Expert insight:

Do you know the key drivers of price sensitivity for pharmaceuticals?

By Gary Johnson, expert-trainer of the Value Pricing for Market Access - The Essentials course.

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While Price Elasticity is a precise quantitative measure of how price affects demand, Price Sensitivity is a more qualitative concept about how important price is to customers.

In pharmaceutical markets, many factors determine how price sensitive customers are. For example, price sensitivity tends to vary according to:

(1) The chronicity of a disease (whether it is acute or chronic)
(2) Symptomatology (whether the disease is symptomatic or 'silent'); and
(3) The setting in which a disease is treated (hospital or retail).

Generally speaking, and all other things being equal, price sensitivity for pharmaceuticals varies as follows:



Of course, this is a gross generalisation and it is far more complex in the real world. In the process of setting the price of a pharmaceutical, specific research techniques are required to assess the Price sensitivity of a pharmaceutical for physicians, payors, etc.

Last update: March 2017


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