Last updated on Jul 25, 2024

How do you assess the value proposition of a new drug for different payer segments?

Developing a new drug is a costly and risky process, but it can also generate significant value for patients, providers, and payers. However, not all payer segments have the same criteria, preferences, and willingness to pay for a new drug. Therefore, to optimize your market access and reimbursement strategy, you need to assess the value proposition of your drug for different payer segments. Here are some steps to help you do that.

1 Identify your target payer segments

The first step is to identify your target payer segments, based on the disease area, patient population, and market landscape of your drug. You can use various sources of data, such as epidemiology, claims, surveys, and interviews, to segment the payers according to their size, type, coverage, policies, and influence. For example, you may want to differentiate between public and private payers, or between national and regional payers, or between formulary and non-formulary payers.

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THARIQ RAFEEQ

Strategic Marketing Specialist ⚡️ Cultivating Strategic Business Relationships
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To assess the value proposition of a new drug for different payer segments: Research Payer Priorities: Understand needs of public and private payers. Economic Evaluation: Conduct a cost-effectiveness analysis. Real-World Evidence: Provide real-world evidence on diverse patient populations. Budget Impact Analysis: Present budget impact to demonstrate financial implications.

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2 Understand their value drivers

The next step is to understand what drives the value perception of each payer segment, and how they evaluate and compare new drugs. You can use various tools, such as value frameworks, budget impact models, cost-effectiveness analyses, and multi-criteria decision analyses, to capture and quantify the value drivers of each payer segment. For example, you may want to consider the clinical benefits, safety, quality of life, unmet needs, innovation, budget impact, and cost-effectiveness of your drug for each payer segment.

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Anirudh M
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Obvious differences among payer segments that create a different value perception Public: Govt funded Private: Insurance companies Out of Pocket: Patient Also, there are Frameworks (FW) to assess the value of a new medical intervention. Examples: 1) ICER FW- emphasis on understanding short term affordability and long term value for money in the context of clinical benefit. 2) AMCP FW- evidence based approach where Product details (efficacy, safety, dosing etc), Cost effectiveness, and Supporting evidence (Clinical trial data and Real world evidence) are required to assess value. Usual considerations in developing such frameworks: health outcomes, evidence (treatment gives outcome), measure of outcomes, and Costs/Budget Impact.

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3 Define your value proposition

The third step is to define your value proposition, or the unique benefits and advantages that your drug offers to each payer segment, compared to the current standard of care or alternative options. You can use various methods, such as value messaging, value stories, value dossiers, and value communication tools, to articulate and communicate your value proposition to each payer segment. For example, you may want to highlight how your drug improves patient outcomes, reduces healthcare costs, fills a gap in the market, or addresses a priority for each payer segment.

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4 Align your pricing strategy

The fourth step is to align your pricing strategy with your value proposition, and the willingness and ability to pay of each payer segment. You can use various techniques, such as price benchmarking, price sensitivity analysis, price optimization, and price negotiation, to set and adjust your price for each payer segment, based on the value you deliver and the market conditions. For example, you may want to consider the reference prices, price corridors, price discounts, price rebates, or price agreements for each payer segment.

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Anirudh M
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On completing value assessments and determining a value proposition, you are now able to comfortably determine what drives value for each payer segment. The simplest way to align your pricing strategy would be to implement differential pricing where the treatment is offered at a different prices for different segment (tiering). To enhance cost benefit ratio, you could also enter into risk sharing agreements by which you share benefits and drawbacks between you (drugmaker) and the payer (govt/insurance). This sharing can be financial or outcome based.

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5 Monitor your value delivery

The fifth step is to monitor your value delivery, or the actual performance and impact of your drug in the real-world setting, for each payer segment. You can use various measures, such as outcomes-based contracts, risk-sharing agreements, real-world evidence, and patient-reported outcomes, to track and demonstrate your value delivery to each payer segment, and to adjust your strategy if needed. For example, you may want to share the results, feedback, and learnings from your value delivery with each payer segment, and to explore opportunities for improvement or expansion.

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Anirudh M
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As determined above, risk sharing agreements are a useful means to monitor value delivery. Typically, risk sharing is either financial or outcome based. When Financial, you focus on controlling costs. For example, you hike the prices if the sales go up. However, you promise a certain ceiling to ensure affordability across segments. When based on outcome, the agreement links payments to performance of the treatment. The pharma company reimburses patients when clinical outcomes aren't obtained. Else, there could be a shared savings agreement where the savings generated by the drug are shared between payers and the pharma company. If a drug results in reduced hospitalization for certain ailment, this might be applicable.

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6 Engage your stakeholders

The final step is to engage your stakeholders, or the key decision-makers and influencers who affect the access and reimbursement of your drug for each payer segment. You can use various channels, such as advisory boards, expert panels, peer-to-peer education, and patient advocacy groups, to build and maintain relationships with your stakeholders, and to address their needs and expectations. For example, you may want to involve your stakeholders in the development, validation, and dissemination of your value proposition, and to seek their input and support for your strategy.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you assess the value proposition of a new drug for different payer segments?

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1 Identify your target payer segments

2 Understand their value drivers

3 Define your value proposition

4 Align your pricing strategy

5 Monitor your value delivery

6 Engage your stakeholders

7 Here’s what else to consider

Market Access

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