Indication-Based Pricing of Innovative Medicines: An assessment of pricing-setting policies across key markets for medicines with multiple indications

October 2020

Indication-Based Pricing of Innovative Medicines

Medicines are increasingly launched for use across multiple indications, some of the indications being very distinct spanning across therapeutic areas. The value delivered to patients and payers by the same medicines can vary significantly across indications, but most payers are only able to accommodate a single price per medicine. Payers and manufacturers often devise various market access schemes or price adjustments across indications (rather than indication-specific), mostly driven by the goal of reducing budget impact of subsequent indications. While these coping mechanisms somewhat address the problem of mismatch between the price and value, they still leave perverse incentives for the industry to sequence the launches in such a way that reduces the risk of a subsequent indication with lower value dragging down the price of a previously launched higher value indication (even if the price of the previous indication fairly reflects the value).

This MTRG study investigates the development and launch of multi-indication products across a number of key markets (Germany, France, England, Scotland, Italy, Spain, Switzerland, Canada, Australia, and the US). The study has four objectives: 

  • To review the current practice (over the period of the past 5 years) of setting price-setting and paying for medicines with multiple distinct indication in key markets;
  • To analyze the impact of the current practices on manufacturers’ launch sequencing decisions;
  • To assess the implications of the launch sequencing decisions and resultant pricing/payment arrangements for payers, manufacturers and patients;
  • To draw recommendations for policy change that would make IBP work for patients, payers, and manufacturers.

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Client: Novartis Pharmaceuticals

Research team: Panos Kanavos, Mackenzie Mills, Aurelio Miracolo & Daniel Michaeli