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Payers play an important role in both national and global health care systems: their decision-making signals to manufacturers their likelihood to support the R&D required for innovative, new medicines. Only a small number of innovative medicines are approved annually. The large proportion of new drug candidates fail during the development, and the average R&D cost per approved new molecular entity is increasing. Providers and payers can be thought of as agents acting on behalf of patients and their covered beneficiaries. Payers are critical in expressing the willingness of health care systems to provide funds to support innovation. Manufacturers must understand, monitor, and anticipate the evolving payer environment to increase the likelihood of regulatory and commercial success for new products. Key tools such as pharmacoeconomic evaluation of cost-effectiveness and budget impact, as well as important processes such as health technology assessment are used in many developed countries. Understanding their varying role in different jurisdictions is critical for pricing and market access negotiations.
This tutorial, which is hosted with the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), will introduce participants to the basic economics of drug development, pricing, contracting, and market access. It will address commonly used economic concepts, such as demand, supply, willingness to pay, monopoly, intellectual property, and value. Practical observations will be made on the similarities and differences in how health care systems approach these pricing and access practices and decisions, with an emphasis on the implications for stakeholder incentives. Examples will be used to illustrate key concepts in both routine and special cases.
Who should attend?
- Explain what makes innovative medicines unique economic inputs into population health including how the patent system relates to the financing of global R&D
- Discuss in what way prices for innovative medicines are established, how this differs by system, as well as the evolving impact of pharmacoeconomics and health technology assessment
- Describe how the complex global network of public and private payers judge the value of innovative medicines