A case study of ex ante, value-based price and reimbursement decision-making: TLV and rimonabant in Sweden

Abstract

Value-based pricing (VBP) is a method of setting prices for products based on perceived benefits to the consumer. When information is symmetric and freely available and agency is perfect, VBP is efficient and desirable. Because of substantial information asymmetries, medical insurance distortions, and the prescribing monopoly of physicians, VBP is rare for prescription drugs, though a number of countries have recently moved in this direction. Because the potential benefits can be sizable, it is high time for a review of actual VBP-based decision-making in practice. Sweden, with its pharmaceutical benefits board (TLV), was an early adopter of VBP decision-making. We illustrate actual decision-making, thus, using the case of Acomplia for the treatment of obesity in Sweden, with and without the presence of co-morbid conditions. This example has a number of features that will be useful in illustrating the strengths and weaknesses of VBP in actual practice, including multiple indications, a need for not just one but two economic simulation models, considerable sub-group analysis, and requirements for additional evidence development. TLV concluded, in 2006, that Acomplia was cost-effective for patients with a body mass index (BMI) exceeding 35 kg/m2 and patients with a BMI exceeding 28 kg/m2 and either dyslipidemia or type 2 diabetes. Because of uncertainty in some of the underlying assumptions, reimbursement was granted only until 31 December 2008, at which time the manufacturer would be required to submit additional documentation of the long-term effects and cost-effectiveness in order to obtain continued reimbursement. Deciding on reimbursement coverage for pharmaceutical products is difficult. Ex ante VBP assessment is a form of risk sharing, which has been used by TLV to speed up reimbursement and dispersion of effective new drugs despite uncertainty in their true cost-effectiveness. Manufacturers are often asked in return to generate additional health economic evidence that will establish cost-effectiveness as part of ex post review. The alternative is to delay the reimbursement approval until satisfactory evidence is available.