How to Price Cancer Drugs
Competitors and payors will force drug companies to justify their drug prices based on value delivered. With oncology as an example, we show a way to rate multiple factors to arrive at an overall clinical value--and then how to translate this value into an appropriate price for the new product. But the pricing assumptions will also change how products are launched.
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Mispricing in Europe--pricing the new therapy too high compared to perceived incremental value than the older therapy--has been a key reason that new classes of drugs haven't achieved their volume objectives. Successful follow-on classes like statins and proton pump inhibitors have kept their European prices relatively close to the costs of the previous therapies; less successful ones, like the glitazones, have not.
Despite spiraling inflation, branded OTC product demand remains high, according to Bayer Consumer Health, which posted Q2 sales up by 16.0%. But with consumer incomes increasingly squeezed, the company is working on ways to defend its market share against cheaper private-label alternatives.