Value-based pricing is a somewhat technical concept that health economists like.
One of the few ways we can actually try to quantify better health is through the concept of quality-adjusted life years. In the institutions across the world that make decisions whereby they ultimately may say no to certain expenditures that cover certain procedures or drugs that do have health benefits but for which the incremental health benefits are too small, given the cost, the metric they tend to use is the concept of quality-adjusted life years.
The idea of value-based pricing is simply that when we negotiate with the pharmaceutical companies, they will have submitted evidence already to agencies like the National Institute for Clinical Excellence in the U.K. or the pharmaceutical benefits board in Australia, where they have actually produced numbers that say what the health improvement is relative to the next best alternative in terms of incremental quality-adjusted life years. If countries use that metric and establish that the maximum amount they are willing to pay for an incremental quality-adjusted life year is x dollars, that can be the basis for negotiations with pharmaceutical companies about what the maximum prices are that will be acceptable in Canada.