Government Intervention into Drug Pricing: Part 4

Boat Of White Pills Along With Tickets Of Dollar, Concept Of Sanitary Copayment

This is our fourth and final post examining government intervention into drug pricing. If you missed any of our previous posts, you can check them out here: First post, second post and third post. In this post, we provide some summary thoughts on drug pricing and recommendations for pharmaceutical industry leaders.


Co-creation needed to sensibly address drug affordability

From our examination of potential government legislation and policies, addressing drug pricing remains a high priority for both political parties. As a result, it will not be prudent for pharma to simply push back on any attempt to provide additional requirements or rules regarding drug affordability. Rather, pharma should focus on emphasizing the inefficiencies and challenging rules in the current system that prevent them from providing value more efficiently. Providing financial support to cash-paying patients and engaging in value-based contracts are just two examples of ways that pharma companies could provide more value to the system with the right policies in place. Focus on making the system work better, rather than explaining why it does not work.


Three key principles for changes to drug pricing and affordability

Any changes to the system of drug pricing and affordability must be rooted in several key principles that balance the needs of each key stakeholder within healthcare. We offer three suggested principles: fair competition, rewards for innovation and intellectual property and patient focus.


Fair competition allows the free market to dictate demand and pricing, rewarding innovation and driving down costs elsewhere. The LASIK surgery market provides one example of how a competitive market within the healthcare industry can sustainably serve all parties involved.


Innovation must be rewarded by allowing manufacturers to achieve a strong return on investment for taking on the risk of substantial time and money to development and commercialize important advances. Fewer diseases would be cured and patient outcomes would stagnate should the financial incentive to innovate be crippled. Investors would simply, and rightly, take their money elsewhere.


Patients are the reason that the healthcare industry exists and the impact of any changes to the system must hold their needs paramount. Simply put, any policy or legislation that does not improve patient value should not exist.


Brand teams must plan for key scenarios

While the drug pricing and affordability debate rages on, brand leaders must prepare for many different potential outcomes, especially those developing products years from commercial launch. This begins with identifying the risks of potential government policies and legislation. Here, each situation is different – an intravenous drug faces far more risk from international price indexing for Medicare Part B drugs than an oral diabetes medication. Next, scenario planning backed by key insights will ensure that brand teams are prepared for higher-likelihood risks. Importantly, good preparation enables brand teams to respond more nimbly than competition, which is essential during times of disruption. Lastly, maintaining a careful watch on ongoing developments ensures that plans remain fresh and provides peace-of-mind during uncertain times.


At Herspiege, our Market Access practice excels at helping teams prepare for uncertain futures. Using an innovative and robust approach to scenario planning, we help clients identify the specific risks facing their businesses and develop strategies for mitigating them. Contact our Market Access Practice Leader David Rees ( to learn how our team can help you.


-Luke Coburn & Michael Koskulics with help from Victor Cotton

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