Indication vs. Value-Based Pricing: What’s the difference?

Earlier this week, I was presenting in Brussels on Indication Based Pricing when somebody asked me, “How is it different to Value-Based Pricing?”  

For me, Value-Based Pricing (VBP) is a broader principle that says the price of pharmaceuticals should be aligned with the value they provide.  

This raises an obvious question: what do we mean by “value” and for whom? 

Indication Based Pricing (IBP) takes the basic principle of VBP and applies it to the practice of varying prices by indication, because different uses of the same drug in different indications generates different value for patients.  

Again, it raises the question what value is relevant and for whom? 

As the global thought leaders on IBP, OHE believe it’s a win for patients who get access to more treatment options, a win for payers who ensure that they only pay for the benefits generated by medicines, and a win for the industry because it maximises the value of their products.  

Over time it has additional benefits, including generating the right incentives for investment and developing innovative treatments that maximise total patient value. It can also generate competition at the indication level, which is of benefit to payers.  

In practice, IBP is still in its infancy with potential barriers to adoption. Understanding both the theory and practice of IBP, developing the right narrative to communicate its benefits, and learning from successful implementations of IBP are critical to developing a roadmap for driving IBP adoption.   

If you’re interested in learning more about this, why not join the experts on 20th March for OHE’s IBP Masterclass. OHE’s global thought leaders will be joined by partners AstraZeneca and IQVIA to help attendees understand the complexities of IBP and discover how to construct the winning IBP narrative.  

Places are limited so sign-up here.  

In the meantime, why not drop me a comment with your thoughts on the distinction between IBP and VBP?