The Changing Role of Access Leaders

The corporate role of access leader has always been a challenging one in the pharmaceutical industry. A complex mix of economic, societal and scientific perspectives makes it hard to find consensus between commercial and research and development (R&D) disciplines on the most appropriate development and commercialization strategies. The fact that these decisions are often made five or more years before launch further adds to the challenge. Lately, the task has become more daunting because of a barrage of Trump initiatives on drug prices. Let’s look at all these aspects in a bit more detail.

U.S. vs. ex-U.S. Developed Markets

Until recently, the United States was the only country that allowed market-based drug pricing. European countries, Canada, Japan, South Korea and Australia have strict pricing and/or reimbursement controls with very strict evidence requirements. Obtaining premium prices in these countries usually requires costly and lengthy head-to-head trials with long-term patient outcomes that are highly clinically significant. While the goal is not unreasonable, it often poses significant challenges to allow for commercialization within a limited patent life. As a result, companies often accept a lower ex-U.S. price to achieve additional return on investment rather than not launching in these markets.

Developing World and Compulsory Licensing

Differences in affordability between lower-income countries and developed markets would economically call for price differentiation. Given the relatively low variable cost of drug manufacturing, it is commercially viable to sell at much lower prices in lower- and middle-income countries than in the United States and Europe. However, drug companies have been penalized for this practice through the diversion of drugs from one country to another and the tendency of governments to limit their locally allowed prices based on international price referencing. Particularly for oncology, there has been strong activism from developing countries, nongovernmental organizations and the World Health Organization to engage in compulsory licensing, where governments use authorities under the TRIPS agreement to essentially circumvent patent rights in favor of allowing generics manufacturers to produce the patented drug at a lower cost.

Portfolio Analysis

Drug development portfolio management is a company discipline that helps the trade-off between investment opportunities from very early in the life cycle until the launch decision. Underlying analyses include U.S. and international revenue forecasts, clinical probability of success, investment needs and timing. Analyses are not usually detailed for each country but may rather be based on the United States, Europe, Japan, or sometimes even an additional rest-of-world factor above the U.S. forecast. Even in cases where the global potential is more accurately addressed, it requires a detailed assessment of various development options to support proper decision-making. For example, how would a riskier head-to-head trial versus standard of care impact the potential? It may lead to higher willingness to pay and more rapid product uptake worldwide, but it may also entail a higher risk of clinical failure.

Commercial and R&D

R&D teams usually have performance benchmarks that are based on meeting clinical development milestones and FDA approval, irrespective of the actual commercial impact. While an urge to progress rapidly is certainly valuable, the difference in focus between development and commercial teams makes it more difficult to build consensus on stronger value propositions with a higher return on investment, as this can delay formal approval or increase the risk of clinical failure. Since portfolio management processes usually don’t distinguish between development strategies, the rapid-to-market option is usually chosen.

The Trump Factor

Most-favored-nation price initiatives by the Trump administration are adding a layer of complexity and uncertainty. Trump’s most recent “Generous”, Globe” and “Guard” proposals have a potential far-reaching impact on U.S. drug pricing and related portfolio decision-making. The uncertainty around the actual adoption of these proposals and the impact of existing and any new individual drug pricing agreements call for detailed scenario analysis that affects portfolio decisions. Given that we just passed the one-year milestone of the second Trump administration, one might wonder what the pharmaceutical world of 2029 will look like. Which drug companies will be ready to support optimal drug portfolio decisions?

Ed Schoonveld is a value and access adviser for Schoonveld Advisory, LLC, and author of The Price of Global Health. He can be reached at [email protected].