Should drug prices differ by indication?

Indication-specific drug pricing, while simple in theory, can be complex in reality. As multiple indications become the norm, varying drug prices by indication will become an important price-management strategy.

While no country has 'officially' implemented Indication-Based Pricing (IBP), the basic concept of 'indication-based management' has been around awhile, and operationally applied on an ad-hoc basis.

In the United States, healthcare giant CVS Health (the largest U.S.-only corporation in the world) has implemented indication-specific pricing and rebate negotiations with pharmaceutical manufacturers since 2017. The insurer has announced indication-specific pricing arrangements for hepatitis C as well as a new indication-based formulary for autoimmune conditions.

This 2020 OHE Consulting report, funded by AstraZeneca, provides a summary and discuss from a consultation survey across sixteen countries represented by 73 validated responses.

The paper reviews the potential benefits and drawbacks, and presents forward thinking on the implementation of indication-based pricing.