Pharmaceutical and life sciences leaders are rethinking their drug pricing strategies as new regulations, drug assessment tools and demands alter the market for medicines. Launching new drugs at prices below established competitors’ rates is becoming more common but is not widespread. Several companies have also launched lower-cost versions of patent-protected products, or authorized generics with reduced prices, often in response to public pressure. Launching separate, lower-cost versions of products may not be a sustainable strategy for most products. However, companies facing pricing pressure on late-stage pipeline candidates or products launching against similar, competing therapies may increasingly consider new pricing options or commitments.
Outside the US, key global regulators and cross-market collaborative bodies have deployed new cost effectiveness assessments to help determine price benchmarks and joint reimbursement rates for innovative therapies. A robust biosimilars market has developed in Europe, providing a lower-cost option for many specialty drugs.
Biopharmaceutical executives making drug pricing decisions for products sold across the globe—from the time of launch to the end of a product’s patent life and beyond—are increasingly challenged to create a pricing strategy that sufficiently rewards innovation and reinvestment in science and discovery while ensuring patients can get access to pharmaceutical treatments. Market changes in the US and globally are pushing biopharmaceutical companies to make organizational changes and beef up their data strategies in support of product value.
Meanwhile, biopharmaceutical companies are producing novel and previously unimaginable treatments and cures for devastating diseases. Specialty drugs targeting orphan diseases (diseases that affect fewer than 200,000 people nationwide) and an array of cancer types, for example, are rapidly entering the market. In 2018, the US Food and Drug Administration (FDA) approved 59 novel new drugs; 34 of those drug approvals—more than half—are indicated for rare diseases. These products enter the market priced to reflect their novel attributes and innovation. Paying for these products, however, can strain health care budgets and lead to barriers to medication access, especially for patients with multiple health conditions.
Ninety percent of global biopharmaceutical executives surveyed by HRI said the health care system will be challenged to afford the next wave of innovative medicines unless there are fundamental changes to drug evaluation and payment models. Drugmakers should craft pricing strategies that anticipate these changes and work with payers to establish pricing models that fit the needs of new products.