Many drugs can be used for several different indications, but when and how can you charge different prices? Here, our resident marketing expert offers some answers.

The proper pricing of pharmaceuticals two or more indications can be treated with the same drug and with a similar dosing regimen, it is unprecedented for a firm to be able to set two different prices. A good example of this is Enbrel (etanercept), which can be used in several inflammatory conditions, ranging from rheumatoid arthritis (RA) to moderate psoriasis. Because the dosage form and the daily dosing are similar across the various indications, the product (and its competitors) has been faced with a value challenge. There are few true restrictions on the use of Enbrel in RA, but severe limitations on its use in psoriasis, which, especially in its milder manifestations, is seen as much less severe or critical than RA. Some firms have established, and received approval for, different brands of the same compound targeted to different indications. However, when the dosing of the product is essentially the same for both indications, the firms have been unable or unwilling to differentiate the prices; and it is doubtful in today’s environment that payers and others would allow a price difference to stand in such a situation.


Depending on the situation there are options for varying degrees of price differentials based on differences in brand, formulation, and dosing. The greater the difference between the presentations of the products used for each indication, the greater the ability of the firm to set and maintain different prices. (See Table 1 on page 46 for these differences and a summary of their pricing implications.)

Each basis for product differentiation for a compound brings with it unique opportunities to set and maintain price differentials. The level of differentiation ultimately determines the level of defendable and maintainable price differences. Unique brand identities, distinct product formulations, and different dosing regimens, or a combination of these options, offer pharmaceutical manufacturers the opportunities to charge differential prices for the same compound in different situations— either different patient groups or different indications. Differences in formulation will provide the greatest potential for pricing differences, is not only difficult it is also fraught with risk. In more complex pricing situations, the task can be quite daunting for a firm faced with multiple opportunities for a single agent. Although the problems are not restricted to price, the effect of the pricing decision in this situation can determine the fate of the product, in terms of which indications to pursue, which formulations to develop, and the ultimate development plan for the product. In disparate indications where there are different levels of value, pricing the product to capture those differences in value can be quite restricted for firms that plan to develop only a single formulation of the product.

I am frequently asked how a company can charge different prices for the same drug when used in different indications. To my knowledge it isn’t possible to vary the price charged for a pharmaceutical product for different uses—without altering the brand, the form, or route of administration to bring about the product difference. In situations where while dosing differences offer less opportunity and simple differences in brand name offer the least opportunity for price differences.

There are a few examples of manufacturers marketing two separate brands made up of the same molecular entity but used for different indications. Allergan’s glaucoma product, Lumigan (bimatoprost), was found to grow longer and fuller eyelashes, so they launched Latisse, the same compound at the same dose—and the same price. Although it is likely that the ideal price for one of the two indications was quite different, Allergan chose not to charge different prices and create problems for themselves later.

Product Formulation considerations

Pure formulation changes can take a compound into a completely different consideration set and provide great pricing flexibility. Janssen’s Risperdal was an oral formulation of the atypical antipsychotic, risperidone. Janssen later launched Risperdal Consta, an intramuscular injection formulation of risperidone for depot delivery of the antipsychotic. This enabled Risperdal to be used in noncompliant patients, adding great value to the compound. Janssen’s per milligram price for Risperdal Consta was set at a significant premium—more than 100% greater—over the price for the oral formulation. Later Janssen launched Invega (paliperidone), a prodrug formulation of risperidone that was priced slightly higher than Risperdal oral, which was about to lose patent. That was followed by Invega SustennaInvega. These formulation changes have allowed Janssen to not only charge different prices but also to maintain their leadership position in a complex and competitive market.

GlaxoSmithKline’s Imitrex migraine drug provides a different example of formulation changes. It has been available in multiple forms: injectable, nasal spray, and different oral formulations. Each product had a per-milligram price differential. Prices of Imitrex injectable are greater than the prices of Imitrex nasal spray, which are greater than the prices for Imitrex oral. This holds true at both Imitrex per milligram prices and per dose prices. Because it is difficult to make exact comparisons of prices when there are formulation differences, the manufacturer has more freedom in the pricing decision.

Pharmaceutical manufacturers have sought to change the dosing regimen for a product, often as a line extension (or patent life extension) action. Historically, this has involved an extended-release product that moves dosing from oral short acting form to an oral longer acting form. Eli Lilly and Co. changed the dosage regimen for Prozac from daily to Prozac weekly, the latter launched at a per-milligram premium to Prozac 20mg capsules, but per-day prices were roughly at parity to the Prozac 20mg capsules.
Similar to Lilly, Merck extended its Fosamax product from a daily oral dose to a weekly dose. However, Fosamax 70mg weekly dose was launched at a parity price to the daily dose. Other firms have set prices for sustained release versions of their products at both premiums and discounts, depending on the product or the firm. Setting higher prices for new ER/SR oral formulations is much less likely now and also much less profitable because of recent changes in federal regulations involving the “base price” for the Medicaid and 340B institutional pricing.

Another approach to formulation difference is to alter the molecule—either by formulating a salt, cleaving off an isomer, developing a prodrug, or otherwise altering the basic molecule to arrive at a different formulation. This is the costliest and riskiest approach to differentiation but, for the most part, also the way in which the charging of different prices is the most straightforward and easiest to maintain. Examples of this include Risperdal / Invega (prodrug) and Prilosec / Nexium (isomer).


The strategy most likely to afford a level of differentiation that can enable differential pricing is one in which a combination of brand-name changes, formulation changes, and dosing changes are all involved.

For example, Proscar and Propecia, products from Merck that treat benign prostatic hypertrophy and male pattern baldness, respectively, were available at different strengths for the conditions, Proscar at 5mg orally and Propecia at 1mg orally. Propecia was launched at a sizeable premium over Proscar on a per-milligram basis. (See Table 2 for several examples of product and price differentiation.)

It is possible to charge different prices for different indications, but only if you plan ahead and build some differences into the product. Other factors to think about are the order in which the indications are likely to be approved, the probability of bringing real new value to each indication, and the business opportunity offered in each. Many of the biological agents under development today have the potential for use in very disparate indications, and to get the most value from those compounds manufacturers must make early and purposeful decisions about the ways in which those different indications should be pursued. Understanding the pricing implications and challenges surrounding the different indications—and building plans around them—will enable you to make better decisions, including such crucial choices as the development of different formulations and the priority of indications. If you fail to think well ahead, you’ll find yourself missing some great opportunities in the marketplace, a mistake that companies can no longer afford to make.