A New Age in Pricing

Medicines are the preferred path to arrest disease and restore health. And while scientists who invent new therapies are heroes, companies that pay their salaries are often seen as villains. Healthcare pricing and profit are seen as the sidewalk “shell game,” leaving patients, providers, policymakers, payers and even product innovators baffled.

Demand for Transparency

Why? Often, procedure payments—from CAT Scans to blood tests—are covered by insurance or personal deductible directly. Copays are set for doctor and specialist visits. Medicine payments are more mysterious, with $15 – $100 for “preferred” drugs, 45% or more for specialty/non-preferred, and $0 to $5 for generics. We are clueless how prices are set and by whom, and why medicine we have taken for years is suddenly unavailable to us. Outrage is the natural response to feeling hoodwinked at the pharmacy checkout counter.

Consumers hate surprises. They anticipate being helped and healed, yet, as payers shift more of patent-protected drug cost to consumers, it begs the question: “Why does this cost so much?” The frequent response, “This medicine costs less daily than a cup of Starbucks,” diminishes customer curiosity and deflects right to know. But, in the world of Facebook privacy breaches and other unplanned discoveries, transparency is a new expectation. Will it now become a go-to market strategy? Soon, everything will be discoverable, even how drugs were priced.

Why Learn by Failure

Recently, we saw how Regeneron/Sanofi dropped the cost of their cholesterol-lowering PCSK9 inhibitor from $14,000 to $4,000 annually so that the cost/benefit was palatable to payers. But, what if people understood how pricing was set in the first place? What if, at introduction, company champions had a transparent strategy?

It’s time for marketing, communication, and commercial leaders to rethink their approach, informing the health ecosystem why a medicine’s price fits the illness, and winning over audiences using bold transparency. Three things to consider:

  1. Gamechanger Therapies: Don’t wait to explain costs. During the study period, use real-world data to outline how the illness is managed currently and associated costs—services, medical visits, therapeutic failure impact, and current drug costs. If a drug that shifts hepatitis C also shifts disease control to a likely cure, it will cost more than what’s on the market. Don’t wait to explain that price—be bold and transparent.
  2. High Cost and Few Patients: Payers have a love/hate relationship with medicines for rare conditions. Patients and caregivers have pressing needs. Payers have to balance budgets. Product innovators can no longer pit patient against payer and win. Think risk sharing pricing strategies—be bold and transparent.
  3. Earn Trust and Advocates: Biopharma does not live in a vacuum. More and more, third-party groups such as policymakers and patient advocates will have strong points-of-view and these go viral. Don’t surprise these influentials. Work months—even years—ahead of launch to learn their positions and share your ideas. Be bold and transparent!

Marketers can no longer hope that ire will abate and pricing will be accepted.  Formularies and public opinion will be market tools that create balance. This is the environment in which to think through pricing as a customer connector, not as an obstacle to brand success.


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