Time to rethink the approach

The growth and increase in the

capabilities of health economic and
market access teams has increased the
chances of overcoming the HTA-hurdle,
however, the increasing complexity and
uncertainty in launch pricing and
sequence optimization (due to
international reference pricing) hasn`t
keep pace with the external changes in
the payer environment.
A suboptimal launch sequence can result
in a company leaving 10`s of millions of
euros on the table in unrealized profits
over the lifetime of a new product.
The traditional methods used for launch sequencing relied primarily on heuristic methods
for determining the sequence, then at the first time an assumption changed, the whole
line of thinking would fall apart. Companies need to improve their launch sequencing
capabilities by making assumptions transparent to decision makers in their organization,
and have appropriate analytic methods that allow for changes in the plan as new
information becomes available.

Pharmaceutical Launch Sequencing - Sean Robbins

Launching a pharmaceutical product in the current environment is much more difficult that
it was just a few years ago. Gaining reimbursement at the target price is the key objective
of Pricing and Market Access teams. These teams are facing hurdles in the form of: health
technology assessments, price referencing at launch, austerity measures in country health
budgets that are causing more sales caps and more aggressive risk share agreements, and
increasingly payers are demanding transparency in both price and reimbursement
conditions.

Time to rethink the approach

Complexity and Uncertainty are Increasing

The complexity of a global has increased, not just due to the number of countries
considered for launch, but also due to the increased use of reference pricing as a method to
determine maximal reimbursed price. Add to this the complexity of re-pricing after launch
(eg. AMNOG assessment) and it`s little wonder why Market Access teams are struggling to
develop a comprehensive launch sequence framework and subsequent strategy.

The trade-off between addressable patient population and achievable price has been
around for years, as evidenced by the number of countries using Price-Volume agreements
to control expenditures. More recently countries have been implementing strategies aimed
to get Pharmaceutical companies to sign-up for deals quickly in return for price
concessions, or conversely by creating uncertainty in the time to expect reimbursement,

Pharmaceutical Launch Sequencing - Sean Robbins

At an abstract level, Pricing and Reimbursement teams must make trade-offs between
accessible patient population, achievable price, and timing of launch.

Time to rethink the approach

thereby creating more pressure of decision makers to accept less than optimal prices.
Typically, these decisions are taken as one-offs without through analyses on how the
decision impacts the rest of the launch sequence.

Traditional Methods for Launch Sequencing

Traditional methods for launch sequencing don`t work well in today`s environment.
Traditional methods of establishing the launch sequence at the time of final pricing
research (using at the end of Phase III) resulted in a static recommendation that was built
on numerous (often opaque) assumptions. By the time the product was being launched
and reimbursed in the first few markets, many of the underlying assumptions had changed,
making the original launch sequence out-of-date, and hence probably suboptimal.

Another heuristic method that was commonly used was to launch in free-priced markets
first, then launch North to South (in Europe), then to Eastern European countries. Things
have changed with the introduction of AMNOG in Germany and the soon-to-be
implemented value-based pricing in the UK that clearly shows that this strategy is no
longer workable.
The most sophisticated methods would use simulation-based models to maximize revenues
over the countries considered for launch by evaluating each sequence independently.

This method is attractive (in theory) because the analyst is forced to be explicit about the
assumptions in the model and it provides a method to re-estimate when the assumptions
change. However, there is a computational problem with this method. Suppose you were

Pharmaceutical Launch Sequencing - Sean Robbins

Astute market access and pricing analysts could recognize changes in assumptions,
however in most cases, only ad-hoc adjustments to the launch sequence would be made.

Time to rethink the approach

considering launching your product in EU-member states and Switzerland. You (or your
computer) would have to evaluate 29! (that is, 8xe30) different revenue permutations for
the various sequences. Even with a high-speed computer, that is a massive amount of
computations to consider each time an assumption changes.

Companies Need an Improved Approach to Launch Sequencing

The ever increasingly challenging environment makes global launches of pharmaceutical
products more difficult. An optimized launch sequence can help improve the long-term
profitability of a new brand. Uncertainty regarding timing and price levels at
reimbursement should lead Pharma executives to start asking the question, What are we
doing to increase the odds of getting an optimal launch sequence?
Traditional methods of launch sequencing are plagued with problems and have severe
drawbacks in today`s world. The `science` of launch sequencing hasn`t keep up with the
changes in the environment.
Hopefully, this white paper will get Pricing and Market Access teams to start the
discussions about optimizing launch sequences.

Pharmaceutical Launch Sequencing - Sean Robbins

In order to cope with this computational complexity some analysts have resorted to using
the method of dynamic optimization where they break down the problem into manageable
chunks, of say, blocks of 5-countries where each block uses a prior knowledge of
constraints of reimbursement timing. For the Europe example given above, this reduces
the number of computations to 720 (120x6). In this case it`s still important to document
the assumptions used to create the blocks. If one assumption changes, then the blocking
method is no longer valid. Another example might illustrate the difficulty for even the
savviest analyst when using the method of dynamic optimization. Consider the
implications of re-pricing in Germany due to an AMNOG assessment. Prior to AMNOG, it
was obvious to place Germany in the first block due to its relatively high price and freemarket pricing. Now, when prices are adjusted after the first year on the market, which
block to you place Germany? Can you adjust your model with assumptions changing when
the AMNOG re-pricing event occurs? If you don`t proactively address this problem in your
initial launch sequence, then you`ll likely end up with a suboptimal launch sequence.