Modeling Tiered Pricing Frameworks: A Simulation Approach.

OBJECTIVE: Drug plans take different approaches to determining reimbursement prices for generic drugs. One common approach is to set the maximum reimbursement price as a percentage of the price of the interchangeable branded drug. In many countries this percentage depends on the number of generic entrants, a model we call "tiered pricing." This paper seeks to enhance understanding of how to set the tiers. METHODS: We construct a simple model of tiered pricing and set parameters to match evidence on generic drug costs and the distribution of revenues. Using simulation methods, we then assess different tier structures in terms of total surplus and average drug cost. RESULTS: We find when tiers are bunched tightly together welfare outcomes are poor. Moreover, there are large welfare gains from increasing the number of tiers from one to two, and only small welfare gains from increasing the number of tiers beyond four. CONCLUSIONS: The choice of tiers has substantial welfare and cost implications. While it is possible to refine the simulation analysis based on specific market characteristics, an optimal tier structure, such as the one we propose in the paper, should have at least two tiers.

Analysis of Road Transport Response to COVID-19 Pandemic in Nigeria and its Policy Implications.

The COVID-19 pandemic presents a serious global health challenge to humanity in recent times. It has caused fundamental disruptions to the global transportation system, supply chains, and trade. The impact on the transport sector resulting from lockdowns has led to huge losses in revenue. At the moment there are limited studies of the road transport sector response to the COVID-19 pandemic. This paper fills this gap using Nigeria as a case study area. A mixed method involving both qualitative and quantitative research was employed. Principal Component Analysis and Multiple Criteria Analysis were used to analyze the data. The results suggest that road transport operators strongly (90.7%) believe that 51 adopted new technologies/innovations, processes, and procedures will keep them and passengers safe from the COVID-19 pandemic in Nigeria. A breakdown shows that observing the lockdown directive is perceived by road transport operators as the most effective response to the pandemic. The breakdown continues in descending order thus: COVID-19 safety protocols, environmental sanitation, and promotion of hygiene, information technology, facemask, and social distancing. Others are public enlightenment, palliative, inclusion, and mass media. This indicates that non-pharmaceutical measures are very effective in the fight against the pandemic. This finding leverages support for the application of non-pharmaceutical guidelines in containing the COVID-19 pandemic in Nigeria.

Do Health Technology Assessment organisations consider manufacturers' costs in relation to drug price? A study of reimbursement reports.

INTRODUCTION: Drug reimbursement decisions are often made based on a price set by the manufacturer. In some cases, this price leads to public and scientific debates about whether its level can be justified in relation to its costs, including those related to research and development (R&D) and manufacturing. Such considerations could enter the decision process in collectively financed health care systems. This paper investigates whether manufacturers' costs in relation to drug prices, or profit margins, are explicitly mentioned and considered by health technology assessment (HTA) organisations. METHOD: An analysis of reimbursement reports for cancer drugs was performed. All relevant Dutch HTA-reports, published between 2017 and 2019, were selected and matched with HTA-reports from three other jurisdictions (England, Canada, Australia). Information was extracted. Additionally, reimbursement reports for three cases of expensive non-oncolytic orphan drugs prominent in pricing debates in the Netherlands were investigated in depth to examine consideration of profit margins. RESULTS: A total of 66 HTA-reports concerning 15 cancer drugs were included. None of these reports contained information on manufacturer's costs or profit margins. Some reports contained general considerations of the HTA organisation which related prices to manufacturers' costs: six contained a statement on the lack of price setting transparency, one mentioned recouping R&D costs as a potential argument to justify a high price. For the case studies, 21 HTA-reports were selected. One contained a cost-based price justification provided by the manufacturer. None of the other reports contained information on manufacturer's costs or profit margins. Six reports contained a discussion about lack of transparency. Reports from two jurisdictions contained invitations to justify high prices by demonstrating high costs. CONCLUSION: Despite the attention given to manufacturers' costs in relation to price in public debates and in the literature, this issue does not seem to get explicit systematic consideration in the reimbursement reports of expensive drugs.

Not one, but many: developing a multi-indication pricing model for medicines in Belgium.

Back ground: Current pricing and reimbursement models that focus on one indication at a time are not suited to address the market access of multi-indication medicines. Therefore, the aim of this study is to co-create with Belgian stakeholders a multi-indication pricing model and procedural pathway, to identify conditions for implementation, and to illustrate the multi-indication pricing model with a case study. Methods: Different multi-indication pricing models were identified from the literature, case studies and pilots in other countries. Semi-structured interviews were conducted with 21 representatives from the National Institute for Health and Disability Insurance, insurance funds, clinicians, patients, the policy cell of the Minister of Health, pharmaceutical industry and academia. These provided insight in the opinions of stakeholders about possible multi-indication pricing models and their feasibility in the Belgian context. Agreement on the preferred multi-indication pricing model and procedural pathway was reached in a multi-stakeholder round table. Results: The international review generated four main multi-indication pricing models that vary in terms of whether a uniform price or differential prices are applied, whether prices are adjusted for the volume and/or value of the medicine in each indication, and whether a proactive or retroactive dynamic pricing approach is used. However, Belgian stakeholders preferred a fifth model, which sets a single price as the volume- and value-weighted average price across all indications at launch. Over time, the price is adapted based on volume and value of the medicine in real-life practice for each indication. To implement this model, a legal framework, horizon scanning and early dialogue, data infrastructure, an evidence plan for the medicine, technical expertise and governance model need to be developed. Conclusion: Although the multi-indication pricing model preferred by Belgian stakeholders raises the administrative burden, it allows for the price of a medicine to vary during the lifecycle based on its initial and real-life performance in multiple indications.

Consumers preferences on nutritional attributes of dairy-alternative beverages: hedonic pricing models.

Dairy products, especially milk play a crucial role in assuring dietary quality for U.S. households. However, due to taste, nutrition, health and environmental concerns, households increasingly prefer to consume dairy alternative beverages instead of conventional milk in the U.S. This work is motivated by the need to take into consideration of intrinsic characteristics and differences of such characteristics when analyzing the changes of consumers' purchasing behavior of and willingness to pay for dairy alternative beverages and conventional milk products. After aggregating and organizing the purchase data of Nielsen Homescan and first-hand nutrition data, this study estimates both linear and semi-log hedonic pricing models. The results show that consumers exert the highest weights and assign highest evaluation on such qualitative characteristic as nutritional attributes which include calories, protein, fat, vitamin A and vitamin D in which protein is the most valued attribute and other characteristics such as package size, multi pack and brand. The hedonic pricing order and value of these qualitative characteristic are indicative of consumers' purchasing behavior and thus provide essential information for manufacturers to better differentiated their products and develop products catering to consumer's preferred attributes.

Assessing Risk Aversion From the Investor's Point of View.

Throughout the financial literature, there is a great deal of debate about the nature of investors' risk preferences. In an ever-changing world, the main schools of knowledge discuss the constant or dynamic basis of these preferences. Based on an exhaustive review of the subject of risk aversion, this paper contributes to filling the gap that exists in the literature on the risk aversion parameter that best fits the investors' behavior toward risk. The main determinants of risk attitude are examined and the different and most novel methodologies and perspectives are carefully analyzed.