Safety-based pricing (mean, lower, upper)^4	$14,627 $14,608 $14,642	$14,520 $14,453 $14,578
Dimension 5. Risk of efficacy failure-based pricing^5
Risk of OS failure-based pricing (lower, upper)	$9,170, $14,680	$9,489, $14,721
Risk of PFS failure-based pricing (lower, upper)	$11,969 $14,680	$13,259 $14,721
Dimension 6. Adherence-based pricing^6
Based on OS (lower upper)	$13,835 $14,680	$12,054 $14,721
Based on PFS (lower, upper)	$11,997 $14,680	$8,724, $14,721

Abbreviations. CEA, cost-effectiveness analysis; CUA, cost-utility analysis; UK, United Kingdom; CAN, Canada; PPP, purchasing power parity; GDP, gross domestic product; OS, overall survival; PFS, progression-free survival.

Table 2. Results for the 6 DSPs estimates and the ADP estimate^a.

Dimensions	1-year contract (2019–2020)^b	2-year contract (2019–2021)^c	Reference
Dimension 1. Cost-effectiveness and cost-utility analysis-based pricing
DSPCEA/CUA (price adjustment %)	$16,391 (+12.14%)	$16,677 (+14.10%)	1
Dimension 2. Willingness-to-pay-based pricing
DSPWTP (price adjustment %)	$4,547 (−68.89%)	$4,704 (−67.82%)	2
Dimension 3. Reference-based pricing
DSPReference (price adjustment %)	$9,395 (−35.72%)	$9,442 (−35.40%)	3
Dimension 4. Safety-based pricing
DSPSafety (price adjustment %)	$14,627 (+0.08%)	$14,516 (−0.68%)	4
Dimension 5. Risk of efficacy failure-based pricing
DSPRisk of efficacy failure (price adjustment %)	$12,652 (−13.44%)	$13.019 (−10.93%)	5
Dimension 6. Adherence-based pricing
DSPAdherence (price adjustment %)	$13,785 (−5.69%)	$12,582 (−13.92%)	6
All dimensions integrated
All dimensions integrated-based average price (SD)	$10,819 ($8,486)	$10,730 ($8,500)
ADP (price adjustment %)	$10,959 (−25.02%)	$10,788 (−26.19%)

^aPrice adjustment of 2018 WAC price for 30-day prescription of osimertinib.

^bInflation rate in 2019–2020 was projected at +0.4395833% but rounded to +0.44% for reporting.

^cInflation rate in 2019–2021 was projected at +0.71875% but rounded to +0.72% for reporting.

Abbreviations. DSP, dimension-specific price; ADP, all-dimension price.

Figure 2. Price variations for a 1-year contract (2019–2020).

Figure 3. Price variations for 2-year contract (2019–2021).

Table 3. Summary of variables included in the six dimensions.

	Dimension	Efficacy		Safety		Willingness-to-pay		Market environment		Other pricing factors		Value of insurance
		Independent	Relative to comparator(s)	Independent	Relative to comparator(s)	Restricted	Unrestricted	Monopolistic	Competitive	Relative to foreign price	Relative to alternative price	Risk of efficacy failure	Adherence support
Long-term assessment	DSPCEA/CUA		✓		✓						✓
	DSPWTP	✓	✓	✓	✓	✓	✓	✓	✓
Short term assessment	DSPReference									✓
	DSPSafety			✓	✓							✓
	DSPRisk of efficacy failure		✓									✓
	DSPAdherence	✓											✓
Long- and short-term assessment	ADP	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓

Alkhatib NS, Erstad B, Ramos K, et al. Pricing methods in outcome-based contracting-δ1: cost-effectiveness analysis and cost utility analysis-based pricing. J Med Econ. 2020;23(11):1215–1222.

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Alkhatib NS, Ramos K, Erstad B, et al. Pricing methods in outcome-based contracting-δ2: willingness-to-pay-based pricing. J Med Econ. 2020;23(11):1223–1229.

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Alkhatib NS, Erstad B, Ramos K, et al. Pricing methods in outcome-based contracting-δ3: reference-based pricing. J Med Econ. 2020;23(11):1230–1236.

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Alkhatib NS, Bhattacharjee S, McBride A, et al. Pricing methods in outcome-based contracting-δ4: safety-based pricing. J Med Econ. 2020;23(11):1237–1245.

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Alkhatib NS, McBride A, Bhattacharjee S, et al. Pricing methods in outcome-based contracting-δ5: risk of efficacy failure-based pricing. J Med Econ. 2020;23(11):1246–1255.

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Alkhatib NS, Slack M, Bhattacharjee S, et al. Pricing methods in outcome-based contracting-δ6: adherence-based pricing. J Med Econ. 2020;23(11):1256–1265.

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