Pharma and Biotech Market Access

The balancing act that’s keeping pharma and biotech market access on its toes

The launch of gene therapies introduced new benchmarks for pricing of pharmaceutical interventions. CAR-T cell therapy costs close to $500,000 per patient in the US, and €300,000 in Europe. Zolgensma®, gene therapy for the treatment of spinal muscular atrophy, is (at the time of writing) the most expensive drug in the world at $2.1m. Whilst such companies claim these prices are fair, it may raise the expectations of commercial business leaders for other new breakthrough therapies. What does it mean for pharma and biotech market access?



Raf De Wilde
Senior Executive Advisor
Valid Insight

High pricing vs easier negotiations

Pharma and biotech market access functions are assessed over whether they meet what they promised regarding price and reimbursement/funding. Far too often, management remembers the high price and forgets about the corresponding utilisation restrictions that were forecasted to be the consequences of such high price. 'Entrepreneurial' pricing is more fashionable than ever; why would we not be able to achieve the same high prices for our breakthrough products as our competitors?

This trend puts market access people in a difficult position since they’re trained for a 'market access hurdle' concept – you need to pass the difficult payer hurdles before your product is reimbursed/funded. However, warnings about overpricing a product could be interpreted by management as lack of audacity or incomplete understanding of the market. Moreover, management may be convinced that the market access team sees benefit in a low price as this makes pricing and reimbursement negotiations easy.

Payer vs public pricing

To be fair, some pharma and biotech market access colleagues do lack the flexibility in predicting payer attitudes. This is partially caused by smart payers who understand how to communicate the detrimental impact of pricing that is perceived as too high. Therefore, when speaking with payers, it always pays to introduce the other stakeholders in pricing and reimbursement/funding decisions i.e. clinicians and politicians. The payer reaction will become less black and white, as payers are confronted with the consequences of late or no access, which may lead to public outcry and political interference.

On the other hand, if the pharma and biotech market access function embraces high pricing, there could be a backfire if market penetration and sales are lower than expectations because of pricing. Another complication is the difference between the list price and the net price the company will ultimately obtain for their drug because of:

  • rebates to third-party administrators such as pharmacy benefit managers in the US
  • confidential patient access schemes such as these negotiated by the National Institute for Health and Care Excellence (NICE) in the UK
  • outcomes-based pricing schemes such as those used for Mavenclad® in Germany
  • discounts, rebates and value-added services that are part of commercial deals on local and regional levels

So, whereas the list price could seem very high, the net price the company actually gets maybe a lot lower. However, trying to explain this aspect to management may lead to demands for even higher prices.

Management needs vs reimbursement goals

There’s no one size fits all solution for market access teams. There are strategies though, that when used alone or in combination, can help to get the optimal price that allows both market access and return on investment.

Maintaining a balance

The selected price needs to find a balance between management's expectations and the price that payers and providers can realistically meet, particularly in times where prices are increasing, and healthcare budgets are falling.

Being proactive

Market access teams need to show that they are doing what needs to be done in a timely, efficient, and proactive manner. Carrying out assessments of market landscapes, forecasting market size, patient numbers, and the potential status of competitors at launch, and showing income predictions for different pricing models will provide data for presentations to management.

Personalised pricing and reimbursement

Prices for therapeutics can be personalised according to the patients, markets and indications:

Keeping reimbursement goals achievable

Pricing drugs and gaining reimbursement can be a real challenge for drug developers. Price it too high, and no one buys it. Price it too low, and it's hard to get a return on investment. And even when the price seems to be right according to the market access team, it can be hard to communicate the reasoning to the management team. Creating a balance between realism and aspirations, and explaining this clearly using the right data, can allow market access teams to answer the needs of management while keeping reimbursement goals achievable.