Drug pricing affordability: how to clear the 5th Market Access hurdle
Written by Tom Kwon and Gavin Outteridge
Sign up to our newsletter here to keep up to date with the latest insights from our industry experts.
There used to be just three hurdles to overcome for proving the worth of a pharmaceutical product: efficacy, quality and safety – the focus of regulatory authorities.
Fast forward to this decade, and pharmaceutical corporations are accustomed to addressing a 4th hurdle – the need to demonstrate Value. As health system decision-makers began to demand not only regulatory-focused thinking, but also economic and humanistic considerations, so Market Access and HEOR teams emerged to take this 4th hurdle into account.
But, four hurdles are no longer adequate to summarise the challenges facing today’s Market Access teams.
Why do we need to consider a 5th hurdle?
The 4 hurdles model has been an effective strategy tool up until now, but it’s incomplete. It’s incomplete because the Pharmaceutical industry is increasingly being challenged on the Affordability of products to health systems, and that represents a 5th hurdle to market access.
Drug price rises this year have been met with sensationalist headlines, and the media and politicians are blaming all aspects of the system, from “middle men” to foreign countries. But, no matter what part of the system is perceived to be to blame, nonetheless pharmaceutical organisations face growing reputational risk. The scrutiny facing drug prices today highlights the urgent need for organisations to address the Affordability of their products and counter the perception that their products are overpriced.
The 4th hurdle, or Value, represents a customer’s willingness to pay. Affordability is more about a cost relative to what a purchaser is able to pay. While not new, Affordability is becoming an increasingly powerful force influencing market access decisions today.
A payer or decision-maker, whether at national, regional or institutional level, may simply not have pockets deep enough to continue current healthcare provision and pay for your latest innovation, however well-proven the product’s effectiveness or substantial the unmet need. Indeed, a widespread unmet need even compounds rather than ameliorates the Affordability challenge. A disease-modifying therapy for Alzheimer’s would be a case in point.
What challenges do organisations face?
Affordability, similar to how the 4th hurdle of Value began, has not typically been given a consistent definition across countries, nor has it been given a similar systematic response by companies, even though the Market Access consequences are comparable to pre-existing hurdles. There are several possible reasons for this development:
The definition of Affordability is a heterogeneous concept
“Fairness” of what is affordable from one market place to another is a highly subjective concept
The concern of Affordability has presented more frequently in the past in less developed economies rather than major markets
Affordability is tied more closely to behavioral economics rather than pharmoeconomics
Addressing Affordability on a global level has cross-country compatibility risk such as reference pricing and differential pricing.
How to anticipate and clear the 5th hurdle
Challenges notwithstanding, integrating the Affordability consideration and possible solutions into the strategy-setting process is a critical success factor for patients, functional teams, and overall commercial return.
Kinapse believe in a practical and focused operational response that integrates input from multiple functions (policy, medical, R&D, etc.) and country affiliates to address Affordability challenges on a companywide level.
To help companies organize to address the Affordability hurdle, we recently worked on a project (alongside our partners AccessPharmaCon) with a top pharmaceutical company to facilitate anticipation of Affordability considerations in strategy development with a playbook to help navigate the current landscape and align further on the next hurdle. The playbook contained an awareness-raising backgrounder on the global environment of the Affordability challenge; a framework model that hosted strategic considerations and solution options with filtering capability to tailor solutions that were most applicable to a given product/market situation; and engaged cross-functional stakeholders to develop their thinking on Value and Affordability in conjunction.
By investing in such a structured and strategically-oriented approach to considering issues of Price, Value and Affordability across functions, companies can benefit from:
A more comprehensive Value & Access strategy, truly reflective of the needs of the current external access environment.
Improved and explicit cross-functional alignment with the key elements of Value & Access strategy for any given product.
Ultimately, greater positive impact on patient access and commercial performance for key products.