Value-Based Pricing

$4,895.00

Value-Based Pricing: Refine Market Access Strategies and Structures to Meet Payer Needs 

The shift from volume- to value-based pricing and reimbursement have created challenges for life science companies. This study explores trends in pricing and reimbursement, most notably value-based contracting.  The insights from this research will empower company experts with the tools to overcome the challenges associated with pricing and reimbursement.  Additionally, the report features ten (10) profiles from individual pricing teams to provide a full picture of how they operate.

Report Details and Features

Value-Based Pricing: Refine Market Access Strategies and Structures to Meet Payer Needs 

Publication Date: December 2017
Pages: 247
Chapters: 4
Metrics: 500+
Charts/Graphics: 170+ 

 The study presents data split by geographic region: 

  • US 
  • Europe/Canada 
  • MENA 
  • Latin America 
  • APAC 

Top Reasons to Read This Value-Based Pricing Report

Discover how successful teams demonstrate product value to payersValue-based pricing is drastically changing pricing and reimbursement.  To adapt to the shift, teams must gather data and other metrics to continue to prove value to payers.  The report specifically discusses the kind of data gathered, how to approach well-informed payers, and the number of pricing studies conducted by Top 10, Top 50 and small company pricing teams each year. 

Identify which teams are involved in pricing activities to adapt to value-based pricing. Pricing teams use a wide range of internal functions to gain the most insights for their pricing strategies.  Value-Based Pricing examines how involving different departments helps to create dynamic product profiles that pricing teams can then use in payer negotiations.  Although no two teams are alike, the report discusses the amount of resources required for a pricing team, which can help determine the level of staffing needed. 

Reduce risk by vetting performance-based contracts with internal legal, compliance and finance groups.  The report discusses strategies to negotiate optimal value-based contracts, from framework conception to the final agreement with the payer. Surveyed participants describe key tactics to avoid unnecessary risks during the negotiation process. Finally, the data provides timelines of contract negotiations, which is especially critical to life science teams that have little to no experience developing and implementing performance-based contracts with payers.

Excerpt: Value-Based Contracts and Negotiations

The following excerpt is from Chapter 3, “Value-Based Contracts and Negotiations. 

Legal and Compliance Team Involvement 

Legal and compliance groups can play major roles in value-based contract negotiations. Teams within a company have different motivations for or against entering into a performance-based agreement. For example, the Company A consultant said that groups overseeing sales operations typically encourage value-based contracting. “People on the sales side think these risk-based contracts are great because they help them sell more,” he explained. 

Individual functions can sometimes look only at the benefits that value-based contracts bring to their teams rather than how they affect the brand or company overall. Legal and compliance teams examine how decisions leave teams vulnerable to new risks in the short and long term. This makes their involvement particularly valuable in risk-based contracts. 

To limit the potential risks, teams ensure that legal and compliance teams monitor and sometimes sign off on value-based agreement discussions. Figure 3.8 shows the average contract negotiation duration and start times for legal and compliance teams. 

  • While one surveyed team (Company 9’s) negotiated a contract for its first-in-class neurology product for two years, surveyed teams on average spend 9.5 months in negotiations. Half of surveyed teams negotiate for only eight months or less.
  • Overall, surveyed teams involve their legal and compliance groups in contract negotiations around the same time (2.6 and 2.7 months after launch). At least one team involved each at the very start of contract negotiations and another as late as one year in.

Examples of companies that have participated in this study:

ph224-participation-list

Table of Contents

Executive Summary

16           About This Report

27           Pricing and Reimbursement: Three Key Findings

33           Pricing Team Structure, Budgets and Staffing

34           Pricing Team Structure

46           Pricing Team Budgets

64           Pricing Team Staffing

88           Outsourcing Pricing Staff

106        Pricing Studies and Team Meetings

107        Optimizing Pricing Studies

133        Pricing Team Meetings

144        Value-Based Contracts and Negotiations

154        Value-Based Contract Negotiations and Timelines

168        Navigating the Challenges of Value-Based Pricing and Reimbursement

197        Pricing Team Profiles

CHARTS AND GRAPHICS

Executive Summary

12           Figure E.1: Exciting Trends in Pricing and Reimbursement

14           Figure E.2: Concerning Trends in Pricing and Reimbursement

16           About This Report

17           Figure E.3: Cutting Edge information Research Methodology

19           Figure E.4: Study Definitions: Team Region

20           Figure E.5: Study Definitions: Company Size

21           Figure E.6: Study Definitions: Product Type

22           Figure E.7: Study Definitions: Product Market Classification

24           Figure E.8: Additional Study Information

26           Figure E.9: Understanding the Graphics

27           Pricing and Reimbursement: Three Key Findings

28           Figure E.10: Teams’ Perceptions of Value-Based Contracting, by Their Recent Experience in a Performance-Based Agreement

30           Figure E.11: Average Impact of External Stakeholders’ Needs on Teams’ Pricing Study Decisions

32           Figure E.12: Functions Involved in Pricing Activities, by Team Region

33           Pricing Team Structure, Budgets and Staffing

34           Pricing Team Structure

35           Figure 1.1: Pricing Team Product Responsibility, by Team Region

35           Figure 1.2: Pricing Team Product Responsibility, by Company Size

36           Figure 1.3: Most Supported Product Type: All Pricing Teams

37           Figure 1.4: Percentage of Pricing Teams with Certain Market Classification Types in Their Product Portfolio: All Teams

38           Figure 1.5: Level of Executive That Heads Pricing Team, by Team Region

39           Figure 1.6: Level of Executive That Heads Pricing Team, by Company Size

41           Figure 1.7: Functions Involved in Pricing Activities, by Team Region

42           Figure 1.8: Functions Involved in Pricing Activities, by Company Size

44           Figure 1.9: Department or Function with Ultimate Responsibility Over Pricing Decisions, by Team Region

45           Figure 1.10: Department or Function with Ultimate Responsibility Over Pricing Decisions, by Company Size

46           Figure 1.11: Average Overall In-House and Outsourced Pricing Budgets, by Year: All Teams

46           Pricing Team Budgets

47           Figure 1.12: Overall Pricing Budgets, by Year: Top 10 Company Teams

48           Figure 1.13: Overall Pricing Budgets, by Year: Top 50 Company Teams

48           Figure 1.14: Overall Pricing Budgets, by Year: Small Company Teams

50           Figure 1.15: Percentage of Pricing Budget Outsourced, by Year: Top 10 Company Teams

51           Figure 1.16: Percentage of Pricing Budget Outsourced, by Year: Top 50 Company Teams

51           Figure 1.17: Percentage of Pricing Budget Outsourced, by Year: Small Company Teams

52           Figure 1.18: Average Percentage of Pricing Budget Dedicated to Pricing Studies, by Year: All Teams

53           Figure 1.19: Percentage of Overall Pricing Budget Dedicated to Pricing Studies, by Year: Top 10 Company Teams

54           Figure 1.20: Pricing Study Budgets, by Year: Top 10 Company Teams

55           Figure 1.21: Percentage of Overall Pricing Budget Dedicated to Pricing Studies, by Year: Top 50 Company Teams

56           Figure 1.22: Pricing Study Budgets, by Year: Top 50 Company Teams

58           Figure 1.23: Percentage of Overall Pricing Budget Dedicated to Pricing Studies, by Year: Small Company Teams

58           Figure 1.24: Pricing Study Budgets, by Year: Small Company Teams

59           Figure 1.25: Average Percentage of Pricing Budget Dedicated to Overhead / Salaries, by Year: All Teams

60           Figure 1.26: Percentage of Overall Pricing Budget Dedicated to Overhead / Salaries, by Year: Top 10 and Top 50 Company Teams

61           Figure 1.27: Overhead / Salaries Pricing Budgets, by Year: Top 50 Company Teams

62           Figure 1.28: Percentage of Overall Pricing Budget Dedicated to Overhead / Salaries, by Year: Small Company Teams

63           Figure 1.29: Overhead / Salaries Pricing Budgets, by Year: Small Company Teams

64           Pricing Team Staffing

65           Figure 1.30: Number of Dedicated Pricing Team FTEs in 2017 and 2018: Top 10 Company Teams

66           Figure 1.32: Number of Dedicated Pricing Team FTEs in 2017 and 2018: Small Company Teams

66           Figure 1.31: Number of Dedicated Pricing Team FTEs in 2017 and 2018: Top 50 Company Teams

67           Figure 1.33: Number of Brand Team FTEs Supporting Pricing in 2017 and 2018: Top 10 Company Teams

68           Figure 1.34: Number of Brand Team FTEs Supporting Pricing in 2017 and 2018: Top 50 Company Teams

68           Figure 1.35: Number of Brand Team FTEs Supporting Pricing in 2017 and 2018: Small Company Teams

69           Figure 1.36: Number of Marketing FTEs Supporting Pricing in 2017 and 2018: Top 10 Company Teams

70           Figure 1.38: Number of Marketing FTEs Supporting Pricing in 2017 and 2018: Small and Device Company Teams

70           Figure 1.37: Number of Marketing FTEs Supporting Pricing in 2017 and 2018: Top 50 Company Teams

72           Figure 1.39: Number of Market Access FTEs Supporting Pricing in 2017 and 2018: Top 10 Company Teams

72           Figure 1.40: Number of Market Access FTEs Supporting Pricing in 2017 and 2018: Top 50 Company Teams

73           Figure 1.41: Number of Market Access FTEs Supporting Pricing in 2017 and 2018: Device and Small Company Teams

74           Figure 1.42: Number of Health Economics / Outcomes Research FTEs Supporting Pricing in 2017 and 2018: Top 10 Company Teams

75           Figure 1.43: Number of Health Economics / Outcomes Research FTEs Supporting Pricing in 2017 and 2018: Top 50 Company Teams

75           Figure 1.44: Number of Health Economics / Outcomes Research FTEs Supporting Pricing in 2017 and 2018: Small and Device Company Teams

76           Figure 1.45: Number of Reimbursement / Managed Markets FTEs Supporting Pricing in 2017 and 2018: Top 10 Company Teams

77           Figure 1.46: Number of Reimbursement / Managed Markets FTEs Supporting Pricing in 2017 and 2018: Top 50 Company Teams

77           Figure 1.47: Number of Reimbursement / Managed Markets FTEs Supporting Pricing in 2017 and 2018: Small Company Teams

78           Figure 1.48: Number of Medical Affairs FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

79           Figure 1.49: Number of Business Development / Alliance Management FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

80           Figure 1.50: Number of Lifecycle Management FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

81           Figure 1.51: Number of Clinical / R&D FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

82           Figure 1.52: Number of New Product Planning FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

83           Figure 1.53: Number of Sales FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

84           Figure 1.54: Number of Market Research / Competitive Intelligence FTEs Supporting Pricing in 2017 and 2018, by Company Size and Region

86           Figure 1.55: Expected Change in Staffing Dedicated to Pricing Activities from 2017 to 2018, by Function

87           Figure 1.56: Average Total Pricing Team FTEs, by Company Size

88           Outsourcing Pricing Staff

89           Figure 1.57: Average Percentage of Pricing Staff Outsourced, by Company Size

89           Figure 1.58: Average Percentage of Pricing Staff Outsourced, by Region

91           Figure 1.59: Percentage of Pricing Teams Outsourcing Each Function, by Team Region

92           Figure 1.60: Percentage of Pricing Teams Outsourcing Each Function, by Company Size

93           Figure 1.61: Outsourcing Dedicated Pricing Staff in 2017

94           Figure 1.62: Outsourcing Brand Team Staff Supporting Pricing in 2017

95           Figure 1.63: Outsourcing Marketing Staff Supporting Pricing in 2017

96           Figure 1.64: Outsourcing Market Access Staff Supporting Pricing in 2017

97           Figure 1.65: Outsourcing Health Economics / Outcomes Research Staff Supporting Pricing in 2017

98           Figure 1.66: Outsourcing Reimbursement / Managed Markets Staff Supporting Pricing in 2017

99           Figure 1.67: Outsourcing Medical Affairs Staff Supporting Pricing in 2017

100        Figure 1.68: Outsourcing Lifecycle Management Staff Supporting Pricing in 2017

101        Figure 1.69: Outsourcing Business Development / Alliance Management Staff Supporting Pricing in 2017

102        Figure 1.70: Outsourcing Clinical / R&D Staff Supporting Pricing in 2017

103        Figure 1.71: Outsourcing New Product Planning Staff Supporting Pricing in 2017

104        Figure 1.72: Outsourcing Sales Staff Supporting Pricing in 2017

105        Figure 1.73: Outsourcing Market Research / Competitive Intelligence Staff Supporting Pricing in 2017

106        Pricing Studies and Team Meetings

107        Optimizing Pricing Studies

108        Figure 2.1: Average Cost Per Pricing Study in 2016: Global Teams

109        Figure 2.2: Average Cost Per Pricing Study in 2016: US Teams

109        Figure 2.3: Average Cost Per Pricing Study in 2016: EU & Can. Teams

111        Figure 2.4: Types of Payers That Impact Teams’ Pricing Study Decisions, by Team Region

112        Figure 2.5: Non-Payer Stakeholders That Impact Pricing Study Decisions, by Team Region

114        Figure 2.6: Average Perceived Impact of Payers’ Needs on Life Science Teams’ Pricing Study Decisions

114        Figure 2.7: Average Perceived Impact of Non-Payer Stakeholders’ Needs on Life Science Teams’ Pricing Study Decisions

117        Figure 2.8: Types of Data Gathered in Pricing Studies: All Teams

119        Figure 2.9: Percentage of Teams Gathering Specific Data in Pricing Studies, by Region

126        Figure 2.10: Average Number of Pricing Studies Conducted Annually, by Company Size

127        Figure 2.11: Average Number of Pricing Studies Conducted Annually, by Region

129        Figure 2.12: Average Number of Pricing Studies Conducted Annually, by Data Type: All Teams

131        Figure 2.13: Average Percentage of Pricing Studies Collecting Each Type of Data: Global Teams

131        Figure 2.14: Average Percentage of Pricing Studies Collecting Each Type of Data: US Teams

132        Figure 2.15: Average Percentage of Pricing Studies Collecting Each Type of Data: EU & Can. Teams

133        Pricing Team Meetings

135        Figure 2.16: Events That Cause Pricing Teams to Meet: All Teams

137        Figure 2.17: Events That Cause Pricing Teams to Meet, by Team Region

139        Figure 2.18: Events That Cause Pricing Teams to Meet, by Company Size

140        Figure 2.19: Average Number of Formal Pricing Team Meetings During Product Launch Window: All Teams

141         Figure 2.20: Average Number of Formal Pricing Team Meetings During Product Launch Window, by Region

142        Figure 2.21: Average Number of Formal Pricing Team Meetings During Product Launch Window, by Company Size

143        Figure 2.22: Average Number of Formal Pricing Team Meetings During Product Launch Window, by Most Supported Product Type

144        Value-Based Contracts and Negotiations

146        Figure 3.1: Percentage of Teams Entering into Value-Based Contracts, by Year and Team Region

148        Figure 3.2: Percentage of Teams Entering into Value-Based Contracts, by Year and Company Size

152         Figure 3.3: Average Percentage of Global Teams’ Payers Entering into Value-Based Contracts, by Year

152        Figure 3.4: Average Percentage of US Teams’ Payers Entering into Value-Based Contracts, by Year

153        Figure 3.5: Average Percentage of EU & Can. Teams’ Payers Entering into Value-Based Contracts, by Year

153        Figure 3.6: Average Percentage of Lat. Am., MENA and APAC Teams’ Payers Entering into Value-Based Contracts, by Year

154        Value-Based Contract Negotiations and Timelines

156        Figure 3.7: Value-Based Contract Negotiation Start and End, by Market Classification

158        Figure 3.8: Average Duration of Value-Based Contract Negotiations and Team Involvement Start Times

160        Figure 3.9: Value-Based Contract Negotiation Duration and Start of Legal and Compliance Team Involvement, by Therapeutic Area and Product Market Classification

161        Figure 3.10: Value-Based Contract Negotiation Duration and Start of Legal and Compliance Team Involvement for Oncology Products

163        Figure 3.11: Positions Responsible for Delivering Value Dossiers During Value-Based Contract Negotiations

164        Figure 3.12: Methods Used to Deliver Value Dossiers in Value-Based Contract Negotiations

165        Figure 3.13: Average Length of Meetings to Deliver Value Dossiers to External Stakeholders, by Company Size and Team Region

167        Figure 3.15: Negotiated Duration of Value-Based Contracts for Oncology Products, by Product Market Classification

167        Figure 3.14: Negotiated Duration of Value-Based Contracts, by Therapeutic Area and Product Market Classification

168        Navigating the Challenges of Value-Based Pricing and Reimbursement

170        Figure 3.16: Average Difficulty of Getting Product Effectiveness Data for Contract Negotiation, by Region

171        Figure 3.17: Average Difficulty of Getting Product Effectiveness Data for Contract Negotiation, by Company Size

174        Figure 3.18: Average Difficulty of Agreeing on the Right Patient Outcome to Measure Product Value, by Region

175        Figure 3.19: Average Difficulty of Agreeing on the Right Patient Outcome to Measure Product Value, by Company Size

176        Figure 3.20: Average Difficulty of Getting Approval from the Company’s Legal and Compliance Teams, by Region

177        Figure 3.21: Average Difficulty of Getting Approval from the Company’s Legal and Compliance Teams, by Company Size

179        Figure 3.22: Average Difficulty of Determining Who Will Be Responsible for Measuring Product Value / Outcomes, by Region

180        Figure 3.23: Average Difficulty of Determining Who Will Be Responsible for Measuring Product Value / Outcomes, by Company Size

182        Figure 3.24: Average Difficulty of Getting Data to Measure Product Value / Outcomes, by Region

183        Figure 3.25: Average Difficulty of Getting Data to Measure Product Value / Outcomes, by Company Size

184        Figure 3.26: Views on Value-Based Pricing and Reimbursement: All Teams

186        Figure 3.27: Views on Value-Based Pricing and Reimbursement, by Region

187        Figure 3.28: Teams’ Perceptions of Value-Based Contracting, by Their Recent Experience in a Performance-Based Agreement

189        Figure 3.29: Views on Value-Based Pricing and Reimbursement, by Company Size

191        Figure 3.30: Percentage of Teams That See Value-Based Pricing and Reimbursement as a Benefit Overall

194        Figure 3.31: Percentage of Teams That See Value-Based Pricing and Reimbursement as a Threat Overall

196        Figure 3.32: Best Practices to Adapt to Value-Based Pricing and Reimbursement

197        Pricing Team Profiles

199        Figure 1.4.1: Company 6: Background

200        Figure 1.4.2: Company 6: Resources

201        Figure 1.4.3: Company 6: Salaries, Overhead and Pricing Studies Budgets

202        Figure 1.4.4: Company 6: Pricing Studies and Team Meetings

204         Figure 1.4.5: Company 8: Background

205        Figure 1.4.6: Company 8: Resources

206        Figure 1.4.7: Company 8: Salaries, Overhead and Pricing Studies Budgets

207        Figure 1.4.8: Company 8: Pricing Studies and Team Meetings

209        Figure 1.4.9: Company 17: Background

210        Figure 1.4.10: Company 17: Resources

211        Figure 1.4.11: Company 17: Salaries, Overhead and Pricing Studies Budgets

212        Figure 1.4.12: Company 17: Pricing Studies and Team Meetings

214        Figure 1.4.13: Company 22: Background

215        Figure 1.4.14: Company 22: Resources

216        Figure 1.4.15: Company 22: Salaries, Overhead and Pricing Studies Budgets

217        Figure 1.4.16: Company 22: Pricing Studies and Team Meetings

219        Figure 1.4.17: Company 26: Background

220        Figure 1.4.18: Company 26: Resources

221        Figure 1.4.19: Company 26: Salaries, Overhead and Pricing Studies Budgets

222        Figure 1.4.20: Company 26: Pricing Studies and Team Meetings

224        Figure 1.4.21: Company 30: Background

225        Figure 1.4.22: Company 30: Resources

226        Figure 1.4.23: Company 30: Salaries, Overhead and Pricing Studies Budgets

227        Figure 1.4.24: Company 30: Pricing Studies and Team Meetings

229        Figure 1.4.25: Company 33: Background

230        Figure 1.4.26: Company 33: Resources

231        Figure 1.4.27: Company 33: Salaries, Overhead and Pricing Studies Budgets

232        Figure 1.4.28: Company 33: Pricing Studies and Team Meetings

234        Figure 1.4.29: Company 47: Background

235        Figure 1.4.30: Company 47: Resources

236        Figure 1.4.31: Company 47: Salaries, Overhead and Pricing Studies Budgets

237        Figure 1.4.32: Company 47: Pricing Studies and Team Meetings

239        Figure 1.4.33: Company 50: Background

240        Figure 1.4.34: Company 50: Resources

241        Figure 1.4.35: Company 50: Salaries, Overhead and Pricing Studies Budgets

242        Figure 1.4.36: Company 50: Pricing Studies and Team Meetings

244        Figure 1.4.37: Company 56: Background

245        Figure 1.4.38: Company 56: Resources

246        Figure 1.4.39: Company 56: Salaries, Overhead and Pricing Studies Budgets

247        Figure 1.4.40: Company 56: Pricing Studies and Team Meetings