What is willingness to pay?
Willingness to pay (WTP) is an economic concept used to estimate the highest price a payer, such as a government agency, insurance provider, or health system, is willing to reimburse for a drug or intervention. It reflects the perceived value of the treatment, taking into account clinical benefit, safety, quality of life improvements, and broader health system impact. WTP may be informed by cost-effectiveness thresholds, budget impact, societal preferences, and available alternatives.
Why is willingness to pay important in pharmaceutical pricing and access?
Understanding willingness to pay is critical for setting pricing strategies, preparing for payer negotiations, and informing health economic modeling. It helps pharmaceutical companies align evidence generation with payer expectations and tailor value communication to justify the proposed price. Variability in WTP across markets can influence launch sequencing, global pricing strategy, and the likelihood of achieving favorable reimbursement. Accurately gauging WTP supports sustainable access while maximizing commercial potential.
