SOURCE: Cutting Edge Information

Cutting Edge Information

June 28, 2011 10:04 ET

57% of Drug Pricing Teams Involved in Phase 2 Development

Drug Pricing Teams Working to Meet Payer Demand Earlier and More Directly, Finds Cutting Edge Information

RESEARCH TRIANGLE PARK, NC--(Marketwire - Jun 28, 2011) - Drug pricing departments are now involved in earlier stages of drug development to maximize drug value and address reimbursement issues, according to a new study.

57 percent of companies surveyed for "Pharmaceutical Pricing Strategy" now involve their pricing department by Phase 2 of clinical development. The study found that leading companies even reported pricing groups' involvement as early as the pre-clinical stage. On the other end of product lifecycle, 52 percent of companies report that pricing involvement continues through a drug's second year on the market.

"Pricing work conducted in the early lifecycle can identify unique product benefits, helping to prioritize investments and guide clinical endpoints," said Adam Bianchi, chief operating officer of pharmaceutical benchmarking firm Cutting Edge Information. "These decisions help to ensure the best possible return on investment."

Driving the need for pharmaceutical pricing strategy is payers' demands for pharmacoeconomic and health outcomes data, even in the earliest stages of product lifecycle. While a drug must ultimately prove to be effective, providing payers with vital information driving pharmaceutical reimbursement is crucial to product success.

"The most effective teams initiate early discussions with payers to help ensure that the product meets both financial thresholds required by payers and clinical endpoints required by regulators," said Bianchi.

The study sets timeline benchmarks for involving various internal functions, including business development, brand teams, marketing and sales, in setting prices. Incorporating input from these groups allows companies to develop a comprehensive strategy that answers various stakeholder needs. These teams also rely on pricing studies to help direct them in clinical or market decisions.

Pricing's elevated role in the drug lifecycle reflects the growing importance of pricing strategy. "Pharmaceutical Pricing Strategy: Maximize Revenue in an Evolving Economic Climate" ( explores benchmarks for pricing departments' team structure, staffing and budgets and gives a detailed view of key trends:

  • Growing company and payer experience with risk-sharing agreements
  • Government-specific price cuts
  • The United Kingdom's move away from NICE's veto authority and toward value-based pricing
  • Increasing focus on comparative effectiveness
  • Parallel trade/re-importation in both developed and emerging markets

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