What is pricing and reimbursement?

Authors: David Cotterell  and Dominic Jones-Phillips

What-is-pricing-web-coverPricing and reimbursement can mean a variety of things in many different spheres of industry. For a pharmaceutical manufacturer launching a new product, pricing and reimbursement broadly refers to establishing a price and obtaining a positive reimbursement decision, or formulary listing status, for their product.

For most manufacturers, key countries in which to gain a favourable price for their products are the USA and the five largest European countries: France, Germany, Italy, Spain and the UK (EU5), with many other countries referencing the prices achieved in the EU5 and USA when negotiating with manufacturers.

The three biggest and most influential countries among the EU5 are the UK, France and Germany, and it is these countries that also have the most well-developed and transparent national drug and device assessment processes.

The processes through which the USA and individual countries in the EU facilitate a new product –gaining a favourable price and securing reimbursement – differ greatly, with each country having clear national, regional and local decision-making processes.

When you approach setting a price and ensuring your product is reimbursed, a number of processes need to be considered; each one can impact eventual uptake and, therefore, the reimbursement of your product. These include:
– Understanding the patient pathway
– Understanding price setting and negotiations linked to health technology assessment (HTA)
– Engaging with payers and purchasers
– Considering whether involvement of any unique funding bodies (for example, the Cancer Drugs Fund in the UK) is required.

Pharmaceutical companies often develop separate ‘US’ and ‘ex-US’ launch strategies for their products; however, each of the major EU countries has different clinical evidence and comparator requirements, which suggests that a simple ex-US pricing and reimbursement strategy cannot work.

Conducting the appropriate background work in order to engage with payers early, understand the spectrum of comparators and be able to clearly justify your choices is, therefore, a key step to take.

National-level health technology assessment can set a list price and grant access to national formularies; however, much of the actual reimbursement subsequently requires engagement and evidence-based discussions with clinicians, commissioners, regional and local-level payers and a clear understanding of patient-focused outcomes and holistic cost-saving benefits

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