[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v24y2024i2p501-535n7.html
   My bibliography  Save this article

Pricing Personalised Drugs: Comparing Indication Value Based Prices with Performance Based Schemes

Author

Listed:
  • Levaggi Laura

    (Faculty of Engineering, 230271 Free University of Bozen Bolzano , Piazza Università, 1, Bolzano, Italy)

  • Levaggi Rosella

    (Department of Economics and Management, 9297 University of Brescia , Via San Faustino 74b, Brescia, Italy)

Abstract
Price strategies are essential to balance timely access to drugs with expenditure containment. This is especially true for personalised drugs, whose effectiveness is heterogeneous across patients. For these drugs, some authors suggest to use Indication Based Price schemes (IBPs), while others argue that Performance-Based managed entry Agreements (PBAs) are more appropriate. We develop a theoretical model to compare the welfare properties of IBPs and PBAs in an environment where effectiveness is uncertain. The manufacturer observes heterogeneity in patients responses, but this information may be non verifiable. By contrast, the regulator can only observe data presented for listing purposes. We show that IBPs may allow to treat the efficient number of patients only if the social value of the drug is entirely appropriated by the manufacturer. PBAs may allow a fairer distribution of the social value, but their success depends on the contract rules and on the degree of uncertainty.

Suggested Citation

  • Levaggi Laura & Levaggi Rosella, 2024. "Pricing Personalised Drugs: Comparing Indication Value Based Prices with Performance Based Schemes," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(2), pages 501-535, April.
    • Handle: RePEc:bpj:bejeap:v:24:y:2024:i:2:p:501-535:n:7
    DOI: 10.1515/bejeap-2023-0150
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2023-0150
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2023-0150?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:24:y:2024:i:2:p:501-535:n:7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.