Pricing: Pharma's Achilles Heel: Overcoming the Price War with Smart Market Access Best Practices
June 6, 2017
A recent Harvard Business Review article ‘How Pharma Companies Game the System to Keep Drugs Expensive’ suggests that pharmaceutical companies may be profiting at the expense of patients by creating barriers to healthy competition.
While media dissatisfaction with the price of pharmaceuticals is nothing new, the visibility of this issue has grown. Yet this same media coverage offers limited explanation and analysis of the complex dynamics that drive drug pricing.
The reality is complex. Not only must pharma recoup their R&D investments and marketing costs, but they are also accountable to their shareholders without whom no investment in innovation is possible. As imperfect as this model may be, compared to not-for-profit or government models, it has shown to be successful in driving rapid drug development for some of today’s most critical health problems.
That said, understanding why drugs are priced as they are doesn’t take away from the fact that there remains a significant gap between drug prices and patient affordability. Nowhere is that more true than in emerging markets and developing countries.
So why not just lower drug prices? When you consider that monthly treatment costs for some specialty medicines are in the thousands, how much would prices have to be lowered to make it accessible to the majority of the patient population? Even with 40-50% discounts in price via direct discounting or bonus schemes (like buy 1, get 1 free), few patients would still be able to pay for their full course of treatment.
Below is a real-life illustration of this issue.
TREATMENT DURATION INSIGHTS (BONUS SCHEME VS. COST SHARING SCHEME)
An analysis of a current Axios-managed access program that utilizes both a bonus scheme and a cost sharing scheme (where patients pay according to ability) found that patients enrolled in the cost sharing scheme stayed on treatment longer and purchased more units compared to the bonus scheme.
This is often due to the fact that patients enrolled in bonus schemes run out of money before completing their treatment plan – resulting in lost medical benefit to the patient and lost investment in the part of the manufacturer.
WHAT CAN BE DONE TO MAKE INROADS ON THIS PERSISTENT PROBLEM?
First, it requires a change in mindset. Access is not just about making medicine available at a lower price. It is about maximizing patient benefit by enabling them to complete their entire treatment course and by addressing the layers of access barriers faced by patients. We have learned that even if a drug is offered for free, without the proper infrastructure or support system that encourages adherence, the ultimate medical benefit to the patient, and in turn, financial return to the company, is limited.
Second, it is about translating that mindset into practical, customized access solutions that resonate with patients and stakeholder alike. Not just a strategy that looks good on paper, but does not translate on the ground. And when it comes to access, there is no ‘one-size-fits-all’ solution – complex challenges require complex solutions.
Third, it is about ensuring solutions are sustainable by making them work for the patient AND the company. Over time, the positive impact of sustainable solutions can help shift the public dialogue on pricing and drug access to one more tolerant of pharma’s efforts. These solutions should aim to maximize patient benefit, while propelling market growth and building critical country stakeholder relationships – what Axios refers to as an 'access win-win.'
While pricing challenges will continue, smart, practical and sustainable market access efforts have the potential to significantly change and improve the dynamics of the issue over time. When treatment is available and accessible, patients have more incentive to seek disease education and diagnosis, kick starting a chain of demand that motivates physicians, payers and policymakers to create lasting change.