Stakeholders to Inform Product Pricing Roger Green & Colin - - PowerPoint PPT Presentation

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Cultivating Dialogue Between Diverse Hospital Stakeholders to Inform Product Pricing

Roger Green & Colin DiBenedetto RG+A

What you will take away

Sharing our learnings with you

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1. Pricing decisions will increasingly incorporate the views of multiple stakeholders 2. It will become increasingly important not just to capture individual viewpoints, but also to evaluate how dialogue between stakeholders drives a pricing decision 3. Even with limited budgets, it is still possible to run effective and robust pricing research that integrates the viewpoints of all key stakeholders

• Client bringing a new antiviral product to market
• Designed for use in a high-risk subset of patients
• Intended for hospital out-patient use
• Single dose IV
• Facing off against well-entrenched, primary competitor
• High brand awareness/recognition
• Utilized in a broad set of patients, both in-patient and out-patient
• Multi-day, oral regimen
• Needed to identify perceived value proposition and price

accordingly

• Very limited budget to do so (e.g., <$50K); considered running a

mock P&T but budget did not allow

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Our challenge

Addressing a critical and complex client need on a limited budget

Study timing: 3Q2014

Experimental Qualitative Approach

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Our thinking

Experimental qualitative is the only way

Carefully select respondents 1 Keep sample small 2 Identify clinical and economic motivations 3 Segment like-minded individuals 4 Encourage engagement 5 Refine value proposition 6 Test for pricing thresholds 7

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Phase 1:

Web-enabled TDIs

Phase 2:

Bulletin Boards

Phase 3:

Wisdom of Crowds

Introduction of the product and exploration of pricing dynamics Testing of price scenarios and associated discussion Estimates of coverage for most likely pricing scenarios

Our solution

Small sample, multi-specialty, multi-modal methodology

Time to completion: 4 weeks

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• Develop a deep understanding of the patient and their journey
• Beginning before presentation and after they are discharged

Carefully select respondents

Acknowledge complexity of the hospital space

• Isolate the

moments of truth

• When are they?
• Where is the patient

when they occur?

• Who is the prescribing

physician at the time?

• Include only

relevant treaters and

• ther personnel who

manage their armamentarium

ENTER EXIT

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Carefully select respondents

Acknowledge complexity of the hospital space

Example Patient presents with severe chest pain; diagnosed with aortic dissection requiring surgery 1 ER 3 Surgery 2 Imaging 5 Step Down 4 Intensive Care 6 General Floor

• A patient can move through many different areas of the hospital or

hospital system from the time they present to the time of their discharge

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Infectious Disease Specialists (IDs)

5 ID treating physician with financial knowledge and consideration Formulary influence/decision making Financial knowledge Knowledge of hospital protocols for condition of interest

Emergency Department Heads (EDs)

5 Physician with oversight and authority over an ER department Formulary influence/decision making Knowledge of hospital protocols for condition of interest Several years experience

Hospital Pharmacy Directors (PHARMs)

5 Pharmacy director with formulary authority and financial insight Formulary decision making authority Strong familiarity with hospital condition of interest and related issues Familiarity with ER considerations

Number of respondents Role/Description Additional qualifications

Keep sample small

Maximize insight from each respondent

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• Clinical and economic motivators are likely to be different across

respondent types working in the same institution

Identify clinical and economic motivations

Find value at the intersection of perceived clinical and economic benefit

Pharmacists ID Specialists ED Heads Core focus Having desired medicines available at the right price Clinical efficacy and safety Getting patients out

• f the ED

Economic Savvy High Varies Low

• Clinical motivators
• Patient treatment goals
• Avoiding admittance
• Curing illness without compromising overall

health and stability

• Economic motivators
• Cost of treatment
• Cost of product
• Reimbursement structure
• Buy-and-bill
• DRG

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ED / Outpatient Hospital Inpatient

How reimbursed? Buy and Bill DRG Reimbursement is… Tied to drug cost Independent of drug cost Affordability Calculus

• Reimbursement minus drug cost

and associated costs

• Costs saved by the product

minus drug cost and associated costs Concerns

• Uninsured patients
• Admitted patients fall under DRG
• Potential for reimbursement issues
• Patients may need to stay in the

hospital for comorbidities even if treated for condition of interest

• No current data to demonstrate

inferred savings Information Needed

• Education on how reimbursement

works

• Verification of codes and payer

coverage

• HECON information demonstrating

decreased admissions

• HECON information

demonstrated decreased admissions and length of stay

• Cost of care for high risk patients

Identify clinical and economic motivations

Find value at the intersection of perceived clinical and economic benefit

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Segment like-minded individuals

Move from respondent type to “value type”

• Assess perceived value and anticipated cost of the new product and

segment accordingly

• High price estimates
• Low price estimates

XX% XX% XX% XX% Low High High Low Anticipated Price Perceived clinical benefit What value proposition will move respondents into the High/High quadrant?

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Encourage interaction

Allow the experts to do the vetting

“This higher cost will, of course, require more strict use in the high risk patients who may otherwise be admitted to the hospital. At $1000 [the product] would still be less expensive than an admission for the high risk patients.” “…one dose of antiviral should [not] be the criteria for admission, [rather] it’s total severity of illness.” “Of course the total condition and acuity

• f the patient would determine the

admission but if…the admission could be avoided, everyone wins.”

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Refine value proposition

Leverage positive and negative perspectives to increase specificity

Supporters (~60%) Critics (~40%)

Perception of IV Believe that an IV agent offers significant benefit to high risk patients Do not believe an IV option is necessarily better than an oral, even for high-risk patients Perception of client product Much needed option for high risk and NPO (not by mouth) patients “Me-too” with a more expensive dosing form Outcomes Infer reductions in admissions, length of stay, and morbidity/mortality Do not believe the product will improve outcomes Financial Reference Point IV antibiotics, hospitable bed days Competitor product

• Bulletin board dialogue pressure tests individual beliefs regarding a

product’s value

• Naturally “drives a wedge” between those who see the value and

those who do not

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$250 $500 $800-950 $1,000+ Supporter Stakeholders – Likely Restrictions Critic Stakeholders – Likely Restrictions ICU or Non- Formulary ICU

• nly

High risk and NPO Patients + ID Consult High risk and NPO Patients + ID Consult Non-restricted Use OR High-Risk Patients High risk and NPO Patients Non-restricted Use

Align value proposition with estimated cost

Identify the proposition that brings greater pricing flexibility and lesser restriction

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• Widely used in politics and marketing as an

estimating, forecasting, and preference question

• Since every person estimates large group

behavior, the impact of outliers reduces and error margins shrink

Test for pricing thresholds

Employ Wisdom of Crowds questioning technique to cancel out estimation error

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Test for pricing thresholds

Employ Wisdom of Crowds questioning technique to cancel out estimation error

What proportion of institutions like yours across the country (not you personally) do you estimate would cover PRODUCT in the following ways (at a WAC of $950)? Not covered on formulary Covered on formulary, but restricted to ID Consult Covered on formulary, but restricted to High Risk patients and patients who cannot take an oral agent Covered on formulary, but restricted to ICU patients who are both high risk AND unable to take an oral agent Covered on formulary, available at physician’s discretion

Sample WoC Question

17 33% 17% 17% 33% 25% 25%

0% 50% 100%

$500 $800 $950 Unrestricted Restricted

Proportion of Hospitals Covering in the Outpatient Setting

n=15

% Hospitals WAC Price

66% 42% 42% 18% 10% 8% 40% 41% 44%

0% 50% 100%

$500 $800 $950 Unrestricted Restricted WAC Price

58% 51% 52%

% Hospitals

Their Institution National Estimate*

Test for pricing thresholds

Employ Wisdom of Crowds questioning technique to cancel out estimation error

Experimental Qualitative Approach

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Our thinking

Experimental qualitative is the only way

Carefully select respondents 1 Keep sample small 2 Identify clinical and economic motivations 3 Segment like-minded individuals 4 Encourage engagement 5 Refine value proposition 6 Test for pricing thresholds 7

Heavily and repeatedly emphasize target patients to ensure that price is not evaluated in the context of the broader patient pool

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Provide outpatient reimbursement information where possible Look to conduct pilot programs with HEOR-savvy IDNs and ACOs to quickly develop HECON data within target patients Price product at a WAC of $950, just under a $1,000 price threshold

Set strategy in accordance with supporter perspective

Larger benefit for a smaller patient set

What you will take away

Sharing our learnings with you

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1. Pricing decisions will increasingly incorporate the views of multiple stakeholders 2. It will become increasingly important not just to capture individual viewpoints, but also to evaluate how dialogue between stakeholders drives a pricing decision 3. Even with limited budgets, it is still possible to run effective and robust pricing research that integrates the viewpoints of all key stakeholders