by Ralph Hughes, Vice President, PharmaVentures.
A prominent biotech Venture Capital (VC) firm recently told me: “Insurance companies are the real movers and shakers in health care at the moment, they are the sharp end of the spear.” And he went on to say that we need to understand what they are thinking if we are going to develop drugs that are marketable.
Drug developers sometimes struggle to see the value that pricing and market access insights will bring at an early stage. Many believe it is too early, that the deal partner will do their own analysis, or they simply don’t understand it.
The VC I spoke to reflected this sentiment, but put a different spin on it: “It’s not us or even the small biotech who has to deal with pricing and access; it’s the larger partner; they get it right in the teeth.” He went on to say it is incumbent on VCs and biotech developers to do the work as it can “pave the way if they do or build barriers if they don’t.”
This was mirrored by a comment from a pharmaceutical exec who said, “We will only look at assets where we can see the path to market for and that includes market access.”
With all this in mind, we spoke to several US payers to try to understand how payer perspectives can impact early development decisions in key areas of development from across the innovative spectrum from gene therapies to repurposed drugs. In these discussions there were some clear lessons that drug developers can learn from payers, even at the very early stage, such as:
- Understanding incentives, perspectives and funding flows can lead to better pricing and development strategies.
- Creating a cost offset narrative is essential for assets with infrastructure issues.
- Understanding payer perspectives can help you define market positioning and pricing.
- Targeting drug development at payers, as well as the regulators, can ensure adoption.
- Payers can become advocates, not blockers, given the right data and narrative.
I have developed a series of short articles from these insights to help early-stage drug developers understand the value that payer insights can bring to early development and deal making.
The first, Understanding the payer perspectives and incentives can lead to a more commercially viable development strategy across the innovative spectrum from gene therapies to value-add therapies is available here.
The second, Creating a cost offset narrative early is essential for deal making in assets with infrastructure issues such as Psychedelics and Cell Therapies is available here.
Find out more about Pricing and Market Access from our website or contact us.