Start up biotech needs to set a price for innovative orphan drug while leveraging potential for off label use.
Business Challenge
A start up biotechnology company was anticipating US FDA approval for its first product. The product had orphan drug status, but the product had considerable potential in off label indications where it would compete with products in a mature, competitive environment.
The company had commissioned several other pricing studies ranging from qualitative provider and payer interviews regarding product value, to quantitative market research surveys to gauge likely product utilization at different price points. The research suggested alternative pricing and revenue scenarios, but could only be supported by “that’s what the research told us.”
The company approached Quorum to review its prior research, and develop a pricing strategy that addressed revenue potential for on- and off-label indications.
Our Approach
Quorum considers health economics, pricing, and reimbursement to be interrelated disciplines. In evaluating pricing options, we incorporate the perspectives of all stakeholders including physicians, patients, third-party payers, and company shareholders.
Quorum’s pricing services incorporate:
Critical reviews of clinical data, market positioning, the competitive landscape, health economics, third-party payment, and competitive pricing
Primary research with target customer segments including prescribing physicians, payers, and patient advocates
Analyses of the impact of different price points on on-label and off-label indications
Presentation of relevant case studies of other high-tech drugs/biologicals to understand their pricing approaches, market responses, competitive actions, and commercial success
Our Solution
Quorum’s analyses pointed to a pricing “sweet spot” that accomplished multiple strategic objectives. The product was priced for on label patients that captured value for patients who lacked therapeutic options. Furthermore, the product was parity priced for off label indications to minimize physician, patient, and payer objections, and drive penetration in these markets. We also supported the development of budget impact and pharmacoeconomic models that would support pricing and contract negotiations with managed care plans and other payers.
Results Delivered
Our pricing strategy and recommendations were presented to the client’s board, which were accepted and incorporated into commercialization plans. Despite its premium price, corporate image among physicians and patients is exceptionally high, while reimbursement obstacles are relatively low.
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