Value-effectiveness analyzes (CEA) purpose to look at how new well being applied sciences have an effect on well being outcomes and prices over a affected person's lifetime. Whereas extrapolating long-term well being advantages and measuring potential price offsets are vital, one other vital merchandise is to estimate how the prices of the brand new well being expertise are prone to evolve over time. That is particularly related for pharmaceutical merchandise.

Whittington et al. (2024) write:

The online worth of a drug typically rises after launch and might later fall as rivals enter the market. Costs often drop extra noticeably after the drug loses its exclusivity and generic substitutes turn out to be out there. Nevertheless, CEAs have hardly ever thought of these prospects prior to now and as a substitute assume that the value of a drug stays fixed over time.

Why is it vital to incorporate dynamic pricing? The FDA estimated that generic medication permitted in 2022 would generate a complete of $18.9 billion in financial savings through the 12 months following their approval.

…a CEA evaluating a brand new drug to a low-cost various could overestimate the extra price of the brand new drug over its life cycle if it assumes that the drug's introductory worth will persist indefinitely. By failing to regulate to the “downstream” worth decline, the CEA might incorrectly recommend that the brand new drug represents an unfavorable worth. Importantly, assumptions about drug worth dynamics in an evaluation must also apply to comparator therapies. Assuming no change within the costs of the comparator medication, the worth of the brand new drug could also be overestimated because the comparator therapy approaches lack of market exclusivity. A static drug pricing assumption doesn’t keep in mind the anticipated financial savings from generic therapy of the choice therapy…
Nonetheless, 95 % of printed CEAs, together with these from ICER, assume that drug costs will stay fixed of their base case.

The necessity for dynamic pricing is particularly vital when evaluating pharmaceutical versus non-pharmaceutical well being applied sciences.

…forgoing anticipated worth drops could make a drug look no extra engaging than an equally efficient non-drug intervention (e.g., surgical procedure) with the identical preliminary worth, despite the fact that worth drops after lack of exclusivity imply that the drug (in contrast to the operation) can be cheaper in the long term.

The commentary continues by including that the IRA has made the drug pricing trajectory extra predictable as a result of (i) worth will increase are restricted to inflation and (ii) IRA permits CMS to barter choose medication earlier than shedding exclusivity.

To learn the creator's suggestions for incorporating dynamic pricing into CEA, learn the total article right here.