SOURCE: Cutting Edge Information

Cutting Edge Information

December 02, 2014 08:47 ET

Price Referencing Takes Precedence in Government Drug Reimbursement

Products in Range With State-Accepted Averages More Likely to Receive Payer Support

RESEARCH TRIANGLE PARK, NC--(Marketwired - December 02, 2014) - Cutting Edge Information, a pharmaceutical business intelligence provider, reported that price referencing -- how a product's price compares to its competitors and how much payers have reimbursed for similar products in the past -- takes priority when determining government drug reimbursement

In a recent survey conducted by Cutting Edge Information, favorable reimbursement depends on a number of factors, including therapeutic area and product type. However, achieving a favorable status starts with inclusion on a state preferred drug list (PDL), which is determined based on cost on an individual prescription basis. 

"Successful reimbursement requires that company executives are knowledgeable about what payers are looking for and right now they are seeking drugs that are comparable in price to competitive alternatives," said Jacob Presson, Senior Research Analyst at Cutting Edge Information. "While a drug taken once a day may be more favorable to a patient than one that is taken 3 times a day, government drug reimbursement decisions are currently based primarily on the pricing landscape. A company that prices at or below the industry standard has a better chance of PDL inclusion than a more expensive alternative, even if it is a more convenient treatment."

Patient convenience does not typically play a role in whether states will reimburse a company's product. Payers do not give preferential treatment to a product that requires patients to take it two times a day versus medications that require five daily doses. Rather, the closer a product's prices are to the state-accepted average, the more likely it is to land on the preferred drug list (PDL) and, consequently, receive favorable government -- and eventual commercial payer support -- according to one interviewed executive.

Cutting Edge Information's newest market access report, "US Government Drug Reimbursement: Winning Key Formulary Positions and Managing Pricing Systems," provides a roadmap for better navigating government reimbursement amid the growing influence of the Affordable Care Act. The report focuses exclusively on US government reimbursement strategy and trends, draws on quantitative and qualitative data from top-performing life science executives to provide actionable insights for winning and maintaining formulary position. Additional guidance outlined in the report includes:

  • Anticipating your government payer needs and developing strong market access strategies;
  • Managing payer relationships before and after product launches to maintain formulary position; and
  • Understanding compliant government reimbursement practices in the United States' new healthcare environment. 

To learn more about Cutting Edge Information and its research report offerings, please visit

Contact Information