The Intersection of Pricing, Reimbursement, and Market Access Strategies

Bringing a new drug to market requires a comprehensive understanding of the strategies necessary for a successful launch. Without a complete view of these strategies, successfully launching a drug is nearly impossible.

The right pricing and product positioning go a long way in properly communicating value, whether you’re reaching for markets with single-payer systems or universal coverage. In this article, we will discuss pharma pricing, market access, and reimbursement strategies in modern markets, and how these pieces fit together in a comprehensive go-to-market strategy.

Pharma Pricing Strategy

Pharma pricing strategies are continually evolving to meet the needs of a dynamic market landscape. Between stringent regulatory requirements across global markets and the increasing need for innovation and clinical evidence to stand out from the competitive landscape, the total cost to bring a drug to market is rising. 

But the resulting discoveries, including treatments for serious global health concerns, are driving demand at breakneck speed. These dual factors force companies to balance competing priorities when pricing pharmaceuticals to ensure a healthy return on investment without pricing themselves out of the markets of core demographics.

At the same time, COVID-19’s impact on both the medical infrastructure and global supply chains for raw materials and processing machinery is throwing the market into constant flux. The economic upheaval is affecting what consumers are demanding and what they can afford, while also changing the risks companies feel they can take.

A third development that may potentially affect pricing strategies is an international price index. While international price referencing is used across many nations today as a price control tool, recent proposals to introduce some form of pharmaceutical price benchmarking to U.S. Medicare programs would dramatically shift price sensitivity expectations globally.

These types of new price controls for physician-administered drugs could soon be established by regulatory bodies which would further limit pharmaceutical profit potential. Such restrictions would drive down list prices for wholesale purchases, and while they may increase demand and access in new markets, they could also drastically decrease revenue for pharmaceutical companies.

To navigate the evolving landscape, pharmaceutical companies are using different pricing strategies for different products. These strategies take into account market segmentation, competitors, the usage patterns for the product, and more. Some of the most common pricing models are:

• Volume-based discounts: The net price per unit of a product is tied to the total volume purchased.  This is most common for products traditionally purchased in bulk quantities.
• Indication-specific pricing: This is common for monoclonal antibodies sold around the world at indication-specific pricing, though limitations currently exist for variable pricing of singular brands across indications.
• Mortgage models: This is commonly reserved for treatments without competitors. It allows the cost of very expensive treatments or therapies to be spread out.
• Health outcome models: These models allow for partial or full refunds if the product doesn’t perform as predicted.
• Financial risk-based models: This model is popular in European markets where a centralized payer system is the largest purchaser of pharmaceutical goods. The purchaser can receive a partial or full refund if the drug does not perform at an agreed-upon level, such as if the drug is more costly than the previous or an alternative treatment.

Pharma Reimbursement Strategy

Most pricing strategies, especially in the United States and Europe, must take into account reimbursement strategies. While manufacturers are often free to set the list price of pharmaceuticals — at least during the first year on the market — major distributors and purchasers can negotiate the net reimbursed price.

While the exact review process will vary across markets, many nations will conduct some form of health-technology assessment (HTA) to evaluate the clinical and cost-effectiveness of new treatments and inform subsequent price negotiations.  

Examples of HTA review bodies and reimbursement decision-makers include: 

• UK: NICE and the Clinical Commissioning Groups (CCGs)
• France: Transparency Commission (TC) and CEPS
• Germany: G-BA and sick funds
• Italy: AIFA and the regional health authorities
• Spain: AEMPS, the Ministry of Health, and the autonomous regions
• Canada: CADTH and the PMPRB
• Japan: Ministry of Health, Labor, and Welfare (MHLW), PMDA, and Chuikyo

Once a product has gained market authorization for an eligible patient population, manufacturers will negotiate the reimbursement level for the treatment including any associated conditions for reimbursement such as target health outcomes.

Markets without a single-payer system, such as the United States, may have more regionalized reimbursement strategies or may turn to other pricing models. Individual insurance payers, hospitals, and health care providers may negotiate custom prices based on competitors, the health outcomes relative to the cost of treatment, and other factors that allow both parties to come to an agreement.

Regardless of the healthcare system and size of purchasers in your preferred markets, considering reimbursement strategies is an essential step in creating the right pricing strategy for any new product.

The Impacts of COVID-19

In the wake of the COVID-19 pandemic, government health organizations significantly increased their healthcare budgets to procure vaccines and ensure their citizens had access to treatment. However, because of the drastic rise in healthcare spending, governments are already facing pressure to reduce future expenditures.

While the shift to value-based care was a growing trend before the pandemic, the focus on cost control and tight budgetary goals will only increase during purchasing decisions moving forward.

COVID-19 vaccines themselves could also face decentralized funding and purchases in the future. If the virus becomes endemic like influenza, the vaccine will be downgraded from receiving emergency funding to general immunization budgets.

Pharma Market Access Strategy

All of these factors complicate pricing, both upon product release and in the years following. However, marketing a new product at exactly the right price is essential for securing contracts and driving uptake.

This is especially vital in the United States, where patients and doctors have more flexibility regarding the treatments they advocate for or purchase. A successful market access strategy ensures your products are accessible to purchasers at the right time and with the right messaging.

Ultimately, pharmaceutical companies need to carefully consider overall pricing models before selecting the initial price tag in order to successfully access the correct markets.

A Comprehensive GTM Strategy

Every go-to-market strategy relies on a successful pricing, market access, and reimbursement strategy. Roadblocks in any of these three areas could prevent access to critical target populations or, in countries with single-payer systems, entire markets. With COVID-19 continuing to evolve and upset the market, previously successful strategies may not be enough to meet the new needs of overstretched purchasers. That’s why it’s important to partner with product-to-market experts who analyze new strategies as they develop in 2021.

Partner With Acquis Consulting to Optimize Your Strategy

At Acquis Consulting, we work with each of our clients to analyze the strength and marketability of new pharmaceutical products. We forecast results based on different pricing, reimbursement, and market access strategies so you can determine the right roadmap for your own organization. Contact us today to learn more about our services or schedule a consultation.