It is a recent paper title of Jiao et al. (2025). Previous studies (eg, Goldman et al. 2013, Goldman et al. 2023) has argued for a 3-portion pricing model. Under the 3-Part pricing model, drugs will quickly come to the market under quick approval with a relatively low price. As clinical testing and other evidence produce more (less) strong evidence, the price will increase (fall). Then, when the specificity of the drug market is over, prices will fall as generic (or biosimiller), which enters the market.
Paper by Jiao et al. (2025) This three-part provides theoretical foundation for pricing approach. At a high level, the approach combines the expected utility theory with the value of information (VOI) metrics to inform the price-based prices (VBP) of new medical technologies. To implement this approach, the author rely on five steps functioning. First of all, the author applies a standard, CEA-based approach that believes that the payments are neutral and pay based on the price-based value of the new medicine (VBPTipSecond, the author loosens the perception that the payment risk is neutral. One thinks that most payable risk is neutral, but the author justifies the potentially payable risk:
Current policies oppose a prevailing risk among policy makers towards AA [accelerated approval] Drugs. For example, Medicade requires high discounts for AA drugs uncertainty (Rome and Caselehem 2021).
Third, writers apply the expected value of the correct information (EVPI) in a way that involves the risk of potential payment risk so that a risk – adjusted value – based value (RVBPFourth, the author believes that there is no such thing as the correct information. In the real world, even large clinical trials still leave some uncertainty. Thus, in a fourth phase, the author argues for the use of the expected value of the sample information (EVSI). EVSI assesses the expected value of conducting future studies with a finite sample size; The larger the sample size, the closer EVSI comes to EVPI. Finally, in the fifth stage, RVBP The following decision is set based on the rule:
… Insurance Payer Decision Applies Rules that VBPTip It should be set so that the expected utility in this scenario is equal to the expected utility in the benchmark scenario. In other words, the expected utility with current uncertainty should be align with utility without uncertainty.
The author also operates a case study for a fictional treatment that will receive quick approval for the treatment of triple intern negative breast cancer (TNBC). The case study showed that when confirmation tests are not yet available, the price of the drug will get a decrease in the price of the content.
For fictional aa [accelerated approval] Drugs, traditional VBP were calculated at $ 2000 per month, which was without accounting for uncertainties in its clinical benefits based on the expected cost of the drug. However, when applying RVBP with an ideal benchmark without any uncertainty, RVBP was set for $ 1900, $ 1400 and $ 1000 [absolute] The coefficient of risk of 0.0001, 0.0005 and 0.001 respectively (α). These adjusted prices reflect the need to reduce the price because the decision is increased by the growth of manufacturers, which faces uncertainty, compensation for that. When the level of uncertainty was based on the expected results of the future confirmation test, the RVBP was slightly higher, with $ 1900, $ 1700, and $ 1500 per month there were adjusted prices for the same, [absolute] Risk coefficient.
For more information, including all mathematical derivatives and more details on case studies, you can read the paper here.
