The ability to strategically price a product in a changing market can be challenging. The traditional price setting process is influenced by several key factors: the manufacturer (production cost and quality of product), the customers and consumers (willingness-to-pay), and the market (market dynamics and competitors). A successful pricing strategy should take into account all of these factors to arrive at a value-based price (VBP). Quintiles has developed a flexible and adaptable value-based pricing framework that can be applied to any therapeutic area and used to evaluate any number of varying product profiles. It involves understanding how payers value asset attributes and how their willingness-to-pay helps quantify each individual attributes’ contribution to a price. Likewise, the VBP framework can inform what asset attributes contribute to physician prescribing and how their willingness-to-prescribe can translate into market uptake. Because this VBP framework incorporates views from multiple stakeholders, such as payers and physicians, the resulting outputs can be incorporated into other efforts like forecasting estimated market share, prescribing and uptake; or likelihood of coverage and level of reimbursement.

1. The Quintiles Approach to
Global Value-Based Pricing
November 2012
Copyright © 2012 Quintiles

2. Uniquely Positioned to Deliver
Unparalleled Insight…
Pricing Know-How
 Quintiles has unique datasets and extensive
experience in developing global P&R strategies that
aim to determine the value-maximizing price associated
Pricing & with the optimal product positioning
Access
Know-how
14 years of global Unique payer
pricing experience database
Global Evidence-
Perspective Based Strategy
Evidence-Based Strategy
• Our evidence-based market access strategies are
differentiated by their foundation in actionable health
economics, insight from our clinical teams, and
intelligence from our commercial teams
Health Economists
300 PhD’s
on staff
Global Perspective
 Our global pricing experts have an extensive network
in developed and emerging markets from which we
can provide direct payer and regulatory insight
Offices in over Over 200 global
60 countries consultants
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3. Value-Based Pricing Introduction
The definition of value differs between various stakeholder groups. An understanding of
each groups’ perception of value is required to develop an evidence-based pricing
strategy
Value-Based Pricing
Value-based pricing is a structured way of estimating price of a new asset based on its
perceived value (supported by evidence) by various stakeholders
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4. Key Business Questions
Our analytics offering allows us to tackle several business questions related to our clients’
global pricing strategy
• Which stakeholder(s) are most influential for pricing decisions?
Does this vary across markets? Solutions
Who Matters?
• What are the interdependent relationships between
stakeholders?
• Clear understanding of
global stakeholder
dynamics
• How do stakeholders place value on products (e.g. health • Proven methodology
What Matters to economics, net price, cost reduction)? that can quantify and
Them? • What are the pricing thresholds they will tolerate and how do relay product-specific
you develop access, and revenue strategies around those? value
• Access to integrated
and unique data
sources
• What information and tools are needed to develop evidence
How Do You based strategies to convince your stakeholders? • Customizable
dashboards and tools
Influence them? • How can you best integrate numerous unstructured data sets to capture and
in a manner to derive value out of them? measure value
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5. Approach to Pricing
Four core pricing analytics verticals provide the pricing insights necessary to develop a
comprehensive Evidence-Based Global Pricing Strategy
12-18 Months Before Launch 6-12 Months Before Launch 0-6 Months Before Launch
Value-Based Revenue Payer Account Payer Contracting
Pricing Optimization Segmentation Strategy
• Triangulation of three • Quantitative research with • Prioritizing market • Developing revenue
pricing inputs: key stakeholders (n = 75 – opportunity with payers by: maximizing contracting
1. Value-based Price Appraisal 400) – Size/Coverage strategy with:
2. Reference Price – Formulary tier design 1. Formulary Mapping
• Output
Benchmarking 2. Contract and Utilization
– Price/demand equation – Cost-control mechanisms
3. Willingness-to-Pay Analysis
Assessment – Pricing scenarios – Competitive positioning
3. Scenario Cost Analysis
• Qualitative sample size (n = – Preference/share – Decision making process
20 – 25 relationship
– Revenue-optimizing
pricing strategy
Phase I – Initial Assessment Phase II – Refinement Phase III – Tactical
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6. VBP Framework
Anchored by our health economic modeling capability, we are able to develop evidence-
based pricing recommendation that holds up to stakeholders’ scrutiny
Business Challenge
Inability to financially quantify a product’s value and determine its stakeholders’ substantiated pricing potential
Value-Based Pricing Framework
Our Framework
Triangulation of three evidence-based methodologies:
1. Health Economic Price Appraisal:
- Formulates a pricing range based on a health
economic appraisal of product benefits measured by a
variety of metrics including cost-savings and cost-
effectiveness potential Health-
Economic
2. Reference Price Benchmarking: Analysis
- Assesses the pricing structure of comparable products
including an evaluation of real-world dosing (contracts
including risk-sharing deals also considered) Value-based
3. Willingness-to-Pay Assessment: Pricing
Recomm.
- Utilizes qualitative feedback from key decision makers
to understand price expectations and thresholds vis-à-
vis current competitors and comparables
Reference Willingness-
Price to-Pay
Benchmarking Assessment
Outcomes
Pricing potential predicated on estimated cost-benefit vis-à-vis comparable drugs, past experience with reference
products, and willingness to pay in the marketplace
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7. VBP Approach
Leveraging a unique framework and all encompassing process-oriented approach to
convert therapeutic area and market-specific insight into actionable pricing for clients
1. Pricing Insight: 2. Components Analysis: 3. VBP Framework: 4. Value-Based
Pricing:
Existing Client
Pricing Work
Comp. Health-
Economic
1 Analysis
HTAs
Comp Comp. Value-based
2 3 Pricing
Recomm.
Comp. Comp. Comp.
Secondary 4 5 6 Reference Willingness-
Research Price to-Pay
Benchmarking Assessment
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8. Illustrative - Oncology
VBP Equation Overview
Foundational components will be segregated into quantitative and qualitative components
which will inform the pricing equation to derive a product’s value proposition
Foundational Additive
VBP
= Cost of Comparator + [(Clinical Differentiation x Evidence) x Market Forces)]
Range
• Cost of selected • OS, PFS, ORR • Trial Design Results • Affordability
Components
comparator
• % patients alive at Year 1 / 2 • Trial Type • Unmet Need
• Route of Administration / • Trial Size • Competition
Dosage Frequency
• Biomarker Test • Novelty
• Maintenance of QoL Certainty
• Time to Launch
• Adverse Events
• Treatment Duration (Mos)
Source
• HECON Models • HECON Models • Qualitative Interviews • Qualitative Interviews
• Quantitative Web Survey
• $’s • % premium or discount • % premium or discount • % premium or discount
Unit
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9. VBP and Market Access
Payer handling of specific assets will differ by market type as each market’s approach to
product evaluation is driven by different factors
Free Markets
• Multiple-payer market; discrete
decision making Low Restrict High Restrict No Coverage
• Specialty tiers and co-insurance 1
US
Probability of Coverage at Level
• Shifting burden of cost onto patient 0.9
HTA Markets 0.8
0.7
• Single-payer market; HTA-based
0.6
decision making
0.5
• Favorable handling if achieve break-
0.4
even threshold of £30,000
UK • National vs. local decision makers
0.3
0.2
0.1
Innovative Markets
0
• Single-payer market; innovation-driven $15,000 $30,000 $45,000 $60,000 $75,000 $90,000 $105,000 $120,000
decisions Annual Cost of Therapy
Germany • Justify clinical benefits to de-anchor
from generic price
• National vs. local decision makers
VBP model outputs allow the user to understand the probability of coverage at a specific
cost by specific payer market type
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10. Market Research Analytics Overview
A conjoint-based discrete choice exercise elucidates how multiple components interplay to
drive price acceptance and access restrictions
Several different profiles for Conjoint / Discrete
each new product Choice Analysis
Comp.
1
Comp Comp.
2 3
Comp. Comp. Comp.
4 5 6
Future Market Scenarios: Conjoint/Discrete Choice Analysis:
Mutually Exclusive Attributes: Future market scenarios created using an Profiles are assessed via conjoint
Limited number of components experimental design to vary component values for analysis to generate each
included in conjoint exercise for each new product. Respondents rate their WTP component’s importance & its
each product profile. and access restrictions for each product profile as contribution towards price and
compared to SOC. access
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11. Preliminary VBP Model
The VBP model will calculate component values based on primary research and populate
a preliminary VBP equation
--Illustrative--
1. User to select
indication,
country, and
comparator
3. VBP ranges and
premium/discount
automatically populated
based on selection
2. User to select
component values based
on asset under
consideration
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12. Illustrative Analytic Outputs
The visualization afforded by outputs will enable easier understanding of stakeholder
perception of various components
Water Fall Charts – Price Access
Component’s
Tornado Diagram
Relationship – Sensitivity Analysis
contribution to price – Efficiency Curves
To assess the To analyze impact of To display sensitivity
relationship between price increase on analysis & relative
components and coverage / approval component importance
variables towards decisions (relative to
calculating the value- SOC)
based price
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13. Case Studies
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14. Quintiles’ Consulting Capabilities
The definition of value differs between various stakeholder groups. An understanding of
each groups’ perception of value is required to develop an evidence-based pricing
strategy
GOVERNANCE & QUALITY ASSURANCE
Commercial
Regulatory Brand Strategy
& Quality Market Access
R&D Market Intelligence
Regulatory Strategy
R&D Compliance Outcomes
Product & Portfolio Strategy
Pharmacovigilance Research
Clinical Transformation
Outsourcing Strategy Quality Systems Optimization
Clinical Analytics
Development Launch Prep Peak Mature
Submission Launch
Process Optimization
IT Strategy and Implementation
Change Management
Program Management
RISK MANAGEMENT
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15. Case Study:
Preliminary Value-based Pricing Strategy
Background
Background Approach
Duration: 20 Weeks
Situation: The client sought to develop an evidence based
pricing opportunity assessment framework that will support overall
pricing development process by understanding the drivers and Quintiles Consulting Team
barriers to pricing and market access in multiple markets
1. The Quintiles Global Consulting (QGC) team conducted HTA Primary Market Research Secondary Market
assessment, primary stakeholder and secondary research: Research
KOLs Payer
i. Reviewed historical HTA’s to identify the decision driving Pharmaco- Analyst and
components and threshold values economic and Industry
Q Internal Academic Reports
ii. Conducted a market and indication specific quantitative HTA Expert Papers
Experts
survey to understand individual attributes’ importance and
contribution to overall premium
2. QGC triangulated a pricing framework via three perspectives
Pricing Methodology
to develop a value-based pricing model in MS excel
i. An analogue assessment for reference price
benchmarking
ii. A primary research willingness-to-pay assessment Health-
iii. A health economic analysis Economic
Analysis
 Benefits to Client Value-based
Pricing
Recom.
1. Review and analysis of the HTA decision rationale and Reference Willingness-to-
indication level thresholds, pricing drivers and their sensitivity Price Pay
Benchmarking Assessment
to price
2. Quantification of clinical value components and market
conditions that impact the overall price premium
3. Preliminary pricing range established using a flexible Value Based Pricing Model and Strategy
evidence-based excel model that is pre-populated with Recommendations
stakeholder’s feedback and can be adjusted as product
profile and market conditions evolve in future
4. A process map to optimally incorporate and “operationalize”
the value-based pricing approach and framework
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16. Case Study:
Value Based Pricing & Market Access Strategy
Background
Background Approach
Duration: 12 Weeks
Situation: The client sought a pricing estimation and an
understanding of the drivers and barriers to formulary access and Quintiles Consulting Project Team
use for multiple IV anti-infectives in preclinical development
1. The Quintiles Eidetics and Quintiles Global Consulting (QGC)
Physicians
group s worked collaboratively Primary Research Secondary Research
i. Eidetics conducted a quantitative survey to investigate the
Payers
effect of product attributes on perceptions and use Value-based
ii. QGC input questions into the Eidetics survey and utilized Pricing Model
the output to guide their research and recommendations
2. QGC conducted research in a comprehensive and structured
manner:
i. Assessed the anit-infectives pricing and reimbursement
landscape including market access barriers and value Market Access Strategy and Value Story
drivers for competitors and market comparables
ii. Calculating a value-based price predicated on its
estimated cost-benefit vis-à-vis comparable drugs in the
marketplace
 Benefits to Client Model Structure
1. Understanding of the hospital formulary decision-making process for IV anti-infectives
2. Insights into the drivers and barriers to access, restrictions and use for their products
3. An assessment of the thresholds / trade-offs of product attributes (efficacy, safety, cost , etc)
driving access and use
4. Insights from analogous products, primary willingness-to-pay research, and from our treatment
cost pricing model
5. Pricing recommendations from an evidence-based framework that can be adapted with new inputs
as circumstances develop
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17. Case Study:
Global Pricing Reimbursement for Phase 2NCE
Background
Background Structure
Company: Large Pharmaceutical Company
Quintiles Consulting Project Team
Situation:
Client had a targeted breast cancer therapy that had finished Phase 2. The client
asked Quintiles to conduct research and develop a value-based pricing model to help KOL Existing &
guide the pricing reimbursement decisions for the compound assuming that four Oncologists Product
proposed Phase 3 clinical trials would be carried out. The project goals were to: Pipeline
Primary Secondary
Research Research
Payers &
• Conduct secondary and primary research on this portion of the breast cancer market
with respect to key clinical and pricing reimbursement characteristics
Influencers Patient
• Assess the clinical relevance and validity of the four proposed Phase 3 clinical trials as Value-Based Population,
represented by the reactions of key opinion leader in oncology to those trials Pricing Model Unmet Needs
• Analyze and compare the efficacy and side effects of the client’s NCE to other NCEs
that would come to the market at the same time, and to existing therapies that would go
off patent
• Collect data and interpret data on pricing reimbursement aspects, unmet needs, the
burden of disease , and ancillary HC costs created or eliminated by the company’s
NCE compared to competitor compounds,
Critical Assessment of initial development phase and
• Develop value-based pricing (VBP) model: compute probability of failure against Scenario Analysis of Pricing Reimbursement Options for NCE
primary ORR endpoint; cost/benefit or side effect/efficacy tradeoff for PFS endpoint to
determine various pricing reimbursement scenarios for the NCE
 Benefits to Client
1. Understanding KOL opinion of four proposed Phase 3 trials in different cancer settings with different combinations of therapies and competitor compounds and
clinical trials. Related assessment of the client’s compound’s efficacy and side effect data and remaining unmet needs, treatment algorithms for these different
settings and patients, including the necessity and value of biomarkers, genetic testing and patient segmentation by responders and non-responders
2. Understanding of how pricing reimbursement decision makers treat new targeted therapies for cancer, including how pricing is set, how formulary inclusion,
exclusion decisions are made and how these decisions are likely to change in the next few years
3. Development and application of Quintiles’ value-based pricing model to assess the pricing flexibility the client would have under different scenarios of efficacy and
side effects for its own and competitors’ compounds in light of new compounds coming to the market and existing compounds coming off patent
4. Client was advised that two of the proposed clinical trials were not viable, that two of the proposed trials were reasonable, and that a few other trials should be
considered. The client also received a complete understanding of the pricing reimbursement range and flexibility for their NCE in its market/competitive situation
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18. Case Study:
Quantitative Linked Model Pricing Optimization
Background Approach
Background
Client: Major Biopharmaceutical Company Sample: Total N = ~500
Situation: Client had novel compound and MOA coming • Countries: • Respondents:
into a class with an entrenched market leader. While clinical • US • Payers
trials were still ongoing, there was a need to develop pricing • UK • PCPs
prior to the trial results. By developing scenario-based
• Germany • CARDs
alternatives, efficient commercialization progress regardless of
the eventual outcome would be enabled. Key Questions • France • Patients
included: • Italy
• How payers react to potential price scenarios and potential Approach:
price premiums for PRODUCT X?
Quantitative linked model to demonstrate how the stakeholders
• How physicians react to PRODUCT X’s price in the context interact and achieve demand at each potential price point.
of patient out-of-pocket cost , cost/day, and potential tier Model allowed client to set revenue optimizing pricing for each
status? potential outcome of their clinical trials.
• How likely patients will be to fill a prescription for
The final linked model and Preference Share
PRODUCT X based on out-of-pocket cost / tier status?
SimulatorTM includes input from all three major
 Benefits to Client
customer groups in the US.
Preference
• The identification of key endpoints and drivers that will make The resulting
Shares User Inputs:
preference share • MD Conversion-to-Ongoing-Use
PRODUCT X favorable and competitive by market Factor
provides a multi-
• Clinical performance settings
• An understanding of what will most impact PRODUCT X’s faceted view of
PRODUCT X potential. • Price
opportunity potential by stakeholder type
MD
• A measure of how each stakeholder influences and is
influenced by the other based on different price and product
profile scenarios
• Price demand curves suitable for revenue optimization and
other economic models - with confidence intervals for the MCO Patient
market estimates
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19. Contact Information
Please contact any of the individuals below if you have any questions regarding the
materials presented here
Quintiles Consulting & Market Intelligence Services
www.quintiles.com/consulting
Mridul Malhotra, Pricing Director (Market Access)
+1-862-368-9799
Mridul.Malhotra@quintiles.com
John Doyle, Managing Director (Market Access)
+1-212-686-8642
John.Doyle@quintiles.com
Brian Griner, Chief Methodologist (Market Intelligence)
+1-908-300-4391
Brian.Griner@quintiles.com
Brad Perkins, Senior Director of Business Development (Market Intelligence)
+1-585-943-8499
Bradley.Perkins@quintiles.com
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