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Health Impact Fund

Value-based pricing and putting epidemiology into practice

Ami Banerjee
Last edited 23rd March 2011

I see epidemiology as the study of health and disease in populations. It can be observational (e.g. cohort studies) or experimental (e.g. clinical trials). Last week, I blogged about the increase in research funding and how more “bang-for-buck” may be expected from public- and private-funded research in hard economic times. Moreover, the best kind of health research is the kind that influences practice, or even better, translates into the policy sphere. However, shortcomings in design of research on the one hand, and clinical practice and policy on the other, mean that much epidemiology is not used or useful.

Clinical trials attempt to tell us whether a drug has a benefit in a particular clinical setting. Cost-effectiveness studies go further, allowing us to assess the relative cost of a drug versus the benefit gained (often by quality-adjusted life-years, QALYs). This epidemiologic research is vital because drugs make up a huge proportion of healthcare spending, for both the individual and the health system. Amazingly, there is no system in the NHS (or for that matter in the world) for directly correlating the amount of money spent or profit made by a certain drug with the health effects of that drug. The pharmaceutical industry has enjoyed the unique status among other manufacturing industries where sale of its products is not determined by their value. This aspect may contribute to the many conflicts of interest, scope for manipulation and lack of clinical data.

There have been many calls for changes in physician-pharma relationships and in the way pharma deals with its intellectual property rights, but few calls for change in the way pharma interacts with health systems. Well that is about to change. The UK Department for Health this week ended a 3 month consultation about value-based pricing (VBP). The government is hoping to roll out this scheme in 2014 and plans to incentivise innovation in drug research by rewarding pharma companies based on the “value” of their products.

A non-profit organisation, Incentives for Global Health, to which I am a medical advisor, is promoting a similar proposal on a global scale: the Health Impact Fund. This global fund aims to incentivise drug development and distribution based on the health impact of the drugs.

Both value-based pricing and the Health Impact Fund must face scrutiny, improvement and testing. However, not only do they both represent opportunities to change the way in which epidemiologic data is collected and used in this research area, they have the potential to radically improve the way in which health systems use limited resources on the expensive resources which are drugs. Have a look at my podcast on IDEAS-LAB about value-based pricing

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