Across international pharmaceutical markets, the criteria used to assess the value of new therapies in relation to standards of care vary markedly and are changing rapidly, reflecting the evolving priorities and growing influence of national and regional payers.
In the United Kingdom, a value-based pricing scheme will be introduced in 2014 to augment NICE’s cost-effectiveness assessment approach. In Germany, pharmaceutical manufacturers face newly stringent criteria for evaluating a new therapy’s benefits and for achieving market access and price premiums as a result of “AMNOG” health care policy reform.
Manufacturers must be able to determine a payer’s response to the introduction of a new therapy to a new market by studying responses in mature and emerging markets. This includes identifying specific drivers of value and quantifying the trade-offs payers make between access to sub-populations and patients with specific indications or conditions, and the prices allowable to gain marketing authorization. The impact of pricing on access varies significantly by country and under different patient coverage assumptions. Modeling the expected access of a specific product as a function of net price per day, for example, reveals significant disparities between established markets and emerging ones such as China and Brazil.
Innovative market access schemes, including risk-sharing and outcomes-based arrangements, are increasingly common as new therapies seek market access. For example, in Italy such arrangements have been necessary for many therapies to gain market authorization. The process for evaluating options for access arrangements assesses risk exposure and the potential financial benefit to payers; primary research is also useful for testing the impact of different approaches.
In addition, pricing and launch sequencing decisions can benefit from the use of modeling to address the complexities of international reference pricing, to understand the sometimes disproportionate or unintended impact a pricing change in one country can have on prices in other markets.
Emerging markets are expected to account for nearly three-quarters of new growth in the pharmaceutical industry in the coming years. Vice President
Christian Frois discusses how market access and pricing decisions will drive success in these geographies.
Vice President Christian Frois
Dr. Frois: Low per-capita income and rapid population growth, limited reimbursement options dominated by local governments, and well-established local generic competition – all can exert immense pressure on manufacturers to discount prices at the local level. Many firms also lack the infrastructure, processes, tools, and training needed to help local affiliates and their regional counterparts meet these challenges.
Dr. Frois: You need a solid understanding of what local payers’ needs and priorities are – in a recent BRIC-focused pricing engagement, for example, we captured insights for the client company on how its drugs are purchased, who the relevant local stakeholders are, and what leverage points would optimize pricing. A key objective should be to help local teams enhance the value proposition of their products, enabling price adjustments only as a last resort, and only through well-established processes.
Many drug companies have tried to minimize price differences between developed and emerging markets. They haven’t always focused enough on helping local teams to articulate a product value proposition that will resonate with local payers facing significant affordability challenges to expand drug coverage among their population.
Dr. Frois: First, avoid excessive price erosion. Don’t expand internationally without first providing adequate support for local teams facing competition from generics or biosimilars.
Second, compete smartly – you can, for example, use tender specifications to differentiate and refine your offerings, achieve higher prices, and maximize access and use. Recently, in helping a company optimize its tender pricing operations across its entire portfolio and most of its ex-U.S. business, we provided processes and tools for the client’s global, regional, and local teams to track, assess, and learn from past and current tender offers.
In emerging markets, cash customers frequently account for most of a brand’s performance. Price differentiation and tier pricing will play a key role in maximizing net sales potential for this customer base.
Develop real collaborations with affiliates. Genuine and sustained efforts by global management to provide tools, processes, and insights tailored for local use can really improve the dynamic. ■
From Health Care Bulletin: Fall 2013