Adoption of value-based pricing for prescription drugs: An extension of Roger's innovation diffusion theory

Arjun Bhattacharjee; Monica Chaudhary; Smitha Ranganathan

doi:10.53730/ijhs.v6nS4.10084

Authors

Arjun Bhattacharjee
arjun.ds20dba016@spjain.org
S P Jain School of Global Management
Monica Chaudhary S P Jain School of Global Management
Smitha Ranganathan S P Jain School of Global Management

Abstract

Value‐based pricing (VBP) is increasingly recognized by academics and practitioners as the most effective approach to price prescription drugs and improve patient access to medicines. However, despite the apparent support, there has been high rate of failure and continued low adoption of value-based agreements between payers and drug manufacturers. This paper aims to explore the potential factors influencing various stakeholders’ intentions to use VBP. For this purpose, the original version of the Roger's Innovation Diffusion Theory, which included relative advantage, compatibility, complexity, trialability and observability is studied and extended with Health Information Technology (HIT) and value measurement factors. The study presents a detailed review of existing literature in the area of healthcare pricing and introduces a conceptual framework that can be used for understanding organizational readiness for rapid adoption of VBP for prescription drugs. Finally, based on the constructs presented in the literature, we propose future research questions that need to be addressed to inform how the healthcare sector should approach the VBP adoption.

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