HKS Affiliated Authors
Ethel Zimmerman Wiener Professor of Public Policy, HKS; Henry and Allison McCance Professor of Business Administration, HBS
Excerpt
Excerpt
Policy Strategies For Aligning Price And Value For Brand-Name Pharmaceuticals. Amitabh Chandra, February 16, 2018, Paper, "Systemic factors in the US health care system lead to greater pricing power for drug manufacturers than is the case in other countries. The result is higher prices that are often poorly aligned with the degree of added benefit for patients and the health system. To achieve the difficult balance between necessary incentives for innovation and affordability, many economists favor “value-based” pricing, in which the price for a new drug reflects an assessment of the comparative effectiveness of the drug compared to other available treatments. In this brief we explore the different varieties of value-based pricing, and we outline several measures through which drug competition may be increased, supported by regulatory steps and payment mechanisms to bring drug prices into greater alignment with their underlying clinical value." Link