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Yes, when you put it like that it a value-based pricing system might actively discourage innovation: new drugs with little or no evidence of their effectiveness will probably not be regarded as useful by customers and so will be bought at a very low price. Pharmaceutical companies would have to have a great deal of faith in their ability to create useful drugs and then be willing to take a long term gamble that they will establish themselves as the best in the minds of their customers. ________________________________ From: Evidence based health (EBH) [mailto:[log in to unmask]] On Behalf Of Dr. Carlos Cuello Sent: 24 May 2010 13:52 To: [log in to unmask] Subject: Re: Government and NICE: Myth busting Love this thread I don´t know in the UK and other EU countries, but in Mexico, medicines (anything that qualifies as medicine) are not taxed (IMHO I think is populism), and there is a critical discussion about taxing medicines so the government could have revenues and "innovate" and invest in R&D. I also, like Daniel, understood that value-based pricing is defined as "you pay more if the drug is considered useful". I considered the idea of taxing those medicines with no evidence of usefulness, the less evidence on that drug, the more you tax them, but I am not an economist, and I am just thinking out loud, I would not know how this could go. Best wishes On Mon, May 24, 2010 at 7:15 AM, Croft Daniel (RBF) NOC <[log in to unmask]<mailto:[log in to unmask]>> wrote: From what I understand about value-based pricing (and that's not a lot so please correct me if I'm wrong) then this will mean that what the customer considers to be the best drugs will be the most expensive. The idea, I guess, is to incentivise the pharmaceutical industry to create drugs that the customer (medical professionals) regards as highly useful as they will then be paid a high price for them. Sounds like a good idea, though one obvious consequence is that (without being too cynical) that the pharmaceutical industry will worry less about actual innovation than convincing the customers (through their previously mentioned huge marketing budgets) that their drugs are the best and should have the highest price. That could potentially lead to even less money for R&D as pharmaceutical companies see that profits are determined more by the regard in which their drugs are held rather than (the admittedly related) usefulness of those drugs. I guess it could go either way depending on how objective the customers can be in ignoring the marketing and focusing on the evidence. ________________________________ From: Evidence based health (EBH) [mailto:[log in to unmask]<mailto:[log in to unmask]>] On Behalf Of Underhill Jonathan Sent: 24 May 2010 11:50 To: [log in to unmask]<mailto:[log in to unmask]> Subject: Re: Government and NICE: Myth busting Ash wrote: >>>> While I fully agree with most of what you have written, there is, in my opinion, a need to debunk a few myths, especially within the context of this important email trail. <<<<< Great thread! I think most us would all agree that we need a profitable pharmaceutical industry to invest in good, robust R&D to drive the innovation of medicines and patient care. The key is how to achieve this balance - driving innovation whilst curbing the worst excesses of the commercial side of this (usually around marketing and sales) that often provide the stories Ash illustrates (and there are many, many others - see nofreelunch) Having read the OFT report when it came out and also reflecting now on what it said wrt value-based pricing, the notion of the NHS (or other heathcare system) incentivising and rewarding those medicines that provide most utility, seems to me to be a great leap forward in achieving this balance. It wont be perfect, will likely require many iterations and there will be LOTS of resistance to it from within pharma (and their shareholders) who may be relatively happy with the status quo. But I can see many advantages at least in the underlying principles of rewarding those medicines that are most useful to patients. Importantly, this also needs to be accompanied by a strong willingness to disinvest in those medicines where we don't have robust evidence (yet) that they provide worthwhile utility and value for money. I'm sure the devil will be in the detail - interesting times ahead! Cheers Jonathan Underhill Head of EBT, NPC -- Carlos A. Cuello-García, MD Director, Centre for Evidence-Based Practice-Tecnologico de Monterrey Cochrane-ITESM coordinator. Professor of Paediatrics and Clinical Research Avda. Morones Prieto 3000 pte. Col. Doctores. CITES 3er. piso,Monterrey NL, México. CP64710 Phone. +52(81)88882154 & 2141. Fax: +52(81)88882148 www.cmbe.net<http://www.cmbe.net> http://twitter.com/CharlieNeck The content of this data transmission must not be considered an offer, proposal, understanding or agreement unless it is confirmed in a document signed by a legal representative of ITESM. The content of this data transmission is confidential and is intended to be delivered only to the addressees. Therefore, it shall not be distributed and/or disclosed through any means without the authorization of the original sender. If you are not the addressee, you are forbidden from using it, either totally or partially, for any purpose