Price negotiation, to close the gap between what a pharmaceutical company requests for their product and the amount a payer is prepared to bear according to its value framework and budget constraints, has become common practice in many jurisdictions. Negotiation processes are complex since they need to balance multiple conflicting societal goals, such as incentivising innovation, facilitating access to medicines and ensuring affordability [1, 2]. In order to reach these goals, the parties may agree on discounts over list prices or further confidential reimbursement conditions included in the so-called managed-entry agreements (MEAs) (e.g. financial-based arrangements, including simple confidential discounts, and/or performance-based agreements [3]).

The effect of centralised negotiation on medicine prices is still controversial and in the United States its implementation for outpatient prescriptions (Medicare Part B and D) is currently a matter of complex political contention [4, 5]. Past research showed that various factors may influence the final outcome of the negotiation, depending on the different value frameworks adopted by decision makers in their own context [6, 7]. The exact list of a product’s features a payer attaches value to, as well as the weights given to them and the trade-offs a payer is prepared to make between each of those, are not generally made explicit in most countries. Previous studies used regression methods to analyse past decisions made by payers in a given jurisdiction, with a view to assess the role played by specific factors (e.g. added benefit, expected budget impact, cost-effectiveness, etc.) on the final negotiated prices. These studies found that negotiated prices were somewhat linked to clinical benefits [8,9,10] in several European countries (e.g. Germany, Italy and France), although the correlation between price and incremental therapeutic benefit was weak overall (r = 0.56 [8]; r = 0.39 [9]; r = 0.37 [10]). Other studies showed that the expected financial impact of the new treatment on pharmaceutical expenditure was among the factors that influenced the final price of medicines the most, either directly or indirectly (e.g. target population size) [11,12,13,14,15]. The cost-effectiveness of the product was found to be—among other variables—a key factor informing adoption decisions in the United Kingdom [16, 17], Sweden [18], South Korea [19], Canada [20] and Australia [21], while no empirical evidence was found regarding the role played by cost-effectiveness in medicine pricing. Perhaps unsurprisingly, given the somewhat different value frameworks used in different jurisdictions, it is impossible to infer a consistent set of predictors of final reimbursement decisions or final prices across countries based on the published literature, with each study reflecting the peculiarity of the regulatory context of interest, differences in adoption decision rules and a different case-mix of products analysed [8,9,10,11,12,13,14,15]. Moreover, given that price information is generally considered confidential and never shared between public institutions across different countries [22], the cost-effectiveness of medicines, calculated with real final prices (after the detraction of confidential discounts and the expected effect of MEAs) remains often unknown or kept confidential [23]. In this regard, Italy has a different regulatory context compared with several European countries. The assessment, appraisal and price negotiation of medicines are undertaken within a single institution (i.e. the Italian Medicines Agency—AIFA), with the potential consequent advantage of greater interconnections between processes and actors, and a better alignment with the concept of ‘value’ across reimbursement decisions and pricing of medicines. Similarly to other countries, the actual list of factors driving the final decision is often undisclosed, making the role of cost-effectiveness in subsequent price negotiation still unclear. Although health economic evaluations (HEEs) evidence has been used to inform decision making for a number of years in Italy, AIFA has only recently introduced the mandatory submission of a structured HEE study for manufacturers intending to bring their product into the Italian market [24].

The objective of this manuscript is to explore the extent to which the incremental cost-effectiveness ratio (ICER), alongside a number of other relevant factors, predicts the final outcome of the negotiation in Italy expressed as percentage discount off the list price. A secondary objective of this study is to identify the mean ICER of reimbursed medicines resulting from past negotiations; information which could be used to further investigate the existence of an implicit cost-effectiveness threshold used by the Italian decision-maker for different categories of medicines.

In the Italian regulatory context, the Italian Medicines Agency (AIFA) is the competent authority for pricing and reimbursement decisions of medicines used in both out-patient and in-patient care. The price of medicines is determined through negotiation between AIFA and the pharmaceutical companies (Law No. 326 of 24 November 2003), in accordance with methods and criteria identified by the new Ministerial Decree of 2 August 2019 (OJ No. 185 of 24 July 2020) and the AIFA guideline for pricing and reimbursement (P&R) submissions published in December 2020 [24]. Among other things, the guidance contains detailed recommendations on how to conduct and report HEEs, which for the first time became mandatory in the case of new orphan drugs, new active substances and new therapeutic indications of patented products.

For its decision making, AIFA is advised by two expert committees (i.e., the Technical Scientific Committee—CTS and the Pricing and Reimbursement Committee—CPR) which work separately, but within a common iterative process, to identify those medicines deserving of reimbursement, their prices and other reimbursement conditions. Both committees are supported by the AIFA offices involved in P&R procedures. In particular, the AIFA HEE Office suggests the price targets for CPR negotiation, informed on the basis of cost-effectiveness and budget impact analysis considerations submitted by the applicants within the reimbursement dossiers and internally revised according to methods and criteria described elsewhere [25]. If the negotiations fail, medicines will not be reimbursed by the Italian NHS (INHS). Therefore, in the Italian context, the CPR resembles a ‘price-maker’ committee, since the final price set for reimbursed medicines is the result of the negotiation that takes place with the manufacturer. As such, in most cases, the final price remains confidential to the public following a non-disclosure agreement between the parties [22]. The new AIFA guideline released in 2020 details the type of information required from manufacturers to inform assessment and appraisal processes, including the specific cases where an economic evaluation is made mandatory (i.e. new orphan drugs, new active substances and new therapeutic indications of patented products). [24]. Nevertheless, a prespecified value framework for medicines price setting in Italy is still missing and no explicit cost-effectiveness threshold exists yet. The current available evidence shows that many factors may influence the outcome of the negotiation in Italy [11]; however, the role of cost-effectiveness results within price negotiations has never been investigated before. Our study is aimed at filling this gap by providing insights into the implicit cost-effectiveness threshold resulting from past reimbursement decisions.