Indication-based pricing of the pharmaceuticals in Croatia: case-study

This is the authors' abstract. We don't add key points for this paper.

BACKGROUND: Rising pharmaceutical expenditure worldwide, including in Croatia, is putting considerable pressure on healthcare budgets. Oncology drugs, often used in several indications with varying efficacy, contribute to this challenge, and a single price is paid regardless of the indication. This study investigates whether indication-based pricing (IBP), a method of pricing the same drug for different indications based on its relative value in different treatment applications, could be a potential solution to contain drug expenditure. RESEARCH DESIGN AND METHODS: We operationalized IBP in two ways: by anchoring all drug prices according to the indication that provides the most or least benefit, and second, by anchoring drug prices to a cost-effectiveness threshold estimated for Croatia. We also interviewed policymakers in Croatia to determine whether they are familiar with the problem of differential effectiveness of medicines with multiple indications. RESULTS: Applying IBP to the oncology drug abiraterone in three indications, as measured by life-years gained (LYGs) and quality-adjusted life-years (QALYs), shows the effectiveness of abiraterone varies considerably by indication. Depending on the IBP approach chosen, drug prices can be reduced by 74% or increased by up to 280%. CONCLUSIONS: Drug prices can vary dramatically depending on the IBP approach chosen.