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Pricing and reimbursement: The increasing role of multi-criteria decision analysis

October 18, 2015

What is the justification for high drug prices for niche markets that include orphan drugs with annual price tags of more than €200,000 and the growing number of targeted therapies for well-defined, relatively small patient populations? No doubt, many of the recently launched products would not have achieved their high prices if their product features, such as efficacy and safety, were the sole criteria considered.

Indication-specific factors, such as prevalence, number of competitors, characteristics of the target population, as well as the opinions and preferences of stakeholders – payer, physicians, patients and society – are playing an increasingly significant role for the pricing opportunity of new drugs.

Multi-criteria decision analysis (MCDA) has become a way to capture those different factors. And a growing number of health technology assessment (HTA) and payer organizations have started to implement MCDA in their decision-making process for coverage and/or pricing decisions.

Multiple factors – different levels of importance

Several studies have shown that, for example, prevalence (or rarity) of a disease is a strong price-driver, as well the severity (seriousness) of the disease, and the age (vulnerability) of the affected patient population. In other words, the smaller the patient population, the younger the patients and the more serious the disease, the higher is the payer’s (and society’s) willingness-to-pay. Conversely, a treatment for a mild form of a disease, which affects primarily elderly people and which is caused by smoking for instance, has less chance to be valued by society and is unlikely to achieve a commercially attractive price.

So, how can the value of a product be determined, considering all the different factors which have varying importance for decision-making?

One size does not fit all

As the term implies, MCDA is a methodology which explicitly considers multiple criteria for decision-making. Thus, in the pharmaceutical world, MCDA means not only considering the therapeutic benefit of the new drug, but also elements, such as disease-related factors (burden of illness), innovation level, the evidence provided and the socio-economic impact of a new drug.

A crucial first step in an MCDA is to identify the factors which are (at least potentially) relevant for the decision-making process. These factors can be collected by a literature search and ideally complemented by primary research with experts. The second and equally important step is the weighting of the factors, in terms of their relevance, for decision-making. Expert interviews can achieve this either by a simple point allocation exercise or more sophisticated methodologies, such as conjoint approaches or the hierarchical analytical process – all methodologies based on trade-off tasks to determine relative importance of criteria. In the third step, the product performance has to be assessed against the relevant factors to derive a (competitive) product performance score.

A complicating factor in applying MCDA for HTA assessments is that the relevant decision criteria, as well as their weighting, can vary significantly by indication, which makes a standardized approach, and therefore a cross-indication comparison, very challenging. Another unsolved problem is a universal way to translate the derived MCDA value score(s) into a monetary value for pricing and reimbursement decisions.

The increasing role of MCDA in pricing and reimbursement in decision-making

Despite the challenges with MCDA, it is increasingly used by many HTA organizations and for pricing and reimbursement decision making. Although not many HTA and P&R bodies are currently using MCDA as a formal part in their decision-making, there is a clear trend suggesting that the importance of MCDA will increase over the coming years.

For example Quebec’s HTA organization, the National Institute for Excellence in Health and Social Services (INESSS) has already adopted a multi-criteria approach as part of their appraisal process of new therapies.1 Similarly, the National Institute for Health and Care Excellence (NICE) in the UK and Sweden’s Dental and Pharmaceutical Benefits Agency (TLV) have also adopted elements of the approach.

The English National Health Service uses an MCDA process for deciding which oncology medicines will be funded by the national Cancer Drugs Fund 2 and the German Institute for Quality and Efficiency in Healthcare ( IQWiG) has piloted two projects to validate the use of conjoint 3 and analytic hierarchical process to compose a multi-factor patient preference score4

Another clear indicator of the increasing role of MCDA is the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) Vision 2020 Implementation Research Working Group, which identified “Good Practices for Using a Multi-Criteria Decision Analysis in Health Care Decisions” as one of the top priority methods for task force development.5

For further information, contact Marco Rauland or Tim Fitzgerald.

References

[1] Aenishaenslin C, Hongoh V, Cissé HD, et al. Multi-criteria decision analysis as an innovative approach to managing zoonoses: results from a study on Lyme disease in Canada. BMC Public Health. 2013 Sep 30;13:897.

[2] NHS England. Cancer Drug Fund decision summaries. Accessed October 2015.

[3] IQWiG. Choice-based Conjoint Analysis – pilot project to identify, weight, and prioritize multiple attributes in the indication “hepatitis C”. 23 July 2014.

[4] IQWiG. Analytic Hierarchy Process (AHP) – Pilotprojekt zur Erhebung von Patientenpräferenzen in der Indikation Depression. Article in German. 8 May 2013.

[5] ISPOR. Multi-criteria decision analysis in health care decision making emerging good practices task force. Available at: http://www.ispor.org/taskforces/multi-criteria-decision-analysis-bgr.asp. Accessed October 2015.

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