Pricing By Indication Takes Hold, Despite Hurdles

Pricing drugs by indication makes sense. If the same drug works better in one disease sub-type than another, it should be worth paying more for in that setting. This is part of the value-based economics that many health systems are striving for. In some European countries, where governments have more control over drug pricing, differential pricing based on indication is already baked into an average overall reimbursement for some drugs. In the US, various PBMs, Express Scripts Holding Co. (ESI) most publicly, have started to pilot indication-based pricing in oncology and inflammatory disease.

The need for indication-specific pricing, like value-based pricing more generally, is acute within oncology, where a number of high-priced drugs...