IM Presentation-PRICING STRATEGY (Revised)
IM Presentation-PRICING STRATEGY (Revised)
IM Presentation-PRICING STRATEGY (Revised)
Product’s Competitor’s
Clinical Clinical Attributes
Approval, Pricing and
Attributes
Reimbursement
• Product Positioning
• Segmentation analysis
Generics New Products and
• Optimal Pricing Strategy Indications
How will they • Negotiating Reimbursement
What will
affect the • Cost effectiveness competitive
market? • Parallel trade effect landscape look like?
GLOBAL
OPTIMAL Parallel Trade Health outcomes
In the Us, public views Pharmaceutical industry as one of the central problems for the
affordability crisis.
The one-dimensional historical pricing strategy is driven by what is possible rather than what
is reasonable.
Current pricing strategies create conflicts between the companies and other healthcare
stakeholders.
Due to an evidentiary divide, many products enter the market with a value gap.
CURRENT APPROACH
Companies with the Unit Based Pricing model have established a public, unit-based price list
and the negotiate the price by a market by market, specific undisclosed discounts based on
in-country regulations.
Two benefits-
- Relatively Easier to implement
- it preserves pricing flexibility
PRICING PRESSURE
The payers in the United States are imposing high pressure on Bio-
pharma Companies to reform the pricing strategies.
In this environment, steep discounts and aggressive rebating strategies
to establish market access have become the norm.
Ex- the near-simultaneous launch of PCSK-9 inhibitors in 2015-
delayed the coverage decisions of payers, until both products were
approved.
Modelling by EY suggests that even as biopharma companies deliver on
their R&D, payer restrictions could eliminate $100 billion in newly
launched and existing product revenues.
THE IMPACT OF PRODUCT VALUE
A critical challenge while establishing the pricing strategy is that there is no single arbiter of
product value.
The Healthcare stakeholders define value differently.
EUROPEAN AND UNITED STATES
VALUE DRIVERS IN THIS FEE-FOR-VALUE WORLD
Pricing approaches of the future will require companies to work with other stakeholders,
especially payers, to co-create data that bridge the value gap
companies serious about innovative pricing strategies must also rethink their organizational
structures to establish closer relationships between the product development and
commercial strategy teams.
INNOVATIVE PRICING
CASE STUDY: ENTRESTO BY NOVARTIS
To accurately determine a product’s pricing flexibility at launch, a company must first assess a
number of attributes that are both market and product-specific.
Different factors play a role in the degree of flexibility a company will have when launching a
product.
MARKET- AND
PRODUCT-
SPECIFIC
ATTRIBUTES
DETERMINE
PRICING
FLEXIBILITY
ASSESSING
PRICING
FLEXIBILITY
2. CONFIRMING THE PRICING ANALYSIS
The second step in any pricing decision is to refine the analysis relative to the list prices of
currently available products.
These list prices act as price anchors, defining the value of new entrants in the market. in
therapeutic areas that are already heavily genericized, companies must determine if the
outcomes data they have are sufficient to enable reimbursement, and thus market share
gains, given the existence of much cheaper therapeutic options.
For instance, consider a new high-cost, but potentially high-impact product that is
launching into a heavily genericized space, where there are “good enough”
alternatives.
THE ENTRESTO EXAMPLE AGAIN
Novartis’ decision to pursue an innovative pricing strategy for Entresto provides important
real-world context in this regard. Although the drug is first in class, its direct competitors
include much cheaper angiotensin converting enzyme inhibitors that provide “good enough”
treatment for some percentage of CHF patients. But if Novartis is able to replicate in the
real world the clinical trial data showing Entresto reduces expensive cardiac events, the
downstream cost savings associated with reduced hospitalizations would offset its up-front
price tag. This scenario makes the drug a good candidate for a novel pricing strategy.
AN ADDED BONUS: The endpoint defining an improved outcome – reduced
hospitalizations – could be easily measured using payers’ existing IT systems.)
3. TIE PRICING TO COMMERCIAL STRATEGY
The final step when articulating a product’s price is to link this decision to the overall
business strategy, including the potential effect on the uptake of other products in the
portfolio.
For instance, the greater a product’s importance to a company’s overall portfolio, the greater
the pressure to accelerate that product’s market share and close the value gap quickly.
In addition, it is important that companies harmonize individual pricing decisions across the
portfolio to create a coordinated commercial strategy.
CONCLUSION
Novartis Strategy:
• In spite of these setbacks on the IPR and pricing front, Novartis continued to launch new products in India to meet
unmet medical need.
• Novartis launched its blockbuster diabetes drug Galvus, at a significant lower price.
• The patient access programme for Glivec, through which more than 17,000 patients who are on Glivec continue to
receive the drug free of charge i.e. more than 90 per cent of patients with chronic myeloid leukaemia(CML) who are
prescribed Glivec get it free
LEARNING FROM THE COMPANY: BAYER
• Natco filed an application with Bayer for the voluntary license of the drug
• On denial, Natco filed an application in the Controller of Patents for Grant of
compulsory license.
• Price difference: Price of drug at the time of decision was Rs. 2,80,248 per
month as compared to generic price drug of Rs. 8800/- per month of Natco.
• Outcome: No bottles of Nexavar were imported in India during the year
2008-2010.
Strategy by Bayer:
• The decision is likely to have little immediate financial impact on Bayer and Onyx, because so little Nexavar is being sold
in India.
• Global sales of the drug in 2011 were 725 million euros, or about $950 million.
• With sales growth slowing in the United States and Western Europe, drug companies have started looking to emerging
markets like India as sources of growth.
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