Resources for managing global drug pricing decisions are limited, says survey

Pharmaceutical Commerce, Pharmaceutical Commerce - November/December 2015,

Model N/Highpoint survey points to better integration of pricing and contract data

While newspaper headlines continue to rail against rising drug prices, an industry survey finds that the managers responsible for those pricing decisions lack the tools they would like to have to make more informed choices. A semi-regular survey by Model N (Redwood City, CA), in combination with the industry-consulting company Highpoint Solutions (East Norriton, PA) finds that 70% of respondents “report dissatisfaction with current state of analytics capabilities. In addition about 80% of the respondents remain concerned about the lack of integration of all necessary data sources such as most accurate pricing database, competitor pricing and reimbursement data, Country Reference Rules, Indication and Launch Information, Sales and Budget data, Tender information, ERP and financial systems leading to unavailability of the complete picture to make decisions.”

(Since Model N and others have been laboring for years on these pricing analytics tools, a snarky reaction to this would be to question those vendors’ products themselves. But, as the survey points out, pricing specialists still rely primarily on Excel spreadsheets to do their work; there’s a lot of room for improvement.)

In the US, a lot of the pricing decisions are pointed at formulary placement with leading pharmacy benefit managers and with payers; in Europe and elsewhere, there is a complex multistep process of developing in-country prices that connect to “reference pricing” baskets, such that a pricing decision in one country can affect the price offer in others.

In 2013, when Model N performed a similar survey, 50% of respondents said that they would be investing in pricing analytics tools; now, that proportion has risen to 65%. Top categories for investing in better analytics capabilities include: launch sequencing optimization; price forecasting and scenario modeling; and reports and dashboards. “The emphasis on a new value-driven healthcare system is forcing pharma companies to demonstrate real, measurable value to stakeholders and, as such, re-engineer the approaches to commercialization and pricing. This trend is now demanding the need to have tools and mechanisms to set, monitor and execute value-based pricing agreements,” says the report.

Model N markets the Revvy Global Price Management platform, a cloud-based system to integrate and analyze pricing and market data. this month, it also announced the acquisition of ChannelInsight, a Denver IT company that performs analytics on channel sales in high-tech and related markets. Highpoint Solutions has developed a practice area, pricing and market access, that includes a “framework” called Strategic Tactical Administrative Remittance (STAR).