pricing for gold in this multi-criteria multi-payer world pricing... · public health aspects...

Pricing for gold in this multi-criteria

multi-payer world Optimize launch pricing across the world

4th Pricing & Profit Optimization Forum

on Life Sciences – EPP

Dr. András Incze, MBA – Akceso Advisors

Dr. Eric Noehrenberg – Shire Pharmaceuticals

Montreux, June 4-5, 2014

1

2 ı June 5, 2014 ı EPP 4th Life Sciences Forum – Montreux ı A. Incze – E. Noehrenberg

Structure of the talk

• MCDA* elsewhere

• MCDA in P&R

• What criteria for Pricing?

• Your levers

• Real life

• Q&A

* Multi-Criteria Decision Analysis


MCDA* is to consider a lot of factors

3

Offense

- nature

- seriousnes

s

Defendant

- character

- community

ties

- bail record

Prosecutor’s

case

- strength

- likely

sentence

Any other

- relevant

factors

Criteria to be used by magistrates for bail decision

Source: Gigerenzer: Gut Feelings, Penguin Books, 2007

* Multi-Criteria Decision Analysis


In practice: few & different are applied

4

Offense

- nature

- seriousne

ss

Defendant

- character

- communit

y ties

- bail record

Prosecutor’s case

- strength

- likely

sentence

Any other

- relevant

factors

Criteria actually used for bail decision

1. What

does the

prosecution

say?

2. What did

the previous

court say?

3. What did

the police

say?

Source: Gigerenzer: Gut Feelings, Penguin Books, 2007

…additionally to the defendant’s input


The name of the game in bail decisions is:

SIMPLICITY

&

DEFENDABILITY


P&R MCDA* criteria ≈ the same across

countries

6

France Risk/benefit

Efficacy/tolerability

Disease severity

Alternatives

Place in therapy

Public Health aspects

Innovativeness

HC Budget impact

IRP

Germany Place in therapy

HTA Assessment

Costs of alternatives

Additional benefit

IRP

Italy Clinical need

Effectiveness

Safety

Cost

Social impact

Organiz. impact

Regional budget

Spain Prices in EU15

Cost effectiveness

HC Budget impact

Price vs comparators

Disease burden

Patient needs

Therapeutic value

Social value

Level of innovation

Source: payor publications/websites; simplified

* Multi-Criteria Decision Analysis in Pricing & Reimbursement

P&R criteria by payors – selected countries


…including England’s emerging VBP

Source: A. Dillon presentation at La-Ser symposium, London, February 13, 2014

Criteria for NICE recommendations - planned


“Decision making by …AHTAPOL

is multi-dimensional and can

be hardly predicted1”

G-BA and Pharma Co’s agreed to

rebates between 0-89% to keep

reimbursement, no

recognizable pattern to

predict it2

8

Sources: 1: Niewada et al: What determines the recommendations issued by AHTAPOL. Value in Health 14 (2011)

2: Lauer Taxe Nov 2013, own research

Application of criteria for reimbursement not predictable though


List Price setting follows clearer rules

Payors most often use

- Internal price

comparators

- International

Reference Pricing

to set the price

9


IRP is applied almost universally in Europe

Source: Akceso Advisors own research

Price referencing rules across Europe – indicative

Legend:

International Reference Pricing

(IRP) AND country-internal price

benchmarking

IRP mainly

No IRP – other mechanisms

Country w. “soft” IRP rules – not

always explicitly stated/applied *

*

* *

*


cross-country referencing grid

indicative

...requiring sophisticated approaches

IRP grew to a highly complex system of price interdependencies ww


Complex interdependencies require sophisticated approach to optimize

• Complex price ref rules

– Basket countries

– Algorithm

– Ref price delay

– Transitional rules

– Review schedule

– Options for risk-share, discounts

– Country-internal referencing

– ...

• Complexity exponentially increases with number of countries

• Real-life knowledge of how rules are applied country by country is indispensable.

12


Pivotal Countries jointly keep a strong dam

against an unfeasibly low level (of launch

price)

Pivotal countries are those identified as very strongly influencing the price of the

others. Pivotal countries vary from case to case, product to product, launch to launch


Your levers: timing & focusing on value vs price

•Launch scheduling & sequencing

•Real Options: manage value & interdependency

–First launch non-reimbursed, then get reimbursement later

–Agree hidden discounts, rebates

–Close managed entry agreements – e.g. Risk Sharing schemes

14


Optimal launch price levels & timing

drive LT improvement – price, sales,

profit


Implementation relies on win-win collaboration with all stakeholders

• External stakeholders (such as patient

groups) and internal stakeholders (such as

Government Ministry colleagues) can inform

the payer’s decision-making process by

providing new perspectives, experiences, and

data.

• Such information can be “the human story” /

Patient Experience and evidence regarding the

socio-economic impact of the disease or

condition and value of effective treatment

• Such stakeholders can be empowered by

companies through provision of new and

relevant information and facilitation of

communication as appropriate and legal.

16


17 17


Take-aways

Move the discussion from Price to Value

Look at Real Options – beyond launch

scheduling

Take market-by-market approach

Consider interdependencies – IRP and

country-internal benchmarks

Engage all stakeholders for win-win

A good holistic

approach will

ultimately create &

maximize the

monetary value –

diamonds &

perceived value –

hearts

leading to ‘gold’ to all!

pricing for gold in this multi-criteria multi-payer world pricing... · public health aspects...

Documents