1. Design An Effective Pricing Strategy
Throughout the Product Lifecycle
Rob Werner
April 20, 2010

2. Outline of Discussion
✤ Role of Value to Optimize Pricing and Access
✤ Defining, Demonstrating and Communicating Value
✤ A Few (Fairly Obvious) Implications to Consider
✤ Food For Thought

3. The Landscape is Changing Very
Rapidly ... But Speed is All Relative

4. The Landscape is Changing Very
Rapidly ... But Speed is All Relative
“Have you ever noticed that anybody driving slower
than you is an idiot, and anyone going faster than you
is a maniac?”
George Carlin

5. The Landscape is Changing Very
Rapidly ... But Speed is All Relative
“Have you ever noticed that anybody driving slower
than you is an idiot, and anyone going faster than you
is a maniac?”
George Carlin

6. The Landscape is Changing Very
Rapidly ... But Speed is All Relative
“Have you ever noticed that anybody driving slower
than you is an idiot, and anyone going faster than you
is a maniac?”
George Carlin
“Remember folks, street lights timed for 35 mph are
also timed for 70 mph.”
Jim Samuels

7. It is All About Value
Drummond et al.
Figure 1. Relationship between EBM, CER, HTA, and related concepts. EBM, evidence-based medicine; CER, comparative
effectiveness research; HTA, health technology assessment.
Excerpted from: Key Principles for the improved conduct of health technology assessments for resource allocation decisions; Drummond, Schwartz, Jӧnsson, Luce, Neumann, Siebert, Sullivan
conclusions, and recommendations are applied. This is par- producing high quality assessment reports that can be used
ticularly true when reports Assessment in by one organization are
International Journal of Technology produced Healthcare 24:3 2008, 244-258 by a range of decision makers (e.g., the Canadian Agency for
used by another. For example, the Drug Effectiveness Re- Drugs and Technologies in Health (CADTH), the Swedish

8. ... And Evidence is King

9. What is Value?
✤ Value Can Include a Variety of Components
• Unit Cost / Acquisition Cost
• Impact on other healthcare costs
• Other societal costs
• Productivity
• Impact on care givers
• Patient satisfication / QOL
✤ Value is Defined In Comparison to Other Alternatives
• Focus on Comparative Value / Comparative Effectiveness

10. Value Is Influenced by Many Factors
✤ You can define, but ... external factors have significant influence
• Key product in class goes generic
• Change in standard of care due to competitive entrant
• Price based competition - monopsony buyer
• Scientific debate
• e.g., Vytorin - ENHANCE

11. How Does The Customer Define and
Assess Value?
• Who is the customer, and how do they define “value”?
• What the Customer Wants You to Know, Ram Charan
• How should they define value?
• How does the customer assess value?
Customers Want
• Healthcare Solutions - not just pharmaceutical products
• That work in the Real World
• Value that can be demonstrated

12. How Do You Demonstrate Value?
• What types of evidence will be considered?
• RCTs only? Observational trials?
• Retrospective analyses? Systematic evidence reviews?
• PROs?
• Role of modeling
• Budget impact models
• When do you build disease models?
• Importance of transparency

13. How Do You Communicate Value?
✤ Who Is The Target Audience?
• Payer vs. Provider vs. Patient?
✤ Who Is In Best Position to Communicate to Audience?
✤ What new skills sets / competencies / tools required?
• e.g., Field Based Outcomes Liasons
• Ability to manage diverse HTA reviews is critical
✤ What is Customersʼ Level of Proficiency?
Goal is an Ongoing Dialogue About Value

14. A Few (Fairly Obvious) Implications to
Consider ...
Date

15. 1. Adopt a Continuous Evidence
Development Mindset
✤ Consider Building a Value Development Plan
• Canʼt have all of the evidence at approval
• Anticipate changes to your value proposition due to external developments
• E.g., Changes in Standard of Care
• Impact of patient subpopulations
✤ Incorporate “Value” into the Development Process
• Donʼt overlook challenge for R&D and Regulatory groups
✤ Line Extensions Subject to the Same Rules

16. 2. Engage Payers in the Value
Development Process
✤ “Pressure Testing” Value Proposition of Pipeline Products Through
External Advisory Groups
✤ NICE External Consultancy
✤ Does It Work in My Patient Population?
✤ Ingenix, etc.

17. 3. Get The Timing Right - Fastest Is Not
Always Best
• Fastest indication to market not always best
• e.g., Anti-TNFs - RA vs. Crohns vs. Psoriasis
• Timing of market introductions can be important

18. 4. Discipline is Essential
• Ever increasing global price transparency ... trend only likely to
accelerate
• Impact of reference pricing
• Rigorous, coordinated approach to pricing and access globally
is essential
• Pricing should not undermine value proposition

19. 5. Don’t Overlook Distribution Strategy
As Key Component of Value
• Distribution solution can help maximize clinical outcomes in the
real world
• Particularly critical for Specialty / Biotech products
• Distribution partners are struggling to demonstrate their value
and eager to collaboration

20. 6. Alternative Pricing Strategies Still
Developing
• Risk Sharing
• Coverage with Evidence Development

21. Some food for thought ...
✤ Managing the transition to the new Evidence/Value environment
✤ How much evidence is enough?
✤ When is it needed?
✤ How do we make coverage, reimbursement and access decisions in
the absence of sufficient data
✤ Who bears the cost and risk of developing all of the new evidence
of value?
✤ How do we “value” incremental innovation?
✤ How do handle individual patient preferences and patient variability?

22. Thank You!
✤ Questions????
✤ RWerner84@gmail.com