Pricing and Contracting Strategies for Portfolio

Summary

SciVida assisted a midsize biotech company in developing pricing and contracting strategies for a franchise consisting of a late-stage asset for a rare disease nearing launch and an in-line product for the same indication.

Situation

A midsize biotech company was preparing to launch a late-stage asset in a rare disease indication for which they already marketed another product. The disease itself was multifaceted, involving variable organ systems and thus several potential provider specialties, adding to the complexity of the scenario. The company faced several challenges: at what price should they launch the new product, should they change the price of the in-line product (and, if so, what should that new price be), and what contracting strategies should they pursue for both the in-line and pipeline products. Wanting to maximize the value of their franchise, they engaged SciVida for assistance.

SciVida’s Approach

To tackle these business needs, we developed an approach entailing three major work streams: (1) conducting in-depth primary research with payers, physicians, and patients and performing pricing modeling and analysis that integrated and evaluated price elasticity of payers, physicians, and patients to recommend pricing for both products [the pricing phase], (2) developing an account segmentation and prioritization model to characterize payer accounts and model the impact of various contracting scenarios for both products [the contracting phase], and (3) facilitating a competitive simulation workshop to vet the strategies for both products and hypothesize competitor strategies [the competitive simulation phase].

Pricing: In the first phase, we conducted quantitative and qualitative primary research with payers, physicians, and patients. Leveraging the output from this research, we developed a pricing model and conducted extensive pricing analysis to evaluate the tradeoffs associated with different pricing and contracting strategies. SciVida then developed recommendations for list and net price for both products.

Contracting: In the next phase, we collaborated with the client to define key criteria for customer segmentation, obtained the necessary internal and third-party data for accounts, products, and key analogs, and then built an Excel model for segmentation and prioritization that characterized accounts according to common attributes and defined economic potential of the different segments, informing leverage points, engagement and influence requirements, and contracting and market access strategy approaches. We then modeled the economic impact of various contracting scenarios across account segments to develop a robust contracting strategy for both products.

Competitive Simulation: In the final phase of the engagement, we collaborated with the client to establish the objectives and scope of the competitive simulation—to hypothesize competitor strategies and identify implications for the client’s products. SciVida then prepared briefing materials for each team and conducted advance briefing sessions to foster robust participation in the simulation activities. On the day of the workshop, the SciVida team facilitated several rounds of competitive simulation, conducted a full debrief with the client team at the end of the workshop, and documented the results.

Armed with the insights from all three phases of the engagement, SciVida developed a strategic blueprint to guide the client on near-term decision making to help them maximize the value of their portfolio.