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Where Drug Firms Go Wrong in International Drug Pricing

Executive Summary

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. To stabilize the proper level of cost difference between old and new therapies and thus price effectively, drug companies need a realistic understanding of how payors and prescribers see the new offering's incremental advantages.

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