# Simplified Algorithm for Determining Value-Based Pricing of High-Tech Medical Devices in the Tuscany Region of Italy

## TL;DR

This paper introduces a simplified algorithm to estimate value-based pricing for high-tech medical devices in Tuscany, showing strong correlation with real prices.

## Contribution

A simplified algorithm for value-based pricing estimation of medical devices, based on clinical endpoints and healthcare costs, is proposed and validated.

## Key findings

- The algorithm successfully estimated VBP for 13 out of 17 devices.
- There was a strong correlation (R2=0.929) between estimated VBP and real prices.
- The algorithm provides a feasible alternative when full economic analysis is unfeasible.

## Abstract

In Europe, value-based pricing (VBP) is widely used for pharmaceuticals but less frequently for medical devices. Medical device prices are generally set at the regional level and rarely at the national level. Therefore, a simple algorithm for estimating VBP can be useful.

In Tuscany (a region with 3.7 million inhabitants), prices for high-tech medical devices have been set by a regional organization since 2018. These prices represent a mandatory condition for purchasing these devices but are generally determined empirically. In this context, we present a simplified algorithm for VBP estimation, which we have applied retrospectively to devices approved in the first half of 2024. The algorithm is based on the primary clinical endpoint used in the device studies and on health-care costs. It represents a modified version of the previously described added therapeutic value (ATV) model. To analyze the results of our experience, we performed a correlation analysis between VBPs and real prices.

Our algorithm was applied to 17 devices. In 13 cases, the VBP could be estimated, while in the remaining four cases, the algorithm failed. In cases where the calculation was successful, the correlation between VBP and real prices was highly significant (R2=0.929; 95% confidence interval (CI), 0.7747 to 0.9789; p<0.001).

In our previous experiences between 2019 and 2023, we attempted to apply a complete economic analysis to 239 newly approved devices and found that such an analysis was unfeasible in 80% of the cases. This simplified algorithm can be useful to determine a preliminary estimate of VBP when a more complete economic analysis is unfeasible.