Pricing Treatments Cost-Effectively when They Have Multiple Indications: Not Just a Simple Threshold Analysis
Bibliographic record
Abstract
BackgroundEconomic evaluations of treatments increasingly employ price-threshold analyses. When a treatment has multiple indications, standard price-threshold analyses can be overly simplistic. We examine how rules governing indication-specific prices and reimbursement decisions affect value-based price analyses.MethodsWe analyze a 2-stage game between 2 players: the therapy’s manufacturer and the payer purchasing it for patients. First, the manufacturer selects a price(s) that may be indication specific. Then, the payer decides whether to provide reimbursement at the offered price(s). We assume known indication-specific demand. The manufacturer seeks to maximize profit. The payer seeks to maximize total population incremental net monetary benefit and will not pay more than their willingness-to-pay threshold. We consider game variants defined by constraints on the manufacturer’s ability to price and payer’s ability to provide reimbursement differentially by indication.ResultsWhen both the manufacturer and payer can make indication-specific decisions, the problem simplifies to multiple single-indication price-threshold analyses, and the manufacturer captures all the consumer surplus. When the manufacturer is restricted to one price and the payer must make an all-or-nothing reimbursement decision, the selected price is a weighted average of indication-specific threshold prices such that reimbursement of more valuable indications subsidizes reimbursement of less valuable indications. With a single price and indication-specific coverage decisions, the manufacturer may select a high price where fewer patients receive treatment because the payer restricts reimbursement to the set of indications providing value commensurate with the high price. However, the manufacturer may select a low price, resulting in reimbursement for more indications and positive consumer surplus.ConclusionsWhen treatments have multiple indications, economic evaluations including price-threshold analyses should carefully consider jurisdiction-specific rules regarding pricing and reimbursement decisions.HighlightsWith treatment prices rising, economic evaluations increasingly employ price-threshold analyses to identify value-based prices. Standard price-threshold analyses can be overly simplistic when treatments have multiple indications.Jurisdiction-specific rules governing indication-specific prices and reimbursement decisions affect value-based price analyses.When the manufacturer is restricted to one price for all indications and the payer must make an all-or-nothing reimbursement decision, the selected price is a weighted average of indication-specific threshold prices such that reimbursement of the more valuable indications subsidize reimbursement of the less valuable indications.With a single price and indication-specific coverage decisions, the manufacturer may select a high price with fewer patients treated than in the first-best solution. There are also cases in which the manufacturer selects a lower price, resulting in reimbursement for more indications and positive consumer surplus.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.000 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.001 | 0.007 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.024 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; both teacher heads agree on what is shown here.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".