Estimating the shares of the value of branded pharmaceuticals accruing to manufacturers and to patients served by health systems

Abstract: In this seminar I will present a framework for estimating how the value generated by new branded pharmaceuticals is shared. The framework accounts for benefits and health opportunity costs in the patent period and post-patent period when generic/biosimilar products become available. I will then share the results of applying the framework to 12 National Institute for Health and Care Excellence (NICE) appraisals. These case studies indicate that patients served by the UK NHS accrue -160% to 94% of total potential net health benefits. In many cases, even in the long run, the benefits of new medicines are not sufficient to offset the opportunity costs of payments to manufacturers, and approval is expected to reduce population health. I will discuss whether these prices can be justified by considering their potential benefits in terms of incentivising future pharmaceutical R&D, and the implications of this work for future pharmaceutical pricing policy.