More purchasers and payors are moving away from simplistic cost-driven drug benefit designs to formularies and cost sharing based on value. The impact of value-based drug benefit designs on manufacturers will depend on how quickly individual firms adapt their business thinking and communications strategies.
Until recently, the path to success for a drug manufacturer was based largely on product novelty, physician-centric marketing, and revenue strategies balancing unit prices and concessions against formulary position.
To maximize market share and margins in the world of value-based drug benefit designs, drug manufacturers will need to:
(1) Demonstrate the clinical and economic case for each product and each therapeutic class with an indication,
(2) Build absolute and comparative evidence on a continuous basis,
(3) Develop new value-based pricing models and market partnerships, and
(4) Communicate far more effectively with public and private payors.
For many firms, this will require a significant, even scary change in thinking and tactics; payor-centric communications; comfort with a massive increase in transparency; and a greater willingness to partner. Therefore, while the financial risks of moving to a value-based world are daunting, ultimately the greatest challenges are intellectual.
Value-based drug benefit designs will pose the greatest challenges to manufacturers with product lines (or pipelines) dominated “me too” drugs; rigid, risk-adverse organizational silos; and out-dated, prescriber-centric communications.