Methodology on value based pricing?

Dear all,
I just posted below question on linkedin and would be delighted to hear your opinion.

"There is an increasing debate around the introduction of value based pricing systems for pharmaceuticals in certain markets, some more detailed and methodological while others are very fluffy and vague. What in your opinion would be a fair and sound methodological concept for the establishment of value based pricing for both industry and health authorities/society?"


The Perfect 'Pricing' Storm

Dear Readers,

so much is going on these days that it is difficult to decide what to discuss here (although a nice problem to have ;). We are having the "Perfect Storm" on the pricing front, first with Greece's major cuts, many companies now are withdrawing products, exchange rate devaluations with international price referencing consequences, than followed by Spain price cuts and other measures, twice actually, now Italy and France as per FirstWord article below. In addition to that the German health minister has brought foreward the new proposal of the reform of the drug law (Arzneimittelgesetz) that also will have major implications if approved. It will now go through discussions and voting in the Bundestag.


France, Italy announce drug pricing cuts
by Lianne Dane

France and Italy announced plans to reduce healthcare spending, with a particular focus on cutting drug prices in a bid to close budget shortfalls. France plans to reduce drug prices by 100 million euros ($122 million) this year, while the Italian government aims to cut off-patent generic drug prices by 12.5 percent from June 2010 until the end of the year.

Other measures introduced in Italy include the establishment of a drug tendering system beginning in 2011 where reimbursement of generics will be limited to the least expensive medicine within four therapeutic categories.

Commenting on France's decision, Noël Renaudin, an official in the health ministry, said "we have to stop the infinite growth in prices for drugs. It’s no longer reasonable.” The announcements follow a recent decree by Greek authorities to lower drug prices by about 25 percent in the country. Citigroup analysts predicted that drug price cuts in Europe's five largest economies could measure between 5 percent and 10 percent.

Commenting on the news, an international health policy expert from the London School of Economics, Panos Kanavos, said “in the face of adversity, commodities like drugs are an easy place for decision-makers to start [cutting] …. and there is considerable scope to cut in many cases." GlaxoSmithKline CEO Andrew Witty noted that "a few European countries hit us every year with big price cuts. I’m not terrified.”