Pricing methods in outcome-based contracting: δ5: risk of efficacy failure-based pricing
Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The fifth dimension (δ5) estimates prices on the basis of the risk of efficacy failure of a drug. We describe this dimension's methodology and present a proof-of-concept application to the treatment of no...
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| Veröffentlicht in: | Journal of medical economics 2020-11, Vol.23 (11), p.1246-1255 |
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| creator | Alkhatib, Nimer S. McBride, Ali Bhattacharjee, Sandipan Ramos, Kenneth Erstad, Brian Slack, Marion Billheimer, Dean Abraham, Ivo |
| description | Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The fifth dimension (δ5) estimates prices on the basis of the risk of efficacy failure of a drug. We describe this dimension's methodology and present a proof-of-concept application to the treatment of non-small cell lung cancer (NSCLC) with EGFR mutation with osimertinib.
The risk of efficacy failure pricing dimension utilizes a seven-step method: (1) defining risk; (2) extracting data; (3) predicting models; (4) performing Monte Carlo Simulation (MCS) to estimate risk of efficacy failure; 5) estimating ranges for a payback; (6) adjusting for medical inflation; and (7) performing Monte Carlo Simulation (MCS) to estimate the DSP
Risk of efficacy failure
. A proof-of-concept exercise with osimertinib in NSCLC was performed for two hypothetical outcome-based contracts: 1-year (2019-2020) and 2-year (2019-2021). We estimated the risk of efficacy failure for osimertinib in terms of overall and progression-free survival versus standard of care. We used the estimated risk to estimate the price reduction on the wholesale acquisition cost (WAC) for the two hypothetical contracts: a 1-year (2019-2020) and 2-year contract (2019-2021). From this we estimated the DSP
Risk of efficacy failure
.
Based on the risk of OS and PFS efficacy failure for osimertinib in OS and PFS, in the 1-year contract, the DSP
Risk of efficacy failure
was estimated at $12,652 (or −13.44% the 2018 WAC) for a 30-day prescription. For the 2-year contract (2019-2021), the DSP
Risk of efficacy failure
was estimated at $13,019 (or −10.93% the 2018 WAC).
We demonstrated that pricing methods based on risk of efficacy failure methods can be integrated into our proposed Six Delta platform for outcome-based pricing/contracting. |
| doi_str_mv | 10.1080/13696998.2020.1815029 |
| format | Article |
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The risk of efficacy failure pricing dimension utilizes a seven-step method: (1) defining risk; (2) extracting data; (3) predicting models; (4) performing Monte Carlo Simulation (MCS) to estimate risk of efficacy failure; 5) estimating ranges for a payback; (6) adjusting for medical inflation; and (7) performing Monte Carlo Simulation (MCS) to estimate the DSP
Risk of efficacy failure
. A proof-of-concept exercise with osimertinib in NSCLC was performed for two hypothetical outcome-based contracts: 1-year (2019-2020) and 2-year (2019-2021). We estimated the risk of efficacy failure for osimertinib in terms of overall and progression-free survival versus standard of care. We used the estimated risk to estimate the price reduction on the wholesale acquisition cost (WAC) for the two hypothetical contracts: a 1-year (2019-2020) and 2-year contract (2019-2021). From this we estimated the DSP
Risk of efficacy failure
.
Based on the risk of OS and PFS efficacy failure for osimertinib in OS and PFS, in the 1-year contract, the DSP
Risk of efficacy failure
was estimated at $12,652 (or −13.44% the 2018 WAC) for a 30-day prescription. For the 2-year contract (2019-2021), the DSP
Risk of efficacy failure
was estimated at $13,019 (or −10.93% the 2018 WAC).
We demonstrated that pricing methods based on risk of efficacy failure methods can be integrated into our proposed Six Delta platform for outcome-based pricing/contracting.</description><identifier>ISSN: 1369-6998</identifier><identifier>EISSN: 1941-837X</identifier><identifier>DOI: 10.1080/13696998.2020.1815029</identifier><identifier>PMID: 32845204</identifier><language>eng</language><publisher>England: Taylor & Francis</publisher><subject>Acrylamides - economics ; Acrylamides - therapeutic use ; Aniline Compounds - economics ; Aniline Compounds - therapeutic use ; Antineoplastic Agents - economics ; Antineoplastic Agents - therapeutic use ; Canada ; Carcinoma, Non-Small-Cell Lung - drug therapy ; Carcinoma, Non-Small-Cell Lung - genetics ; Contracts ; Cost-Benefit Analysis - methods ; Costs and Cost Analysis - methods ; Genes, erbB-1 - genetics ; Humans ; lung cancer ; Lung Neoplasms - drug therapy ; Lung Neoplasms - genetics ; Models, Economic ; Monte Carlo Method ; osimertinib ; outcome-based-contracting ; pricing methods ; Risk of failure ; United Kingdom</subject><ispartof>Journal of medical economics, 2020-11, Vol.23 (11), p.1246-1255</ispartof><rights>2020 Informa UK Limited, trading as Taylor & Francis Group 2020</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c413t-7712db4fe3e50efcc17f329dd1a3d8b33ac01a24643b98d2998207b8ccd3c1e63</citedby><cites>FETCH-LOGICAL-c413t-7712db4fe3e50efcc17f329dd1a3d8b33ac01a24643b98d2998207b8ccd3c1e63</cites><orcidid>0000-0001-5071-9257 ; 0000-0003-0490-4421</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,776,780,27901,27902</link.rule.ids><backlink>$$Uhttps://www.ncbi.nlm.nih.gov/pubmed/32845204$$D View this record in MEDLINE/PubMed$$Hfree_for_read</backlink></links><search><creatorcontrib>Alkhatib, Nimer S.</creatorcontrib><creatorcontrib>McBride, Ali</creatorcontrib><creatorcontrib>Bhattacharjee, Sandipan</creatorcontrib><creatorcontrib>Ramos, Kenneth</creatorcontrib><creatorcontrib>Erstad, Brian</creatorcontrib><creatorcontrib>Slack, Marion</creatorcontrib><creatorcontrib>Billheimer, Dean</creatorcontrib><creatorcontrib>Abraham, Ivo</creatorcontrib><title>Pricing methods in outcome-based contracting: δ5: risk of efficacy failure-based pricing</title><title>Journal of medical economics</title><addtitle>J Med Econ</addtitle><description>Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The fifth dimension (δ5) estimates prices on the basis of the risk of efficacy failure of a drug. We describe this dimension's methodology and present a proof-of-concept application to the treatment of non-small cell lung cancer (NSCLC) with EGFR mutation with osimertinib.
The risk of efficacy failure pricing dimension utilizes a seven-step method: (1) defining risk; (2) extracting data; (3) predicting models; (4) performing Monte Carlo Simulation (MCS) to estimate risk of efficacy failure; 5) estimating ranges for a payback; (6) adjusting for medical inflation; and (7) performing Monte Carlo Simulation (MCS) to estimate the DSP
Risk of efficacy failure
. A proof-of-concept exercise with osimertinib in NSCLC was performed for two hypothetical outcome-based contracts: 1-year (2019-2020) and 2-year (2019-2021). We estimated the risk of efficacy failure for osimertinib in terms of overall and progression-free survival versus standard of care. We used the estimated risk to estimate the price reduction on the wholesale acquisition cost (WAC) for the two hypothetical contracts: a 1-year (2019-2020) and 2-year contract (2019-2021). From this we estimated the DSP
Risk of efficacy failure
.
Based on the risk of OS and PFS efficacy failure for osimertinib in OS and PFS, in the 1-year contract, the DSP
Risk of efficacy failure
was estimated at $12,652 (or −13.44% the 2018 WAC) for a 30-day prescription. For the 2-year contract (2019-2021), the DSP
Risk of efficacy failure
was estimated at $13,019 (or −10.93% the 2018 WAC).
We demonstrated that pricing methods based on risk of efficacy failure methods can be integrated into our proposed Six Delta platform for outcome-based pricing/contracting.</description><subject>Acrylamides - economics</subject><subject>Acrylamides - therapeutic use</subject><subject>Aniline Compounds - economics</subject><subject>Aniline Compounds - therapeutic use</subject><subject>Antineoplastic Agents - economics</subject><subject>Antineoplastic Agents - therapeutic use</subject><subject>Canada</subject><subject>Carcinoma, Non-Small-Cell Lung - drug therapy</subject><subject>Carcinoma, Non-Small-Cell Lung - genetics</subject><subject>Contracts</subject><subject>Cost-Benefit Analysis - methods</subject><subject>Costs and Cost Analysis - methods</subject><subject>Genes, erbB-1 - genetics</subject><subject>Humans</subject><subject>lung cancer</subject><subject>Lung Neoplasms - drug therapy</subject><subject>Lung Neoplasms - genetics</subject><subject>Models, Economic</subject><subject>Monte Carlo Method</subject><subject>osimertinib</subject><subject>outcome-based-contracting</subject><subject>pricing methods</subject><subject>Risk of failure</subject><subject>United Kingdom</subject><issn>1369-6998</issn><issn>1941-837X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2020</creationdate><recordtype>article</recordtype><sourceid>EIF</sourceid><recordid>eNp9kEtOwzAQhi0EolXpEUBesgnYHqdJugIhXhISLECCleX4AYYkLnYi1HtxDs6Eq7Ys8WYs6_tnPB9Ch5ScUFKSUwqzalZV5QkjLD2VNCes2kFjWnGalVA876Z7YrIVNELTGN9JOgCUFHQfjYCVPGeEj9HLQ3DKda-4Nf2b1xG7DvuhV741WS2j0Vj5rg9S9Qma45_vfI6Dix_YW2ysdUqqJbbSNUPYBhbrjgdoz8ommummTtDT1eXjxU12d399e3F-lylOoc-KgjJdc2vA5MRYpWhhgVVaUwm6rAGkIlQyPuNQV6VmaSFGirpUSoOiZgYTdLzuuwj-czCxF62LyjSN7IwfomAcCki2gCc0X6Mq-BiDsSL9tZVhKSgRK7FiK1asxIqN2JQ72owY6tbov9RWYwLO1oDrrA-t_PKh0aKXy8YHG2SnXBTw_4xflSmIMA</recordid><startdate>20201101</startdate><enddate>20201101</enddate><creator>Alkhatib, Nimer S.</creator><creator>McBride, Ali</creator><creator>Bhattacharjee, Sandipan</creator><creator>Ramos, Kenneth</creator><creator>Erstad, Brian</creator><creator>Slack, Marion</creator><creator>Billheimer, Dean</creator><creator>Abraham, Ivo</creator><general>Taylor & Francis</general><scope>CGR</scope><scope>CUY</scope><scope>CVF</scope><scope>ECM</scope><scope>EIF</scope><scope>NPM</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7X8</scope><orcidid>https://orcid.org/0000-0001-5071-9257</orcidid><orcidid>https://orcid.org/0000-0003-0490-4421</orcidid></search><sort><creationdate>20201101</creationdate><title>Pricing methods in outcome-based contracting: δ5: risk of efficacy failure-based pricing</title><author>Alkhatib, Nimer S. ; McBride, Ali ; Bhattacharjee, Sandipan ; Ramos, Kenneth ; Erstad, Brian ; Slack, Marion ; Billheimer, Dean ; Abraham, Ivo</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c413t-7712db4fe3e50efcc17f329dd1a3d8b33ac01a24643b98d2998207b8ccd3c1e63</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2020</creationdate><topic>Acrylamides - economics</topic><topic>Acrylamides - therapeutic use</topic><topic>Aniline Compounds - economics</topic><topic>Aniline Compounds - therapeutic use</topic><topic>Antineoplastic Agents - economics</topic><topic>Antineoplastic Agents - therapeutic use</topic><topic>Canada</topic><topic>Carcinoma, Non-Small-Cell Lung - drug therapy</topic><topic>Carcinoma, Non-Small-Cell Lung - genetics</topic><topic>Contracts</topic><topic>Cost-Benefit Analysis - methods</topic><topic>Costs and Cost Analysis - methods</topic><topic>Genes, erbB-1 - genetics</topic><topic>Humans</topic><topic>lung cancer</topic><topic>Lung Neoplasms - drug therapy</topic><topic>Lung Neoplasms - genetics</topic><topic>Models, Economic</topic><topic>Monte Carlo Method</topic><topic>osimertinib</topic><topic>outcome-based-contracting</topic><topic>pricing methods</topic><topic>Risk of failure</topic><topic>United Kingdom</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Alkhatib, Nimer S.</creatorcontrib><creatorcontrib>McBride, Ali</creatorcontrib><creatorcontrib>Bhattacharjee, Sandipan</creatorcontrib><creatorcontrib>Ramos, Kenneth</creatorcontrib><creatorcontrib>Erstad, Brian</creatorcontrib><creatorcontrib>Slack, Marion</creatorcontrib><creatorcontrib>Billheimer, Dean</creatorcontrib><creatorcontrib>Abraham, Ivo</creatorcontrib><collection>Medline</collection><collection>MEDLINE</collection><collection>MEDLINE (Ovid)</collection><collection>MEDLINE</collection><collection>MEDLINE</collection><collection>PubMed</collection><collection>CrossRef</collection><collection>MEDLINE - Academic</collection><jtitle>Journal of medical economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Alkhatib, Nimer S.</au><au>McBride, Ali</au><au>Bhattacharjee, Sandipan</au><au>Ramos, Kenneth</au><au>Erstad, Brian</au><au>Slack, Marion</au><au>Billheimer, Dean</au><au>Abraham, Ivo</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Pricing methods in outcome-based contracting: δ5: risk of efficacy failure-based pricing</atitle><jtitle>Journal of medical economics</jtitle><addtitle>J Med Econ</addtitle><date>2020-11-01</date><risdate>2020</risdate><volume>23</volume><issue>11</issue><spage>1246</spage><epage>1255</epage><pages>1246-1255</pages><issn>1369-6998</issn><eissn>1941-837X</eissn><abstract>Six Delta is a six-dimensional independent platform for outcome-based pricing/contracting. The fifth dimension (δ5) estimates prices on the basis of the risk of efficacy failure of a drug. We describe this dimension's methodology and present a proof-of-concept application to the treatment of non-small cell lung cancer (NSCLC) with EGFR mutation with osimertinib.
The risk of efficacy failure pricing dimension utilizes a seven-step method: (1) defining risk; (2) extracting data; (3) predicting models; (4) performing Monte Carlo Simulation (MCS) to estimate risk of efficacy failure; 5) estimating ranges for a payback; (6) adjusting for medical inflation; and (7) performing Monte Carlo Simulation (MCS) to estimate the DSP
Risk of efficacy failure
. A proof-of-concept exercise with osimertinib in NSCLC was performed for two hypothetical outcome-based contracts: 1-year (2019-2020) and 2-year (2019-2021). We estimated the risk of efficacy failure for osimertinib in terms of overall and progression-free survival versus standard of care. We used the estimated risk to estimate the price reduction on the wholesale acquisition cost (WAC) for the two hypothetical contracts: a 1-year (2019-2020) and 2-year contract (2019-2021). From this we estimated the DSP
Risk of efficacy failure
.
Based on the risk of OS and PFS efficacy failure for osimertinib in OS and PFS, in the 1-year contract, the DSP
Risk of efficacy failure
was estimated at $12,652 (or −13.44% the 2018 WAC) for a 30-day prescription. For the 2-year contract (2019-2021), the DSP
Risk of efficacy failure
was estimated at $13,019 (or −10.93% the 2018 WAC).
We demonstrated that pricing methods based on risk of efficacy failure methods can be integrated into our proposed Six Delta platform for outcome-based pricing/contracting.</abstract><cop>England</cop><pub>Taylor & Francis</pub><pmid>32845204</pmid><doi>10.1080/13696998.2020.1815029</doi><tpages>10</tpages><orcidid>https://orcid.org/0000-0001-5071-9257</orcidid><orcidid>https://orcid.org/0000-0003-0490-4421</orcidid><oa>free_for_read</oa></addata></record> |
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| subjects | Acrylamides - economics Acrylamides - therapeutic use Aniline Compounds - economics Aniline Compounds - therapeutic use Antineoplastic Agents - economics Antineoplastic Agents - therapeutic use Canada Carcinoma, Non-Small-Cell Lung - drug therapy Carcinoma, Non-Small-Cell Lung - genetics Contracts Cost-Benefit Analysis - methods Costs and Cost Analysis - methods Genes, erbB-1 - genetics Humans lung cancer Lung Neoplasms - drug therapy Lung Neoplasms - genetics Models, Economic Monte Carlo Method osimertinib outcome-based-contracting pricing methods Risk of failure United Kingdom |
| title | Pricing methods in outcome-based contracting: δ5: risk of efficacy failure-based pricing |
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