Value-Based Pricing

Lilly believes that the prices of our medicines reflect the value they provide to patients, providers, payers and society as a whole. We incorporate our understanding of value, based on available data, when establishing prices.

Increasingly, public payers are seeking to implement pricing negotiations informed by assessments conducted to gauge a new medicine’s value, predominantly the use of health technology assessment (HTA). Lilly believes that, just as the practice of medicine cannot and should not take a one-size-fits-all approach to treating and curing the ill, the methods used to achieve value-based pricing should be flexible and recognize the complexity of value, of clinical development and the practice of medicine, and of ensuring a reward for innovation that will finance future pharmaceutical research and development.

The ability of HTA to appropriately inform value judgments and pricing decisions depends in part on the availability of the full range of evidence on comparative effectiveness and safety of the new medicine at the time of regulatory approval. Generating that full range of evidence of value may need to extend beyond the timing of approval. Because of this, pricing and reimbursement systems may need to be flexible and offer options for “coverage with evidence development” under which initial price and access levels are determined subject to the availability of more comprehensive evidence in the future.

In any value-based pricing approach, value should be considered comprehensively, inclusive of the viewpoints of patients, providers, payers and industry. The judgment of a medicine’s value need not be reflected only in its ultimate price. There are opportunities to recognize and reward value also through decisions on reimbursement and degree of timely patient access to new medicines.

The outcomes of an HTA review of a new medicine may be informative for a value-based pricing negotiation. However, if HTA is to inform pricing, it is essential that the HTA process consider the full range of value of new medicines for patients and other stakeholders, including the benefits to society. More information is available in Lilly’s policy position on health technology assessment.

There are also means other than pricing in which value may be considered in health care decision making. Lilly supports exploration of innovative payment models that involve broad stakeholder engagement in the development and implementation processes, assessment of impact, and development of measures to support improvements in patient outcomes and improve integration of care. Payment methods and programs, such as value-based benefit designs, that reward improvement in patient outcomes and health care system processes, rather than the quantity of the services provided, may hold promise. Desired outcomes may be, but are not limited to, reduced mortality and increased longevity of life, adherence to appropriate clinical best practice standards, and improvements to care such as reduction in hospital stays or improved quality of life.