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Strategic Thinking: The Global Drug Launch Pricing Dilemma

January 29, 2020


Written by: Bami Oshinowo Annabelle Brough

As drug reimbursement continues to evolve with some areas converging. The global payer approach to decision making offers significant variation across geographies.

Key takeaways

  • Several factors contribute towards manufacturers seeking new ways to develop global drug pricing strategies
  • Product launches vary based on geography; when comparing the USA to EU, access outcomes can vary significantly based on whether or not the pivotal trial design has been optimized for each region
  • When looking to optimize a pricing launch strategy, CBPartners has detailed three key first steps to include

CBPartners’ Take: While the USA landscape is evolving at a rapid rate, it is unclear what is to come in the future, but there is the chance that the country’s P&MA decision making may begin to imitate that of the EU


Manufacturers are being forced to search for smarter ways to develop global drug launch pricing strategies. Budgetary constraints and the rising cost of many new innovative medicines has put great stress on reimbursement systems around the world. Our global clients are having to think more strategically about their cross-regional launch pricing plans, and this can be particularly complex when thinking about the United States of America (USA) vs. Europe (EU) – the two big revenue powerhouses.

While Health Technology Assessments (HTAs) are now being conducted in the USA, by the Institute for Clinical and Economical Review (ICER), USA payers are still largely applying a commercial mindset (i.e., significant and continual increase in list prices with lucrative hidden contracting agreements) when it comes to coverage decision-making, particularly in highly competitive areas. Whereas the European payers from the National Institute for Health and Care Excellence (NICE, in England), the HAS (Haute Authorite de Sante, in France) or the G-BA (in Germany) apply a more scientific approach and consider the product’s trial design, clinical evidence, and comparative effectiveness for decision-making.

This difference in payer philosophy is further compounded by tensions between minimizing the time to market and maximizing prices. There is of course the additional internal pressure of preparing for a successful regulatory launch, ensuring appropriate account segmentation and accurate utilisation / market share analysis.

But why do product launches and pricing decisions vary so much based on the market: USA vs. the EU

When looking to launch a product in both the USA and EU, access outcomes can vary significantly based on whether or not the pivotal trial design has been optimized for a USA launch or an EU launch. Often, there is a trade-off between designing a USA (and commercial marketing) friendly pivotal trial, which targets as many patients as possible with lesser thought for an active comparator. This differs significantly with payer expectations in the EU where a pivotal trial which targets a defined patient population with a recognised standard of care (SoC) active comparator is seen to be highly optimised (and P&MA friendly). These trade-offs are also reflective of the internal struggles faced by global P&MA and marketing functions all trying to make the most of a launch, in addition to the internal cost implications of pursuing comparative pivotal trials – often the USA and marketing teams win, with the brunt of limited success being borne by the EU teams.

In the USA, there are multiple layer decision across a highly fragmented market. In the EU, there is often a single-payer HTA system at play, meaning a single negative access decision or tough pricing negotiation can be truly catastrophic to a product’s launch. Finally, the higher degree of access control on physician utilisation in the EU further compounds this issue – if access is denied in an EU market, it is highly likely physicians will never be able to utilise said therapy, whereas in the USA, there is significantly more leeway with formulary management, where a therapy may have limited access due to a high price and unattractive contracting offers, but due to an open formulary design philosophy, a subset of patients will still be able to access said therapy.

What should global drug manufacturers be thinking about when launching across both the USA and EU?

It is unlikely the focus on penetrating the USA is going to change for global clients any time soon – after all, this is their most significant market. But is there a way to better optimize launch and P&MA across both geographies, without paying for an expensive comparative trial, or compromising on patient population targets?

Thinking more carefully about how to set your price differently and appropriately across both regions is key but how should the differential between USA (where launch often occurs first) and EU pricing be established? It should not be based on ‘past experience’ or an arbitrary % discount from the USA, as this often does not correlate with the clinical evidence being presented to EU HTA bodies, leading to those negative access or pricing decisions.

Once a price is negotiated in Germany, the price discount differential between the USA, WAC and GER net price increases to > 70% in MS and only to 30% in CF, demonstrating that the premium USA WAC orphan price has been somewhat maintained in GER for CF, but not for MS. In short, even though the MS manufacturers already included a large EU discount on their GER free price, this increased even further following negotiations that suggested a difference in terms of their attainable GER price.

Despite all the drug assessment considerations from the HTA and ICER around more competitive price and market access, why do manufacturers of Orphan Medicinal Products (OMPs) achieve similar pricing in the USA and the EU?

There are several factors which dictate realistic price differentials between the USA and EU, the biggest driver appears to be unmet need or competitive state of a therapeutic market. Of course, there are several other factors which go into these dynamics but could and should our global clients be thinking about these dynamics earlier before diving into regional launch plans? How much time could be saved by pricing optimally across both regions rather than fighting a doomed battle to penetrate the EU with lacklustre data and an unrealistic US WAC inspired price?

How can global clients implement these tactics to optimize their global pricing strategies?

In an increasingly complex global marketplace, manufacturers need to be prepared to develop a global pricing strategy that anticipates the divergence of payer’s philosophy across regions. Key first steps include:

Prepare your launch pricing strategy much earlier

  • Developing a pricing strategy just before launch is less likely to be successful. Think through regional differences and how your overall strategy and pivotal trial design will play out across each region. Be prepared for the implications of FDA regulatory requirement decision making and the impact this will have during your EU launch.

Keep your eye on how the market will evolve

  • Understand the competitive landscape you are launching into and how this is expected to evolve during and beyond the clinical trial programme. While the competition is low today, it does not mean that is going to be the case in 10 years. Some key considerations are the impact of evolution on society, appropriate trail comparators, and access assumptions. competitive will the space of entry be by the time of launch? How will unmet needs and competitiveness change? How should this dictate how you should price across regions?

Explore the impact and ROI of differential clinical development plans for the USA vs. EU

  • As the markets regulatory authorities approach these challenges in different ways, it is useful to consider a more specific trial for EU submissions. This will help to avoid unnecessary duplication of clinical trials or repetition of unsuccessful trials.
  • Finally, although divergent from the EU today, the USA landscape is also evolving rapidly and who knows what the next presidential campaign will bring – although unlikely, there is always the rumour that the USA will one day start to look more like the EU in terms of P&MA decision making.