Confidential Pricing Agreements Mitigate the Risks of Low Drug Prices in Key Markets

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Pharmaceutical brand teams design their global launch sequencing strategies to mitigate the risks associated with reference pricing, a top challenge at many drug companies, according to a new study by Cutting Edge Information.

“Pharmaceutical Launch Sequencing: Mapping Commercialization Opportunities to Maximize Global Value and Expand Market Access”

The study, “Pharmaceutical Launch Sequencing: Mapping Commercialization Opportunities to Maximize Global Value and Expand Market Access,” found that on average, surveyed companies ranked the likelihood that a country’s price would be referenced in other markets at 8.5 of 10 in terms of importance. Nearly half of the surveyed companies ranked reference pricing 10 out of 10. A pharmaceutical brand’s global launch sequences are influenced by a number of factors as companies prioritize high-value markets to maximize product prices and establish market rates for new drugs.

Lower reimbursement rates in an early launch market can lead to lower prices in other markets. Confidential price discounts, or opaque discount agreements, can mitigate the risk of low prices. The UK, for example, is at the forefront of pricing agreements, according to the study. In return for an official higher price, companies will sometimes share the risk should their product not work for certain patients. These risk-sharing agreements prevent other countries from reference a lower price.

“When other countries reference prices, they can only reference a country’s official price,” said Michelle Vitko, senior research analyst at Cutting Edge Information. “Because of this, countries that negotiate in confidence can often obtain better pricing from the drug manufacturer.” The challenge, according to Cutting Edge Information, is that payers are normally public agencies, and in many countries their pricing agreements are also considered public information.

Cutting Edge Information’s latest study, “Pharmaceutical Launch Sequencing: Mapping Commercialization Opportunities to Maximize Global Value and Expand Market Access” (www.cuttingedgeinfo.com/research/marketing/global-launch-sequencing/) examines the market potential of 14 individual countries and benchmarks global launch sequencing metrics. Pharmaceutical executives use this report to:

Tailor launch plans to maximize revenue in high-value countries.
Draft a launch calendar that anticipates and addresses country-level challenges.
Mitigates risks and leverages reference pricing to increase revenue performance in key markets.

For more information about global pharmaceutical launches and market access management, contact Elio Evangelista at 919-403-6583.