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Review
. 2017 Sep 4;7(3):10.
doi: 10.3390/jpm7030010.

Value-Based Pricing and Reimbursement in Personalised Healthcare: Introduction to the Basic Health Economics

Louis P Garrison  1 , Adrian Towse  2
Affiliations
Review

Value-Based Pricing and Reimbursement in Personalised Healthcare: Introduction to the Basic Health Economics

Louis P Garrison et al. J Pers Med. .

Abstract

'Value-based' outcomes, pricing, and reimbursement are widely discussed as health sector reforms these days. In this paper, we discuss their meaning and relationship in the context of personalized healthcare, defined as receipt of care conditional on the results of a biomarker-based diagnostic test. We address the question: "What kinds of pricing and reimbursement models should be applied in personalized healthcare?" The simple answer is that competing innovators and technology adopters should have incentives that promote long-term dynamic efficiency. We argue that-to meet this social objective of optimal innovation in personalized healthcare-payers, as agents of their plan participants, should aim to send clear signals to their suppliers about what they value. We begin by revisiting the concept of value from an economic perspective, and argue that a broader concept of value is needed in the context of personalized healthcare. We discuss the market for personalized healthcare and the interplay between price and reimbursement. We close by emphasizing the potential barrier posed by inflexible or cost-based reimbursement systems, especially for biomarker-based predictive tests, and how these personalized technologies have global public goods characteristics that require global value-based differential pricing to achieve dynamic efficiency in terms of the optimal rate of innovation and adoption.

Keywords: cost-effectiveness analysis; differential pricing; dynamic efficiency; health economics; personalized healthcare; personalized medicine; precision medicine; value-based pricing; value-based reimbursement.

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Conflict of interest statement

The authors declare no conflict of interest.

Figures

Figure 1
Figure 1
Dark blue circles: proposed information-related elements of value; Light blue circles: traditional Health Technology Assessment (HTA) and other societal elements of value; Blue line: value element in traditional HTA/health system perspective; Red line: additional value element also included in societal perspective. Source: Adapted from Figure 1 in Garrison et al. [6]
See this image and copyright information in PMC

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