Pricing methods in outcome-based contracting: integration analysis of the six dimensions (6 δs). (1st November 2020)

• Record Type: Journal Article
• Authors: Alkhatib, Nimer S.; McBride, Ali; Slack, Marion; Bhattacharjee, Sandipan; Erstad, Brian; Ramos, Kenneth; Abraham, Ivo
• Is Part Of: Journal of medical economics. Volume 23:Number 11(2020)
• Page Start: 1266
• Page End: 1272
• Publication Date: 2020-11-01
• Subjects: Six delta platform -- outcome-based-contracting -- pricing methods -- osimertinib -- lung cancer; D40 -- C00; Medical care -- Cost control -- Periodicals; Medical economics -- Periodicals; 362.10941
• DOI: 10.1080/13696998.2020.1815031
• Languages: English
• ISSNs: 1369-6998

Abstract

Abstract: Aims: Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The six dimensions have been described separately: (δ1) cost-effectiveness analysis and cost-utility analysis-based pricing; (δ2) willingness-to-pay-based pricing; (δ3) reference-based pricing; (δ4) safety-based pricing; (δ5) risk of efficacy failure-based pricing; and (δ6) adherence-based pricing. The final step is to integrate the various dimension-specific pricing estimates into a composite estimate termed the All-Dimensional Price (ADP). We describe the methodology for this integration and present a proof-of-concept application to the treatment of non-small cell lung cancer (NSCLC) with EGFR mutation with osimertinib. Materials and methods: For better accuracy in estimating the ADP, we used the prices generated from the six dimensions at scenario levels, not at the dimension-specific price (DSP) level. We pooled the price estimates and performed Monte Carlo Simulations (MCS) for the price scenarios generated by the six dimensions. We used the results of the proof-of-concept exercise involving osimertinib in NSCLC with EGFR mutation to estimate the ADP in two hypothetical contracts: 1-year (2019–2020) and 2-year contract (2019–2021). Results: The average of the 30-day prescription estimates from the six dimensions averaged $10, 819 (SD=$8, 486) for the 1-year contract and $10, 730 (SD=$8, 500) for the 2-year contract. MCS yielded for the 1-year contract an ADP of $10, 959 (or −25.02% the 2018 WAC price) and an ADP for the 2-year contract was $10, 788 (or −26.19% the 2018 WAC price). Conclusions: We demonstrated that the integration of the prices from the six dimensions of the Six Delta platform and market conditions is feasible and yields multidimensional prices estimates to support outcome-based pricing/contracting.