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J. Pers. Med. 2017, 7(3), 10; https://doi.org/10.3390/jpm7030010

Value-Based Pricing and Reimbursement in Personalised Healthcare: Introduction to the Basic Health Economics

1
Pharmaceutical Outcomes Research & Policy Program, Department of Pharmacy, Health Sciences Building, H375, 1959 NE Pacific St., H-375A, Box 357630, University of Washington, Seattle, WA 98195-7630, USA
2
The Office of Health Economics, Southside, 7th Floor, 105 Victoria Street, London SW1E 6QT, UK
*
Author to whom correspondence should be addressed.
Academic Editor: Stephen B. Liggett
Received: 20 July 2017 / Revised: 24 August 2017 / Accepted: 28 August 2017 / Published: 4 September 2017
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Abstract

‘Value-based’ outcomes, pricing, and reimbursement are widely discussed as health sector reforms these days. In this paper, we discuss their meaning and relationship in the context of personalized healthcare, defined as receipt of care conditional on the results of a biomarker-based diagnostic test. We address the question: “What kinds of pricing and reimbursement models should be applied in personalized healthcare?” The simple answer is that competing innovators and technology adopters should have incentives that promote long-term dynamic efficiency. We argue that—to meet this social objective of optimal innovation in personalized healthcare—payers, as agents of their plan participants, should aim to send clear signals to their suppliers about what they value. We begin by revisiting the concept of value from an economic perspective, and argue that a broader concept of value is needed in the context of personalized healthcare. We discuss the market for personalized healthcare and the interplay between price and reimbursement. We close by emphasizing the potential barrier posed by inflexible or cost-based reimbursement systems, especially for biomarker-based predictive tests, and how these personalized technologies have global public goods characteristics that require global value-based differential pricing to achieve dynamic efficiency in terms of the optimal rate of innovation and adoption. View Full-Text
Keywords: personalized healthcare; personalized medicine; precision medicine; value-based pricing; value-based reimbursement; health economics; cost-effectiveness analysis; differential pricing; dynamic efficiency personalized healthcare; personalized medicine; precision medicine; value-based pricing; value-based reimbursement; health economics; cost-effectiveness analysis; differential pricing; dynamic efficiency
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Garrison, L.P.; Towse, A. Value-Based Pricing and Reimbursement in Personalised Healthcare: Introduction to the Basic Health Economics. J. Pers. Med. 2017, 7, 10.

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