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Value-based drug pricing makes sense, but is difficult to pull off | DrugPatentWatch

It’s hard not to like the notion of value-based pricing for prescription drugs. It aims to ensure that the prices we pay for drugs reflect the benefits they provide, either in terms of longer life or better quality of life. And what could be more American than letting the market determine the right price through the intersection of demand and supply?

So it is a bit ironic that, when it comes to determining the value of drugs, European health systems have led the charge on value-based pricing. Regulators there have developed sophisticated procedures – formally called health technology assessments – to assess the value of new drugs, devices, and diagnostic tools. These assessments are then routinely used to set prices.

The practice has only recently taken hold in America. The nonprofit Institute for Clinical and Economic Review now routinely conducts health technology assessments on approved drugs, devices, and diagnostics in the later stages of the approval process, often unveiling them with great public fanfare. Medical societies such as the American Society for Clinical Oncology, health care providers such as Memorial Sloan Kettering, insurers, and others are all working on their own frameworks to measure value.

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Value-based drug pricing makes sense, but is difficult to pull off – DrugPatentWatch – Make Better Decisions.

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