Pricing of medical devices under coverage uncertainty-a modelling approach.

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Pricing of medical devices under coverage uncertainty-a modelling approach. / Girling, Alan; Lilford, Richard; Young, TP.

In: Health Economics, 20.10.2011.

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@article{9d9fc043dab74531b5a8a994cbfa2757,
title = "Pricing of medical devices under coverage uncertainty-a modelling approach.",
abstract = "Product vendors and manufacturers are increasingly aware that purchasers of health care will fund new clinical treatments only if they are perceived to deliver value-for-money. This influences companies' internal commercial decisions, including the price they set for their products. Other things being equal, there is a price threshold, which is the maximum price at which the device will be funded and which, if its value were known, would play a central role in price determination. This paper examines the problem of pricing a medical device from the vendor's point of view in the presence of uncertainty about what the price threshold will be. A formal solution is obtained by maximising the expected value of the net revenue function, assuming a Bayesian prior distribution for the price threshold. A least admissible price is identified. The model can also be used as a tool for analysing proposed pricing policies when no formal prior specification of uncertainty is available. Copyright {\textcopyright} 2011 John Wiley & Sons, Ltd.",
author = "Alan Girling and Richard Lilford and TP Young",
year = "2011",
month = oct
day = "20",
doi = "10.1002/hec.1807",
language = "English",
journal = "Health Economics",
issn = "1057-9230",
publisher = "Wiley",

}

RIS

TY - JOUR

T1 - Pricing of medical devices under coverage uncertainty-a modelling approach.

AU - Girling, Alan

AU - Lilford, Richard

AU - Young, TP

PY - 2011/10/20

Y1 - 2011/10/20

N2 - Product vendors and manufacturers are increasingly aware that purchasers of health care will fund new clinical treatments only if they are perceived to deliver value-for-money. This influences companies' internal commercial decisions, including the price they set for their products. Other things being equal, there is a price threshold, which is the maximum price at which the device will be funded and which, if its value were known, would play a central role in price determination. This paper examines the problem of pricing a medical device from the vendor's point of view in the presence of uncertainty about what the price threshold will be. A formal solution is obtained by maximising the expected value of the net revenue function, assuming a Bayesian prior distribution for the price threshold. A least admissible price is identified. The model can also be used as a tool for analysing proposed pricing policies when no formal prior specification of uncertainty is available. Copyright © 2011 John Wiley & Sons, Ltd.

AB - Product vendors and manufacturers are increasingly aware that purchasers of health care will fund new clinical treatments only if they are perceived to deliver value-for-money. This influences companies' internal commercial decisions, including the price they set for their products. Other things being equal, there is a price threshold, which is the maximum price at which the device will be funded and which, if its value were known, would play a central role in price determination. This paper examines the problem of pricing a medical device from the vendor's point of view in the presence of uncertainty about what the price threshold will be. A formal solution is obtained by maximising the expected value of the net revenue function, assuming a Bayesian prior distribution for the price threshold. A least admissible price is identified. The model can also be used as a tool for analysing proposed pricing policies when no formal prior specification of uncertainty is available. Copyright © 2011 John Wiley & Sons, Ltd.

U2 - 10.1002/hec.1807

DO - 10.1002/hec.1807

M3 - Article

C2 - 22021085

JO - Health Economics

JF - Health Economics

SN - 1057-9230

ER -