SOURCE: Cutting Edge Information

October 09, 2008 08:18 ET

Cutting Edge Information's Research Shows MCOs and Third Party Payers Rank First Among Groups Influencing Pharma Pricing

RESEARCH TRIANGLE PARK, NC--(Marketwire - October 9, 2008) - Managed care organizations (MCOs) and other third party payers were ranked the most influential external stakeholders in pharmaceutical pricing according to the new study, "Outcomes-Based Pharmaceutical Pricing: Meeting Stakeholder Needs," published by competitive intelligence firm Cutting Edge Information. Of the companies surveyed, 86% listed MCOs and third party payers as the most influential external stakeholder influencing pricing. (http://www.pharmapricingstrategy.com).

MCOs and third party payers certainly have a fair amount of influence on pricing strategies, but they are not the only external stakeholders concerning the drug industry. Also receiving a high percentage of the voting -- 80% -- competitor companies/products were narrowly edged out for the top spot. Not far behind, government payers ranked third on the list, with 77% of the vote. Physicians ranked fourth, garnering 66% of the vote.

Pricing departments must do a fair amount of market research on MCOs, other third party payers and government payers when formulating a drug's pricing strategy. According to the study, executives are finding it harder to get these payers to cooperate with their research efforts. Often, payers will refuse to take part in phone interviews, fearing their participation may give the drug company the upper hand in negotiations.

"MCOs and other payers cover a significant percentage of costs for pharmaceuticals each year," said Haley Wynn, lead author of the study. "It does not surprise me to see them so high on the list of stakeholders influencing pricing decisions."

The 124-page report provides an in-depth analysis of pharmaceutical pricing planning, processes, decision making and resources. Based on these findings and surveyed companies' best practices, CEI analysts offer action points to guide companies to set the right prices and optimize their profits. Metrics include the following:

--  Resource support, innovative versus me-too drugs
--  Cross-functional involvement in pricing decisions
--  Share of companies with dedicated pricing departments
--  Lifecycle entry and exit points for functions involved in the pricing
    process
--  2008 pricing budgets and headcounts, by company size
--  2008 headcounts broken down by geographic market and by company size
    

Contact Information

  • CONTACT INFORMATION:

    For more information, contact:
    Haley Wynn
    Email Contact
    919-433-0224

    For media inquiries, contact:
    Lucas Einstein
    Marketing Specialist
    Email Contact
    919-433-0207