Amidst historic shifts in drug pricing and reimbursement to boost market access for innovative therapies, our Project Director Stephanie Mattsson joined our partner FingerPost and other 1000+ professionals in Amsterdam for World Evidence, Pricing, and Access (EPA) Congress on March 21 – 23, 2023. The congress, which is Europe’s largest market access, and pricing convention, had chosen a theme that emphasized patient perspectives at the heart of market access. A highly relevant aspect as we see pharmaceutical companies and payors currently reconfiguring their strategies to boost market access. Now here we are summarizing some of the many insights gained from the congress about pricing and reimbursement:
Pricing, reimbursement, and market access strategy can make or break a biotech company
In this era of costly cures and the need to look beyond initial patient care, the market access function provides a transformative change to the traditional one-to-one relationship between pharmaceutical/biotech, patients, payers, and providers. Expanding the understanding of the pricing and reimbursement landscape and triaging current reimbursement mechanisms has become critical for a successful market launch of any biotech and pharmaceutical company. A few aspects you should consider early on are the following:
- Do current reimbursement mechanisms provide enough opportunities for the product in development and in line with the value expected by owners and shareholders?
- Will the drug/product be considered an innovative treatment by payers?
- Which pricing benchmarks (external reference pricing) are apt for the product in development?
A recent Deloitte report found that the average cost of developing a new drug among the top 20 global biopharma companies has increased by 15% in the past years to approximately 2.3 billion USD.
Incorporate the pricing and reimbursement strategy early on in development
A recent Deloitte report found that the average cost of developing a new drug among the top 20 global biopharma companies has increased by 15% in the past years to approximately 2.3 billion USD. In the current era with a tough market access environment, big pharma companies dive into pricing, reimbursement, and market access strategies in the preclinical stages of product development to ensure a maximum return on their investment and successful market penetration. Further, as payers and policymakers increasingly scrutinize the cost-effectiveness of the drugs, it is of vital importance to address the pricing and reimbursement challenges early on. Some of the most important topics that you should investigate in the early stages of drug development to formulate the pricing and reimbursement strategy are:
- Which is the addressable patient population in the target indication of choice and how large it is?
- What is the potential value of product in the target indication and achievable pricing?
- Which clinical trial endpoints should be adopted that help in conveying the drug’s value story when negotiating with payers and providers?
“Amazon and Netflix effect”: Payors have started exploring new payment models based on a drug’s value to reflect competitive dynamics and patient needs
Drawing from implementation lessons and successes in other industries, payers, and providers have started to evolve their playbook and now explore dynamic pricing techniques as more novel treatments are being developed. Big pharma is already integrating various dynamic pricing models to improve patient access and it is of vital importance for early-stage biotechs to explore and build pricing assumptions and health economic models early on in their valuations based on QALYs and health outcomes. To stay up to speed, you need to find the answer for these questions:
- What should be the pricing and reimbursement strategy for the product in development?
- What potential challenges may I face in negotiations with payers?
- When should one vet this pricing strategy and start planning for a successful launch?
