Applied Health Economics and Health Policy
Carlos Campillo‑Artero · Jaume Puig‑Junoy · José Luis Segú‑Tolsa · Marta Trapero‑Bertran
Background Marketing of new and existing drugs with new indications used alone or in combination is increasing.
Objective To identify the advantages and disadvantages of indication-based pricing (IBP) systems for such drugs from the
standpoint of economic theory, practical applications and international experiences.
Methods We conducted a systematic review of published articles and reports using six bibliographic databases: PubMed,
ASCO, Scopus, DARE, HTA and NHS EED. We also conducted a search of gray literature in Google Scholar. The same
search terms were used as in Towse et al. (The debate on indication-based pricing in the U.S. and fve major European
countries. OHE Consulting Report, London, 2018). Articles and reports published from 1 January 2000 to 30 September
2018 were included.
Results A total of 26 studies met the inclusion criteria. There are three main types of IBP: diferent brands with diferent
prices for each indication, an averaged single price for all indications and a single price with diferential discounts. The
studies indicate that IBP systems are premised on the idea that charging a diferent price for diferent indications refects the
diferences in their value and in social willingness to pay for each one and for the investment in R&D based on the indication’s incremental clinical beneft. Some argue that a uniform price reduces access and increases the price for lower-value
indications, while others contend that if IBP sets prices at the maximum threshold of social willingness to pay for each
indication, all surplus is transferred to the producer and consumer surplus is reduced to zero. No practical applications of
pure IBP were found. Single pricing for drugs is the most prevalent approach. The system that most closely approximates an
IBP model consists of agreements that are generally confdential and linked to risk-sharing agreements.
Conclusions There are no applications of pure IBP systems and their practical consequences are therefore unknown. More
economic theory-based assessments of the pros and cons of IBP and studies diferent from reviews are needed to capture
their intricacies and specifcities.