Negotiations on Cost and Availability of New Pharmaceuticals

OECD countries are now facing a rising number of new medicines offered at high prices which challenged health authorities and health care payers to secure access for patients to new, life-saving treatments while controlling expanding costs. There is a clear need to understand the capacity of "value-based" pricing policies to impact social goals, like timely access to new treatments, sustainable health budgets, or incentivizing research to improve patient outcomes. Moreover, the process of value assessment and price negotiation is expected to have an impact. European countries were seeking to collaborate more in reimbursement decisions. However, pharmaceutical industries expressed their concerns about "significant variance in access to new medicines across Europe".

In a study presented, it shows that even if mean negotiators would agree on a “fair and reasonable” price, a majority of reimbursement negotiators can still fail because WTP (willingness to pay) and WTA (willingness to accept) between regulators and sellers may differ on the level of individual negotiations. For this current policy reform debate, at least two possible points were come up with: price-related framing effects, as well as role-related behavioral effects.


The framing effect of the price magnitude should be investigated further as potential policy intervention targets to affect prices and access to new pharmaceutical treatments. At the same time, lower prices for high-cost therapies could reflect concern regarding budget impact. It could also mean, the negotiators tend to neglect the same at lower price levels causing higher budget impact for large treatment populations at lower price levels. Moreover, if negotiators incorporate budget impact considerations, this should preferably not decrease the number of agreements and access for patients. Otherwise patients suffering from a high-cost disease would be discriminated against compared to other patient groups.


Further experimental research could investigate, whether price negotiations focusing on incremental cost-effectiveness, rather than nominal prices, align negotiations results between different price magnitudes – for better or worse, depending on the policy interest.


Table 3 provides an overview of the main outcomes of the average state of the ten markets. Sixty-one percent of the negotiation couples could have reached an agreement (“trades possible”), since WTP ≥ WTA. Yet, only 63% of these were successful, leaving on average 61% of patients with no access to the new treatment.

The starting point for policy reforms, using behavioral science, could indeed be to transfer and adapt behavioral tools from other policy areas. However, there is probably no way around developing specific behavioral tools to solve existing challenges in pharmaceutical pricing. Further experimental research should investigate interventions that shift price agreements closer to stated preferences and increase the number of trades realized towards the number of trades possible. This could stimulate reform efforts in European markets where price agreements are increasingly held confidential and thus can neither be analyzed on an actual basis nor be compared to a publicly debated willingness to pay.

In conclusion, the incremental value of new pharmaceuticals as well as willingness to pay for an additional quality-adjusted-life-year (QALY) is central in current policy reform debates. There is a clear need to comprehend the capacity of “value-based” pricing policies to impact societal goals, like timely access, sustainable health budgets, or incentivizing research tom improve patient outcomes. However, not only the pricing methods but also the reimbursement and pricing process are subject to reform demands in this regard. The aim here is to enrich the debate from a behavioral perspective since “behavioral economic-related phenomena may affect price negotiations” for new pharmaceuticals as they affect professional deciders in other markets.



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