A new report by strategy and marketing consultants Simon-Kucher & Partners found that drug companies that involve their pricing and market access (P&MA) teams early in the development of drugs appear to be the most profitable.

Of the companies surveyed that have earnings before interest, taxes, depreciation and amortization (EBITDA) margin of greater than 20 percent, 55 percent involve their P&MA teams in trial design at the phase I to phase II transition, compared to only 36 percent of companies with EBITDA margins of less than 20 percent. The more profitable companies also took into account payers and other decision makers' needs and value drivers at the phase I to phase II transition more often than those with lower EBITDA margins.

"The more successful companies actually are doing these things early on," Klaus Hilleke, senior advisor at Simon-Kucher and an author on the report, told BioWorld Insight.

While survey respondents at most companies believe that early involvement is important, only 18 percent said they've had high success with the integration.

"We thought there would be more self satisfaction. We found that many respondents were actually not very happy with what they're currently doing and they wish they could do more and had more resources available internally to deliver results and better strategies to their peers in the company," Hilleke explained.

From talking with survey respondents, the report determined that senior management often doesn't see the need for early P&MA involvement, resulting in a lack of resources and a subsequent lack of success when companies do try to implement early P&MA involvement. "In other words, there is not enough senior management attention and push for this topic and, unsurprisingly, not enough resources are being made available to enable success," the report concludes.

Involvement as early as the transition from phase I to phase II can help create the best data package to set up the P&MA teams for success years after a marketing approval.

"The knowledge about what customers want and accept, and not accept, leads to a better preparation and then a better and more successful launch of new product," Hilleke said. "By not doing those activities you have a much harder fight to get your new product accepted and gain momentum and market share. It takes longer, is more difficult and may not lead to the same level of revenue and success in the market."

And P&MA teams can also be the voice of reason, killing projects that may not live up to their commercial goals.

"The team can early on identify products that would never make it to the market because they are not what customers expect, they are not as good as sometimes the R&D guys may believe, they are not addressing the key needs of the market or they are not delivering added value compared to other products," Hilleke said.

Many a CEO has pointed out when asked about pricing by analysts that the company can't set the price until it sees the pivotal data or even the label, and while Hilleke acknowledged the price can't be finalized until then, he encouraged companies to set up scenarios based on different potential outcomes during development. "This is a long-term process; you start very broad with what are my alternatives, what are my options, and then you narrow it down with every new piece of information," Hilleke said. "And then towards the end, it's not simple, but it's easier to make a decision compared to not having gone through this process having thought about all these option alternatives and the pros and cons of them."

New models

Much of the need for early involvement from P&MA teams comes from the changes in models for generating revenue in the industry. "The conventional model of producing and providing drugs for society will no longer be sufficient. Many companies have already started to change their business models to become solution providers that not only provide drugs but also ensure that these drugs deliver value to patients," the report points out.

"It's very difficult to simply go to the market and say, 'This is our price, take it or leave it,'" Hilleke said of the current reimbursement environment. "You have to come up with new models that address the specific situations of payers."

For example, companies are increasingly sharing risk with payers, offering rebates or free drug for patients who don't respond to treatment. And for high-priced treatments like gene therapy where patients get a benefit over a long time frame, companies such as Philadelphia-based Spark Therapeutics Inc. are working to allow payments over time. Spark's gene therapy, Luxturna (voretigene neparvovec-rzyl), to treat RPE65 mutation-associated retinal dystrophy is priced at $850,000, or $425,000 per eye. (See BioWorld, Jan. 10, 2018.)

"With these new models you have to start early," Hilleke said. "You have to set up the measurement tools to measure success or set up financial instruments to allow for installment payments. If you start thinking about these things at launch, it may be too late."

The report also points to co-development of diagnostics or other services that can be delivered with the product as a way for companies to bring added value. And again Hilleke said early involvement of P&MA is important to determine how the added product and services are monetized and to ensure that the return on investment makes them worth developing.