Value Based Pharmaceutical Pricing in the US and UK: Does Centralized Cost Effectiveness Matter?

William S. Comanor published “Value Based Pharmaceutical Pricing in the US and UK: Does Centralized Cost Effectiveness Matter?” with Stuart O. Schweitzer, Jon M. Riddle, Frederic Schoenberg in the Review of Industrial Organization, February 2018.

This article compares the relative impact on pharmaceutical launch prices between the cost effectiveness analyses required by an agency of the British National Health Service (NICE) and the cost effectiveness judgments made by insurance companies and Pharmacy Benefit Managers in U.S. pharmaceutical markets.  We examined a sample of the same drugs introduced in the two countries and compared the ratios of launch prices to those charged for predecessor drugs used for the same therapeutic purpose.  From this analysis, we could not reject the hypothesis that these ratios were the same in the two countries, which suggests that the U.S. market system imposes cost effectiveness calculations similar to those imposed by the British regulatory authorities.