Gary Johnson and Sam Johnson, CELforPharma faculty members of our popular 2-day course How to Price Better than Your Competitors: Essential Insights, Principles & Techniques for Successful Market Access, have been involved in the pricing and/or forecasting of half of the new molecular entity launches over the past 5 year. We asked them what the 3 main value pricing challenges are in the pharma industry. This is what they replied:

1) Understanding who your payers are

This sounds easy. But much – perhaps most – pricing research talks to the wrong “payers”. There are many types of payer (apex/local, retail/hospital and so on). The mix of relevant payers varies by market, site of therapy and the nature of the drug. Also, there are lots of what we might call “para-payers” who are involved in the pricing decision, but are not payers per se. Many HTA people would fall into this category. Understanding who is actually going to make the calls when it comes to pricing your drug is vital.

2) Understanding what, if any, value your drug offers

Most drugs offer little, if any, incremental value relative to competition. And yet pricing research often presumes that they can command a price premium. Some drugs offer great value relative to competition. And yet, amazingly, some companies price them as though they are commodities with no pricing power. Understanding if you deliver what payers consider added value and therefore have pricing power is vital. There is no magic bullet for quantifying the price that your added value can command. But a basket of validated research techniques is your best bet.

3) Projecting your pricing analysis into the future

Most pricing analysis and research quantifies the price that a new drug could command in today’s market. But, pipeline products do not enter today’s market; they enter tomorrow’s market. And tomorrow’s market will change and evolve over time. Understanding your pricing prospect over the lifecycle of your product is vital if you are to understand its value.

Last update: March 2023

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