How pharmaceutical manufacturers can use global pricing data and advanced analytics for better decisions and a competitor’s edge.

Launching a new drug, while managing ongoing pricing and reimbursement changes, is a complex undertaking. It requires reliable, accessible global pricing data and advanced analytics to help pharmaceutical companies (pharmcos) overcome critical challenges. Accurate, detailed information and knowledge about a competitor’s data can give pharmcos the edge they need to develop effective pricing strategies.

In fact, this level of analysis can benefit pharmcos of any size—including smaller companies—and help them to harness data in a way that maximizes revenue. What’s more, innovative new options enable pharmcos to access the appropriate amount of data for the particular size and scope they require for their product portfolios. This allows them to devise a well-structured response to a competitor’s price change or drug launch.

Pharmcos can utilize advanced global pricing data in a number of ways to optimize their pricing strategies. They can benchmark pricing strategies of competitors, determine pricing trends globally, forecast potential price drops, gain knowledge about the impact of international reference pricing, and easily view standardized data. This helps to ensure efficient cross-country comparisons of pricing, reimbursement, and cost of treatment data.

What’s more, global pricing data can map business development strategies, and aid in the development of new product forecasts for capacity planning, manufacturing, logistics, marketing, sales, and finance. Data also gives pharmcos the ability to submit price validation certificates to government authorities and use in negotiations with health authorities to prevent price leakage. They can also access indirect analysis against other comparators to demonstrate that a new product is better for the market.

Adopting a global pricing solution that generates only the most accurate information is the key to long-term sustainability in today’s market. Without it, projections are based upon prices derived from inaccurate sales reports, which can lead to flawed or misaligned price strategies and potentially significant global revenue loss.

Challenges in the Post-Reform Environment

The pharmaceutical industry is grappling with multiple challenges, such as escalating demand for more sales and effective treatments, as well as scrutiny over the prices of new drugs and biotech therapies. Furthermore, political leaders have recently called on the U.S. Federal Trade Commission (FTC) and U.S. Food and Drug Administration (FDA) to take action against pharmcos that inflate drug prices and keep generics off the market. While price hikes are often linked to investment in new research to develop a better treatment, companies must be careful not to descend into “anti-competitive price gouging,” while grappling with other key challenges, including the entry of biosimilars onto the market, price erosion, international reference pricing, and evolving competitive changes.

Generics vs. Biosimilars

Pharmcos often face the added competition of biosimilars entering the market after a drug’s patent expires. In this case, it is important to have a solution that will empower the company to actively and efficiently analyze trends, and forecast how the market will react when the competing product is launched.

Consider this common scenario: one pharmco launches a generic cancer drug just as two biosimilars are launched by two other companies. To remain competitive in this market, the brand manufacturer is forced to drop its price, resulting in a loss of sales and market share.

Price Erosion

Today, it is more important than ever for pharmcos to optimize their pricing strategy using in-depth analysis of how the global markets work. If two drugs cost approximately the same per patient per year, the result is a price war, as the two companies vie for profits and market share.

Reference Pricing

International reference-pricing is a complicated challenge. Therefore, pharmcos must rely on a map of international reference rules and define the best possible launch order of a new drug.

Take international reference-pricing in Germany. Pharmcos can launch at free price through AMNOG, but must negotiate the reimbursed price after one year. After the prescription-related average doses have been updated, the Central Association of Statutory Health Insurance Funds (SHI) adjusts the reference price. With effect from Jan. 1, 2014, onwards, a seven percent discount on the ex-factory price is granted to SHI. The manufacturer’s rebate applies to patented medicinal products available on prescription only and to which no reference pricing applies.

Germany formally references 20 different countries and others informally, making manufacturers concerned about the impact of pricing across Europe and other regions. If there is a price reduction in Germany, one of the first countries to be impacted is the Netherlands because it reviews prices every six months, followed by Ireland and Austria. Keep in mind that Austria is impacted directly and indirectly by the price change because it benchmarks other countries that also reference Germany.

In France, price depends upon medical assessment ASMR by the Transparency Commission, as well as the price of drugs with the same medical goal (comparator), sales forecast, and the use conditions—expected or real.

Indication-Based Cost of Treatment Analysis

Robust decision-making tools help pharmcos to gain keener insights into treatment costs. By performing a cost-of-treatment analysis, the best treatment for the same disease can be more easily found. Unit price, age, weight, patient compliance, and treatment duration are critical factors in this analysis.

Innovative solutions give pharmcos a cost-of-treatment module that enables them to quickly draw comparisons at an indication level. These tools can also be used to simulate different outcomes by modifying the pre-populated dosing information, and help them to compare cost per year, per cycle, as well as by duration of treatment and the annual cost, including wastage.

Accuracy: The Defining Factor

Spreadsheet analysis does not capture the detail, complexity, and accuracy required to meet today’s challenges. Pharmcos must find the right solution that can empower them to develop effective pricing strategies for new drugs, and manage ongoing pricing and reimbursement changes to maximize revenue.

To identify and partner with a solution that provides the highest quality, most robust global pricing, and reimbursement data on the market, pharmcos should follow this checklist:

Data Coverage:

• Wide range of market availability
• Ranks high in country coverage when benchmarked against the competition
• Complete therapeutic product portfolios

Leading Data Quality Process:

• Local data standardized and categorized for easy cross-country comparison
• Extensive quality control and validation measures to ensure precise datasets
• Reduced time spent manipulating and gathering data, and more time for strategic decision-making

Real-time Data:

• Fresh data with frequent updates and alerts

Flexible Solution:

• Data scope designed to meet customer needs
• Flexible delivery and service options

Exceptional Client Support:

• Dedicated, knowledgeable analysts to handle support and questions

User-Friendly Application:

• Intuitive, easy-to-use application
• One-click report and visualization creation

The solution should also provide a business intelligence tool for creating reports and analysis, with a portal that offers:

• Faster, easier data discovery
• Connection to data in a few clicks
• Interactive dashboards
• Live data connection for up-to-the-minute changes
• Perfect data manipulation with combined multiple data sources in one view
• Mobile and portable analytics for producing reports in minutes—and shared with thousands
• User privilege settings and auditing

Collecting and standardizing data is complex, time-consuming, and costly. To minimize revenue leakage and remain competitive, pharmcos need to turn un-structured global and market access data into a standardized format that can be compared across countries. Finding a solution partner that offers the most accurate and timely data on the market is essential for long-term sustainability. 

About Andrew Hanhauser

Andrew Hanhauser, Manager, Global Pricing and Market Access, Alliance Life Sciences, provides ongoing vision and strategy to transform and streamline data standardization through the use of process and technology. He has lent his expertise in operations, technology, and business strategy to a number of Fortune 500 corporations. Hanhauser is a graduate of The Pennsylvania State University, and Northeastern University where he earned his MBA.  

This article can also be found in the January/February 2016 edition. 

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