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ORIGINAL RESEARCH article

Front. Pharmacol.
Sec. Drugs Outcomes Research and Policies
Volume 16 - 2025 | doi: 10.3389/fphar.2025.1474856

Drivers of innovation value: simulation for new drug pricing evaluation based on system dynamics modelling

Provisionally accepted
Qian Xing Qian Xing Wendi Cheng Wendi Cheng Wei Wang Wei Wang Chunlin Jin Chunlin Jin Haiyin Wang Haiyin Wang *
  • Shanghai Health Development Research Center, Shanghai, China

The final, formatted version of the article will be published soon.

    Objectives: Paying for the innovative value of drugs is an important means of mitigating healthcare system duplication and enhancing patient health. Assessing and exploiting the factors influencing innovation premium to forecast trends and shortcomings within the pharmaceutical innovation ecosystem. Methods: Utilizing system dynamics, this research constructs a decision evaluation system for new drug pricing in Japan. It integrates various decision-making factors across dimensions such as value premium, marketability premium, pediatric premium, and SAKIGAKE premium, employing Vensim PLE software for simulation purposes. Results: Under the current policy framework, pharmaceutical innovation is on the rise, with significant policy effects observable after five years. The most substantial growth in value occurs in medications for rare diseases and niche markets, with effects varying in the short to medium term and stabilizing over the long term. Sensitivity analysis highlights that factors like combination therapies, faster mechanisms of action, and novel therapeutic parts notably influence the value dimension. Other significant factors include obtaining national certifications, addressing indications lacking standard treatments, and demonstrating superior efficacy. The study also identifies underexploited opportunities related to the use of evidence in pricing decisions. Conclusion: Clinical outcomes are pivotal in shaping drug pricing, influencing both patient and healthcare provider preferences, and thereby affecting market uptake and competitive dynamics. Regulatory frameworks that prioritize unmet medical needs or superior drug efficacy are essential. Future enhancements to the model should incorporate more real-world evidence and expand regulatory considerations to better reflect the dynamic nature of the healthcare sector and support equitable, outcome-based drug pricing.

    Keywords: system dynamics, drug prices, Innovation premium, Value-based pricing, pricing evaluation

    Received: 02 Aug 2024; Accepted: 06 Jan 2025.

    Copyright: © 2025 Xing, Cheng, Wang, Jin and Wang. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

    * Correspondence: Haiyin Wang, Shanghai Health Development Research Center, Shanghai, China

    Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.