Drug Life Cycle Pricing Challenges

Pharmaceutical manufacturers face challenges during all the phases of the drug life cycle in accurately pricing their products. When launching a product, many companies struggle to answer questions around optimizing launch sequence by country, collecting the necessary insights into the impact of launch pricing, and ways of dealing with unexpected changes in plans.  When dealing with price maintenance and compliance, the concerns heighten as millions of dollars can be lost annually in unnecessary price erosion. The risk of fees and penalties arise as an issue in government pricing, and forecasting reference price quickly and accurately becomes difficult.  Advancement of the product’s maturity through its lifecycle raises similar questions when loss of exclusivity occurs.

Launch sequence is a complex analytic problem typically “solved” in a
simpler Excel model, but a better algorithm can yield better results. Automated
price optimization processes can create 0.1% to 0.2% increases in your main
portfolio, 1% to 2% improvements in product maturity, and 1% improvement in
launch planning. Automation of the maturity phase of your products can add as
much value as your top sellers and be as profitable as a blockbuster, but is
inefficient to manage in the same manner because of many more products and
pricing decisions.

Pricing, Reimbursement & Market Access is historically under invested in IT Spend relative to its impact when compared to other departments such as Sales & Marketing. The following issues are typical within the department:

  • Excel-driven processes are the standard for calculations.
  • No commercial software available causing large development efforts necessary for advanced analytics.
  • Business rules were dynamic and expensive for IT for support in a system.
  • Historical year-over-year IT budgeting remains relatively stagnant.

Why it’s time to change:

  • Accessible analytics are now on the market and are end-user friendly.
  • Successful pricing optimization software implementations have been completed in other industries, i.e. Retail and commercial airlines
  • Payer influence is much greater than 15 years ago, and they are driving the need for optimization causing a shift away from the traditional promotional model.

Alliance’s PriceRight solution has some of the most sophisticated and innovative price analytic features, accompanied by unique capabilities from planning to launch, through operational price and tender management, into generic erosion and loss-of-exclusivity. The capabilities ensure that we don’t just address your needs, but invent better pricing approaches.

PriceRight offers more accurate, insightful analytics that reduce erosion and drive more to the bottom line. The open platform is critical to adapting to change because of the regulatory environment that spans at least 50+ major markets for most pharmaceutical companies. PriceRight helps companies manage their pricing throughout its lifecycle, and enables global market access, all in a single integrated suite.

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