Equity in Pharmaceutical Pricing and Reimbursement: Crossing the Income Divide in Asia Pacific

Rutger Daems; Edith Maes; Christoph Glaetzer

doi:10.1016/j.vhri.2013.03.001

Equity in Pharmaceutical Pricing and Reimbursement: Crossing the Income Divide in Asia Pacific

Value Health Reg Issues. 2013 May;2(1):160-166. doi: 10.1016/j.vhri.2013.03.001. Epub 2013 Apr 30.

Authors

Rutger Daems¹, Edith Maes², Christoph Glaetzer³

Affiliations

¹ Planet Strategy Group, Brussels, Belgium.
² Maastricht School of Management, Maastricht, The Netherlands. Electronic address: edith.maes@telenet.be.
³ Janssen Asia Pacific, Singapore.

PMID: 29702846
DOI: 10.1016/j.vhri.2013.03.001

Abstract

Objectives: The article takes a three-dimensional approach (triangulation) in defining international pricing policy for pharmaceuticals using cost-effectiveness analysis (CEA), willingness-to-pay (WTP) analysis, and ability-to-pay (ATP) analysis. It attempts to find a balance between the various economic methods of which some focus on effectiveness while others are geared toward incorporating equity in the equation.

Methods: A critical review of the first two established economic methods and their ability to evaluate not only "efficacy" but also "fairness" in pricing decisions identifies a gap in the latter. Therefore, a third analytic method is presented that measures the ATP based on a country's score in the human development index of the United Nations Development Program for 120 countries. This approach allows practicing differential pricing among and within countries. To refine this equity-driven pricing concept, two additional parameters can be added to the model: the Oxford "Multidimensional Poverty Index" and the "Out-of-Pocket" or "Self Pay" health expenditure as reported by the World Bank.

Results: There is no hierarchy between the above three pricing methods. Because one method provides further insight into the other, however, it is recommended to start with CEA followed by WTP analysis. These types of analysis are closely linked in that the first provides the CE ratio for the compound investigated and the other sets the anticipated ceiling threshold of the payer's WTP (in a particular country). The ATP method provides a supplementary "equity" check and facilitates the process of equity-based differential pricing.

Conclusions: A third method should be used in conjunction with the standard CEA and WTP analysis that measures the ATP with the human development index as yardstick to provide sustainable and equitable access to medicines. We recommend that ATP analysis becomes an additional practice in policy decision making and in defining international pricing strategies for pharmaceuticals.

Keywords: ability-to-pay; access to medicines; equity; pharmaceutical pricing.