Realizing Global Pharma Price Optimization in a Cost-Contained Environment: How an Inter-And Intra-Country Pricing Simulator Contributes to Revenue and Profit Improvement, and Quantifies the Impact of the Multiple Challenges Currently Affecting Drug Pricing.

2 Pages Posted: 10 Nov 2006

Abstract

Rationale: Balancing drug cost, drug use efficiency and improved access to medicines continues to be a complex issue for healthcare policy makers worldwide, leading to a wide variety of country-specific regulations.

All of this in addition to safeguarding innovation through sustained growth and profit has become an even more challenging conundrum for the pharma industry.

Objective: Succeed to best navigate country pricing regulations, reimbursement rules and market mechanisms in order to optimize global pharma profit as well as individual country access to new medicines, striking a balance between rewarding innovation and facilitating market access.

Methodology: The next-generation pricing simulator Pharmawiser™ combines algorithms for the full range of price and demand steering mechanisms - such as generic & therapy class referencing, international price benchmarking, parallel trade, as well as imposed and competitive discounting- into one fully integrated master algorithm. For each country it maps the different mechanisms at play that affect product price and market access, allowing for ongoing updates to keep pace with real-time (or expected) regulatory changes and healthcare reform. The interdependent and cascading effect of a pricing or reimbursement policy decision or market event in one country is reflected on all the others and measured in terms of impact on revenue, profitability and market access, while sensitivity analysis is based on comparing outputs from diverse scenarios.

Results: Working with accurate, up-to-date country information and product/therapy-class specific data inputs, the simulator helped identify the best possible price scenario for five real-life pilot projects, balancing access and profit, quantifying profit at risk for each scenario; and could significantly improve profitability versus the basecase.

The combined inter- and intra-country pricing simulator proves to be a unique and versatile tool, supporting decisions on optimal pricing at launch, or pro-actively monitoring price changes during the product's patent life, such as at major market events or at expiry of marketing exclusivity.

Conclusion: Profit optimization is now made possible by an integrated inter-& intra-country pricing simulator, making this a welcome and empowering decision support instrument for the pharma industry. Pharmawiser™ is fit for fast mapping and updating the growing number of changing rules & regulations and the consequences of increasing 'cost-efficacy'&'price-value' steering by healthcare payers. In this new more transparent and price-elastic environment, it is probably the most comprehensive analytical tool available to lead to optimal price and reimbursement, thus ensuring maximum market access benefiting both the industry and societal welfare.

Keywords: pharma pricing simulator, price optimization software, inter-country

Suggested Citation

Van Mol, Chris, Realizing Global Pharma Price Optimization in a Cost-Contained Environment: How an Inter-And Intra-Country Pricing Simulator Contributes to Revenue and Profit Improvement, and Quantifies the Impact of the Multiple Challenges Currently Affecting Drug Pricing.. iHEA 2007 6th World Congress: Explorations in Health Economics Paper. Available at SSRN: https://ssrn.com/abstract=943813 or http://dx.doi.org/10.2139/ssrn.943813

Chris Van Mol (Contact Author)

Alliance Concepts, Inc ( email )

Belgium

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