Getting a Grip on Oncology Drug Costs--and Pricing
Until now, the US oncology drug market has operated in its own economic universe. It's been a lucrative niche business, characterized by premium prices for drugs that address small, desperate patient populations, often coping with fatal diseases that lack effective therapies. The playing field, however, is changing rapidly, with multiple implications for manufacturers. Scientific progress-and money--are at the heart of the change. Changes in oncology reimbursement will affect pharmaceutical manufacturers' relationships with providers and payers as well as their development and commercialization strategies. v
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New Medicare reimbursement, if implemented as is, will disrupt the close-knit oncology marketplace, Expensive new drugs are relatively immune to discounting pressures that form the basis of the reimbursement formula. Nevertheless, infrastructure changes wrought by the squeeze on oncologists' margins will impact the relationship between manufacturers and physicians.
Manufacturers in the past haven't paid much heed to health plans' half-hearted efforts to reign in biotech drug spending. They figure if the drug is good enough, payers have to cover it. But health plans are for the first time serious about managing specialty pharma spending. Manufacturers should take heed because the impact on their revenues and marketing strategies could be significant.
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