On April 22, 2022, Health and Global Policy Institute (HGPI) has released a new set of policy recommendations, ” Towards the Establishment of a Value-Based Health Care System: An Analysis of Value-Based Pricing.”

These recommendations are being released as a part of HGPI’s recently launched “HGPI Expert Policy Advocacy Platform,” which will facilitate the creation and promotion of policy recommendations by HGPI fellows and others associated with the Institute. Through this platform, policy recommendations developed by HGPI Fellows and others are scrutinized and approved by a review committee within HGPI. Upon their approval, HGPI commits to issuing and advocating for the proposals. It is hoped that this new platform will produce a wide variety of both feasible and creative solutions to today’s pressing health policy issues.

As the first phase of this project, Dr. Ataru Igarashi, an HGPI Fellow, has created a set of policy recommendations entitled, “Towards the Establishment of a Value-Based Health Care System.”

For the HGPI Special Seminar, we hosted Dr. Igarashi explained the contents of the Recommendation “Toward The Value-Based Health Care System,” and participants’ questions and comments were answered as needed in an interactive manner, leading to a lively discussion. The recommendation states that measures to deal with increasing medical costs due to the declining birthrate and aging population as well as the increasing sophistication of medical care are urgent issues, and proposes a drug price system, Value-based pricing (VBP), to evaluate innovative drugs as a specific quantitative and qualitative evaluation method to reflect multifaceted values.

A summary of the recommendations can be found below.

Main points of the new recommendations:

1 Sustainability of Health Care System

• Rising healthcare costs due to the declining birthrate, aging population, and the increasing sophistication of medical care must be addressed urgently.
• The effects of medical services can be divided into two categories: “employment-inducing and production spillover effects” and “benefits gained by patients.” The impact of medical services on patients can give rise to a great number of costs, including loss of productivity and the cost of care. The time has come to redefine what value means in healthcare.
• To this point, the focus of drug price debates has been on revising the drug price system to sustain the insurance system (lowering drug prices). However, drug price related costs account for about 20% of healthcare costs, making it difficult to reduce healthcare costs and improve overall healthcare efficiency through this method alone.
• The current price adjustment system is designed to drastically reduce prices when a drug becomes widely used, which may impede the development of drug innovation out of Japan.

2 Methodology for Value-based drug pricing

• It is recommended that a specific quantitative and qualitative evaluation method be adopted to reflect the multifaceted value of drugs through a VBP framework.
• VBP makes it possible to reflect multiple factors in the price, including safety, efficacy, and health economics.
• Factors that are difficult to quantify, such as the magnitude of unmet need, disease severity, and rarity, can be pseudo-quantified using set criteria.

3 Valuation of concrete drugs

• Current drug prices were compared with currently available data showing the quantifiable range of total costs for various drug. Depending on the drug, there were great differences between these two values.
• For drugs that show significant effectiveness after a short period of treatment, the total cost tends to be much higher than the current price. However, total costs are much lower than current prices for drugs that treat severe diseases with low impact on survival.
• Although there is high unmet medical need for drugs such as anticancer drugs, since the value of these drug is not reflected in their prices, there is a risk that access to such drugs will be limited in the future.
• VBP, which evaluates both quantitative and qualitative value, is useful as a system to reflect values that cannot be directly quantified in final drug prices.

For details, please see the PDF below.
*A recommendation written in English is published on June 10, 2022.

(Webinar) HGPI Special Seminar “Towards the Establishment of a Value-Based Health Care System”

[Overview]

■ Date & Time: Wednesday, April 27, 2022; 16:30-18:00 JST
■ Format: Zoom Webinar
■ Host: Health and Global Policy Institute (HGPI)
■ Speaker:
Dr. Ataru Igarashi (Fellow, HGPI/ Associate Professor, Yokohama City University School of Medicine, Unit of Public Health and Preventive Medicine/ Visiting Associate Professor, Graduate School of Pharmaceutical Sciences, The University of Tokyo)
■ Languages: Japanese
■ Participation fee: Free

[Speaker Profile]

Dr. Ataru Igarashi (HGPI Fellow/ Associate Professor, Yokohama City University School of Medicine, Unit of Public health and Preventive Medicine/ Visiting Associate Professor, Graduate School of Pharmaceutical Sciences, The University of Tokyo)
Ataru IGARASHI, Ph.D., is an associate professor at Yokohama City University School of Medicine, Unit of Public Health and Preventive Medicine. In 2002, he graduated from the Faculty of Pharmaceutical Sciences, The University of Tokyo. He started his career at The University of Tokyo as an assistant professor, just after he received his Ph.D. degree in 2008. His areas of expertise are health economics and pharmacoeconomics. His research on vaccination policy, anti-smoking policy and pharmacoeconomics have been used in the governmental decision making process.