Pharmaceutical Pricing Strategy (PH185)

Developing Teams to Calculate and Communicate Product Value
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  • Build Efficient Pricing Teams to Compete in a Global Market

     

    Today’s pharmaceutical marketplace is continuously changing — and pricing teams face a more complex environment than ever before.  Companies must embrace strategic product pricing’s growing importance to contend with increasing globalization and regulatory scrutiny worldwide.  To best manage the pricing challenges — including increasing austerity measures, under-developed emerging market infrastructure and a greater emphasis on pharmacoeconomics — companies are turning to integrated strategic pricing teams.  Health economics, comparative effectiveness research and market access come together with the pricing function to support efforts throughout the product lifecycle.

    This report examines pricing strategy and teams across the pharmaceutical industry at the global and national level.  Research examines dedicated pricing team structures, staffing and resources alongside the other internal functions that contribute to strategic pricing decisions.  Use this report to optimize pharmaceutical pricing efforts and overcome market access challenges:

     

    Structure pricing teams to manage a changing marketplace and increasingly complex regulatory guidelines.

    Form dedicated groups able to begin pricing work during early product development.  Navigate an increasingly global and competitive market through advance planning and integrated pricing strategy creation.

     

    Assess pricing team priorities and measure market access involvement in pricing decisions.

    Leverage departments companywide — from clinical and R&D to market access to sales teams — to support pricing efforts.  Prioritize new products based on development and categorization — blockbuster v. niche products or innovative v. follow-on products.

     

    Embrace outcomes research to highlight product value.

    Grow pricing team resources to match the importance of comparative effectiveness research. Prepare to meet payers with more data supporting products’ pricing decisions.

     

     

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  • Pharmaceutical Pricing Strategy Metrics

     

    Chapter 1: Prioritizing Staffing and Budgets for Pricing Team Success

     

    Chapter Benefits:

    • Determine how to prioritize pricing efforts across portfolios using blockbuster v. niche or innovative v. me-too categories.
    • Establish dedicated pricing teams to allow for closer integration with health economics and other market access groups in pricing decisions.
    • Initiate early-phase pricing involvement to attain more accurate pricing assessments and drive pricing success.
    • Focus resources on major markets, but be aware of revenue opportunities in emerging markets such as BRIC countries, Latin America and Africa.
    • Funding for pricing teams increasingly comes from marketing, brand teams and dedicated budgets.

     

    53 graphics detailing companies’ strategic pricing efforts, as well as dedicated pricing team structure and staffing. Data are, where applicable, broken out by company type (Top 10, Top 50, small and medical device):

    • Average ratings of pricing success for all companies and broken out by company type
    • Prioritization method (blockbuster v. niche products or innovative v. me-too products) of pricing resources for all companies and broken out by company type
    • Prioritization of pricing resources by geographic focus
    • Difference in pricing resource prioritization from 2011 to 2013
    • Existence of dedicated pricing teams for all companies
    • Age of dedicated pricing functions for global and national-level teams
    • Department with oversight of dedicated pricing teams
    • Level of executive leading pricing team functions
    • Assignment of pricing functions (by therapeutic area, brand, developmental stage or geographic region) for all companies and by company type
    • Departments involved in strategic pricing decisions for all companies, global and national-level pricing teams
    • Average number of pricing teams by company type
    • Total number FTEs for pricing functions within entire company for global pricing teams and national-level teams in the US, EU and emerging markets
    • Dedicated pricing function FTEs for global pricing teams and teams based in the US, EU and emerging markets
    • FTE support by product development phase for all company types for innovative and follow-on products and for blockbuster and niche products
    • Average level of personnel allocation by country for all companies and broken out by company type
    • 2011 and 2012 budgets for dedicated pricing teams by team type (global and national-level) broken out by company types
    • Average change in pricing function budgets from 2011 to 2012 for all companies
    • Departments contributing to pricing team funding for all companies and broken out by company type
    • Percentage of budget dedicated to specific geographic regions for all companies and broken out by company type
    • Percentage of companies outsourcing pricing functions
    • Level of outsourcing for global and national-level pricing teams by activity

     

    Chapter 2: Aligning Team Involvement in Pricing with Purpose and Focus of Studies

     

    Chapter Benefits:

    • Involve teams during the development stage when they have the most product knowledge and expertise.
    • Consider product attributes and study audiences to determine the pricing study’s focus.
    • Plan pricing strategy early, but be aware of marketplace and regulatory changes.
    • Ensure that prices reflect the degree to which products meet patient needs.
    • Use pricing studies to determine how different prices impact all groups — payers, physicians and patients — involved in buying medication.

     

    71 graphics detailing pricing team and related groups’ involvement in strategic pricing decisions as well pricing studies performed to support team efforts.  Data are, where applicable, broken out by company type (Top 10, Top 50, small and medical device):

    • Earliest and latest development phase for specific team involvement in pricing decisions:
      • Dedicated pricing teams
      • Business development
      • Clinical/R&D
      • Brand team
      • Health economics
      • Lifecycle management
      • Managed markets
      • Market access
      • Market research
      • Marketing
      • Medical affairs
      • New product planning
      • Sales
    • Average involvement by development phase among companies using specific teams for pricing decisions:
      • Dedicated pricing teams
      • Business development
      • Clinical/R&D
      • Brand team
      • Health economics
      • Lifecycle management
      • Managed markets
      • Market access
      • Market research
      • Marketing
      • Medical affairs
      • New product planning
      • Sales

     

    • Events triggering a pricing study for all companies and by company type
    • Focus of pricing studies for all companies and by company type
    • Number of pricing studies completed by developmental stage for innovative and follow-on products, by company:
      • Pre-Clinical
      • Phase 1
      • Phase 2
      • Phase 3
      • Registration
      • First year after product launch
      • Second year after product launch
    • Number of pricing studies by developmental stage for blockbuster and niche products, by company:
      • Pre-Clinical
      • Phase 1
      • Phase 2
      • Phase 3
      • Registration
      • First year after product launch
      • Second year after product launch
    • Duration of pricing studies by company for global pricing teams and teams in the US, EU and emerging markets
    • Cost of pricing studies by company for global pricing teams and teams in the US, EU and emerging markets

     

    Chapter 3: Navigating Pricing Challenges, Trends and Emerging Markets

     

    Chapter Benefits:

    • Prepare pricing teams to take on an increasingly global market with growing regulatory scrutiny and government price cuts.
    • Weigh the challenges and trends facing pricing teams industrywide — at all company types and at the global and national levels:
        • Assess how companies operating in the US react to the US healthcare reform.
        • Emphasize outcomes data to support strong pharmaceutical products.
        • Be aware of competitor product prices and gather data to defend product reimbursement.
        • Consider the impact of reference pricing when planning for global or multimarket product launches.
        • Know the stakes of risk sharing agreements in reimbursement efforts.
    • Gauge opinions industrywide on major emerging markets (BRIC countries) and smaller markets (Latin America, Africa and the Middle East).
        • Evaluate parallel trade’s impact on pricing efforts in emerging markets.
    • Equip pricing teams with global skillsets to prepare for future efforts.

     

    29 graphics detailing the challenges and trends facing both global and national-level pricing teams:

    • Overall company, national-level and global pricing team perspectives on key strategic pricing challenges:
          • US healthcare reform
          • Outcomes research data
          • Reference pricing
          • Government price cuts
          • NICE in the UK
    • Companies' views of trends facing pricing teams:
        • Parallel trade in developed markets
        • Comparative effectiveness research
        • Experience with risk sharing agreements
    • Companies' pricing outlook in emerging markets:
        • Brazil
        • Russia
        • India
        • China
    • Company ratings of emerging markets challenges:
        • Parallel trade within emerging markets
        • Parallel trade from outside of emerging markets
        • Local regulatory and market access restrictions
        • Finding local launch partners
        • Local competition
        • Compulsory licensing of generics
        • Effective use of differential pricing

     

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  • Pharmaceutical Pricing Strategy Report Sample

     

    Understand How Product Prioritization Impacts Pricing

    Previous Cutting Edge Information pricing function research covered the different ways of prioritizing pricing resources. The two dominant categorization methods in the industry over the past decade have been innovative versus me-too products and blockbuster versus follow-on products. Understanding how this decision — made very early in the product’s lifecycle — will impact the product development is key.

    In some cases, the target market plays a major role in which method is used. As seen in Figure E.1 [Figure available in full report], among surveyed companies, 67% of EU-based pricing teams use innovative versus me-too comparisons when prioritizing pricing products. This distribution reflects the well-established preference in European markets for innovative products that show a clear advantage over existing alternative treatments. Similarly, in the US, 61% of surveyed companies use blockbuster versus niche product differentiation either exclusively or in tandem with innovative versus me-too product comparisons. The US, both in terms of the industry and the overall market environment, has long been focused on creating and selling the biggest blockbuster products possible.

    The era of blockbuster drugs is coming to an end. As a result, many companies are shifting to the more current innovative versus me-too product differentiation. Today’s market is saturated with the blockbusters of previous years, but the remaining areas of potential focus for a blockbuster are increasingly narrow. However, looking at products from the perspective of their innovation level can add a different dimension to an entire product portfolio. Understanding the premium that governments and private groups will pay for innovative but niche products is very important in today’s market environment.

     

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