Reimbursement and Pricing Strategy
Pricing considerations influence almost every decision. Prior to launching a novel oncology drug for the first of four indications, our client required a clear strategy to optimize the initial launch price.
Situation
- Health Advances’ client was conducting multiple Phase II trials with a highly novel oncology therapeutic for several tumor types.
- The two lead indications offered quite different pricing dynamics due to the patient population, unmet need, pricing of existing agents and other treatment approaches.
- Their challenge was to decide whether to price for the first indication with a high price and smaller population or the second, larger indication at a more modest price.
Critical Questions to Address
- How would price elasticity differ across the specific indications?
- Would emergence of novel competitive products change the treatment paradigm?
- Would potential changes in the reimbursement environment for oncology drugs significantly affect pricing and positioning as the label expanded?
- At what price should the client launch the product for the initial indication?
Health Advances Approach
- Documented and compared the leading oncology therapeutics using common metrics, including price per year, per course of therapy, per dose and per milligram.
- Conducted a regression analysis on price versus several variables to identify correlations with efficacy.
- Completed an extensive set of interviews with oncologists, payers and hospital formulary officials to map out perceptions of unmet need, demand drivers for the new therapy and the influence of price.
- Created a scenario-based model to help our client evaluate pricing tradeoffs for the first two indications reflecting clinical trial and marketplace shifts, affecting the probability and timing of drug approval.
Results
- Recommended a price justified by our sensitivity analysis around a range of development and market-based assumptions.
- Delivered to the client our model so they could perform real-time modifications as the clinical trial program moved forward.
- Influenced a change in development priorities based on an integrated vision of the eventual market dynamics.
