Navigating the Rules of Drug Pricing

The debate over drug pricing and reimbursement, which has grown louder and more incessant on both
sides of the Atlantic in recent years, reached a new high as the payer backlash against costly new
products intensified. In this charged environment, even developers of truly innovative, life-changing drugs can
struggle to win what they believe is a fair price. The only chance of success is to enter payer negotiations
with a data-laden value proposition—and this means rethinking R&D.

Until recently, drug developers viewed regulatory approval of their products as the last major hurdle
between them and the chance to start recouping a return on their hefty investments in R&D. Innovative new
products almost unquestionably commanded premium prices. The main challenge was to demonstrate to
physicians why they should prescribe a particular treatment. Gradually, this model, which pharma
companies understood and were designed to serve, has given way to a new normal. Now, budget holders, not
regulators, are the main gatekeepers to market access.