Medicines to treat multiple indications have increased over time and are expected to increase in the future [1]. Pricing models for new indications have been classified into three categories [1]: (1) Brand Model, i.e. different brand (and therefore different price) for each indication; (2) Indication-Based Pricing (IBP), i.e. a single price and discounts and/or Managed Entry Agreements (MEAs) differentiated by indication; and (3) Blended Price Model (BPM), i.e. a single price for all indications set as a virtual weighted average of the prices per indication.

A recent systematic review of pricing models for new indications [2] indicates that the IBP model presents the advantages: (1) to align the price with the drug’s value for each specific indication; (2) to help pharmaceutical companies in focusing their investments in Research and Development (R&D) towards indications that are expected to bring value to the healthcare systems, thus linking price to value; and (3) to facilitate patient access to medicines. The same review evidences that only Italy has adopted an IBP model thanks to the presence of drug registries, since the IBP model requires tracking drug use by indication [3]. Furthermore, the IBP model may impose an administrative burden, depending on the complexity of the agreements by indication. This is why the BPM model is more widely adopted. Furthermore, where the BPM model is adopted, it predominantly relies on confidential discounts differentiated by indication, rather than MEA. This observation aligns with the context of critical revaluation surrounding MEA and outcome-based agreements [4]. Two recent contributions have designed models that could partially overcome the problems of outcome-based agreements [5, 6].

An Expert Consensus Report published by the Office of Health Economics [7] advocates a more flexible approach when negotiating prices for new indications. By acknowledging the value of a drug with its newly approved indication, this approach has the potential to recognize the value of the drug in the new approved indication. This would produce faster and more widespread patient access to medicines and encourage the development of innovative therapeutic solutions. The IBP model is identified as the model that best fits these characteristics. The BPM model faces criticism, primarily because it is potentially more driven by budget impact considerations than value aspects since the actual price per indication (that could better reflect the value) is not revealed. Furthermore, the size of the target population is known for the already approved indications and is often used to weigh the prices by indication, while it is estimated for new ones, thus incorporating into prices the risk of incorrect estimates. Finally, the BPM model causes an indirect renegotiation of prices and/or discounts for all indications. If net prices are publicly available, pharmaceutical companies would prefer not to launch new indications in countries where they expect a higher price cut and/or discount, since these countries can become a benchmark for cross-reference pricing [8].

Similar conclusions have been drawn from a Discussion Paper issued by an Italian working group [9]. The IBP model produces a greater consistency of prices with the value per indication, avoids the risk of missed launch for the new indication (generated by an overall reduction in effective prices for all indications) and does not require identifying a weighting system (that often refers to the size of the target population), which is estimated for the new indication.

All contributions remark on the paucity of empirical evidence on the impact of new indications. A recent study examined the impact of 100 new indications, approved between 2009 and 2019, for 25 cancer drugs across seven countries (Australia, Canada, France, Germany, England, Scotland, and USA) [10]. The analysis highlighted that new indications, compared with the first approved, (1) produce a lower health increment in terms of survival and quality-adjusted life-years (QALYs) saved; (2) target a wider patient population; and (3) are often not reimbursed or affected by restrictive reimbursement recommendations. The same paper highlights that when the price and reimbursement (P&R) for new indications is negotiated, public prices are cut in France and Germany, while relevant companies increased prices in the US. Another paper scrutinized Health Technology Assessment (HTA) recommendations for sequences of multi-indication cancer medicines (31 drugs and 118 indications evaluated) across Germany, France, England, Scotland, Canada, Australia, and USA. Among its findings, it noted a lower magnitude of the European Society of Medical Oncology (ESMO) clinical benefit scale (MCBS) for the first indication launched but a higher proportion of HTA coverage recommendations; the study concluded that discordance in the value of first versus subsequent indications can pose major challenges in systems that define the price based on the initial indication [11].

Despite that there is growing empirical evidence on the impact on new indications, neither the effects on net prices nor the impact on P&R negotiations have been investigated thus far. Furthermore, all the above-mentioned analyses did not include Italy, which is an interesting case study since it has adopted an IBP model in the past but has recently moved from an IBP model to a BPM model.

In Italy, P&R negotiations for new medicines and indications are managed by the Italian Medicines Agency (AIFA) [12]. The Italian P&R process starts when the applicant submits an application consisting of a dossier structured according to a standardized format (Common Technical Document [CTD]), which is published on AIFA’s website [13]. P&R negotiation considers the unmet need, the added therapeutic value, the cost of comparators, the size of the target population, the cost-effectiveness profile, and the drug and healthcare budget impact [14]. To date, AIFA’s decision making is supported by two distinct committees—the Technical-Scientific Committee (CTS) and the Price and Reimbursement Committee (CPR). The CTS provides scientific support to P&R negotiations, e.g. if the CTS determines that the risk-benefit profile of a new product is comparable with other drugs for the same indication, the CPR cannot allow a premium price over the comparator(s) for the new products. The CPR, on the other hand, negotiates the P&R with the marketing authorization holder, complementing the scientific evaluation provided by the CTS with economic considerations [14]. After ratification by the AIFA’s Board of Directors (BoD), the outcomes of the P&R agreements are published in the Italian Official Journal (OJ) [Determina AIFA].

The P&R negotiation process for new indications is equivalent to the first launch: companies must submit a full P&R dossier. In addition, the P&R process for new indications poses some challenges related to the value by indication since the value a drug delivers across indications may vary substantially. As previously mentioned, Italy was the first country to adopt an IBP approach through discounts and/or MEA by indication [2, 10, 15], supported by drug registries that allow to track the use of drugs by indication [3]. However, in recent years a BPM-based approach has prevailed: public prices and/or discounts, applied to all indications, are renegotiated when a new indication is approved [9].

Pharmaceutical companies may also consider applying for innovative status for each indication approved, and the CTS then appraises the applications and decides on full, conditional, or non-innovativeness status. The former lasts 3 years and provides for a dedicated fund and immediate access to regional markets; conditional innovativeness lasts 18 months and can subsequently be converted into full innovativeness on the grounds of real-world data, but provides the relevant products only for speedier access to the regional markets [14]. The innovativeness status is decided on the grounds of the unmet need, therapeutic added value, and quality of the evidence provided [16]. Unmet need and added therapeutic value are evaluated using a five-level scale (maximum, important, moderate, poor and absent) [17], whereas the quality of the evidence through a four-level scale (high, moderate, low, very low), known as the Grading of Recommendations Assessment, Development and Evaluation (GRADE) method [17]. The added therapeutic value and the quality of the evidence are the most important drivers of the innovativeness appraisals [14, 17, 18].

Our analysis aimed at covering the information gap on the impact of new indications on P&R negotiation complexity and on net prices, using Italy as a case study due to its transition and IBP approach to a BPM approach. The duration (time to reimbursement) of new indications compared with first indications procedures was used as a proxy of P&R complexity. Discount increment following the negotiation of P&R for new indications was used to capture the impact on net prices. In addition to determining the overall impact of new indications on the P&R negotiation process, we stratified the results based on different characteristics, including orphan indications and the presence of MEA. Furthermore, to understand the broader implications of the shift from an IBP model to a BPM model, we also analyzed the P&R process duration and discount increment over time.