Biopharmaceuticals: Pricing for Clinical Value and In-Market Risk

August 20, 2015

The Health Affairs Blog (Horvath, 8/20) reported that rapid changes in the U.S. health care marketplace, many of them related to the ACA, have affected current drug launch prices. An important point the article makes is that the patent can be irrelevant to a therapeutic alternative coming to market. The time period between the first-in-class branded product and the second-in-class branded therapeutic alternative declined from an average of 2.7 years in the 1990s to just over one year in the early 2000s. Branded competition can increase pressure for price concessions to payers and providers for both the first product and the new branded competitor/therapeutic alternate. Uncertainty about branded competition is potentially a much more significant risk than generic entry post-patent. A company cannot know for certain if a therapeutic alternate will make it to market, how effective a competitor it will be, or how market share or revenues will be affected. This market uncertainty can affect pricing.