Cultivating Dialogue Between Diverse Hospital Stakeholders to Inform Product Pricing Roger Green & Colin DiBenedetto RG+A 1
What you will take away Sharing our learnings with you 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 2
Our challenge Addressing a critical and complex client need on a limited budget Study timing: • Client bringing a new antiviral product to market 3Q2014 • 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 3
Our thinking Experimental qualitative is the only way Carefully select respondents 1 Keep sample small 2 Identify clinical and economic motivations 3 Experimental Segment like-minded individuals 4 Qualitative Approach 5 Encourage engagement 6 Refine value proposition Test for pricing thresholds 7 4
Our solution Small sample, multi-specialty, multi-modal methodology Phase 1: Phase 3: Phase 2: Web-enabled Wisdom of Bulletin Boards TDIs Crowds Introduction of the Testing of price Estimates of coverage product and scenarios and for most likely pricing exploration of pricing associated discussion scenarios dynamics Time to completion: 4 weeks 5
Carefully select respondents Acknowledge complexity of the hospital space • Develop a deep understanding of the patient and their journey • Beginning before presentation and after they are discharged • Isolate the ENTER moments of truth • When are they? • Where is the patient when they occur? EXIT • Who is the prescribing physician at the time? • Include only relevant treaters and other personnel who manage their armamentarium 6
Carefully select respondents Acknowledge complexity of the hospital space • 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 Example Patient presents with severe chest pain; diagnosed with aortic dissection requiring surgery 5 1 3 Step ER Surgery Down 4 6 2 Intensive General Imaging Care Floor 7
Keep sample small Maximize insight from each respondent Hospital Infectious Disease Emergency Pharmacy Specialists Department Directors (IDs) Heads (EDs) (PHARMs) Number of 5 5 5 respondents Role/Description ID treating physician with Physician with oversight Pharmacy director with financial knowledge and and authority over an ER formulary authority and consideration department financial insight Additional Formulary Formulary Formulary decision making influence/decision making influence/decision making authority qualifications Knowledge of hospital Strong familiarity with Financial knowledge protocols for condition of hospital condition of interest interest and related issues Knowledge of hospital Familiarity with ER protocols for condition of Several years experience considerations interest 8
Identify clinical and economic motivations Find value at the intersection of perceived clinical and economic benefit • Clinical and economic motivators are likely to be different across respondent types working in the same institution • Clinical motivators • Economic motivators • • Patient treatment goals Cost of treatment • Avoiding admittance • Cost of product • Curing illness without compromising overall • Reimbursement structure health and stability • Buy-and-bill • DRG Pharmacists ID Specialists ED Heads Having desired Clinical efficacy and Getting patients out medicines available at Core focus safety of the ED the right price Economic High Varies Low Savvy 9
Identify clinical and economic motivations Find value at the intersection of perceived clinical and economic benefit ED / Outpatient Hospital Inpatient Buy and Bill DRG How reimbursed? Reimbursement is… Tied to drug cost Independent of drug cost • Costs saved by the product • Reimbursement minus drug cost minus drug cost and associated Affordability Calculus and associated costs costs • Patients may need to stay in the • Uninsured patients hospital for comorbidities even if • Concerns Admitted patients fall under DRG treated for condition of interest • • Potential for reimbursement issues No current data to demonstrate inferred savings • Education on how reimbursement • works HECON information • Verification of codes and payer demonstrated decreased Information Needed coverage admissions and length of stay • • HECON information demonstrating Cost of care for high risk patients decreased admissions 10
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 Anticipated Price Low High High XX% XX% What value Perceived proposition will move clinical respondents into the benefit High/High quadrant? XX% XX% Low 11
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 of the patient would determine the admission but if…the admission could be avoided, everyone wins.” 12
Refine value proposition Leverage positive and negative perspectives to increase specificity • 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 Supporters (~60%) Critics (~40%) Believe that an IV agent offers Do not believe an IV option is Perception of IV significant benefit to high risk necessarily better than an oral, patients even for high-risk patients “Me - too” with a more expensive Much needed option for high risk Perception of client product and NPO (not by mouth) patients dosing form Infer reductions in admissions, Do not believe the product will length of stay, and Outcomes improve outcomes morbidity/mortality Financial IV antibiotics, hospitable bed days Competitor product Reference Point 13
Align value proposition with estimated cost Identify the proposition that brings greater pricing flexibility and lesser restriction Critic Stakeholders – Supporter Stakeholders – Likely Restrictions Likely Restrictions ICU $1,000+ only ICU or High risk Non- and NPO $800-950 Formulary Patients + ID Consult High risk and NPO High risk and $500 Patients + ID NPO Patients Consult Non-restricted Use OR $250 Non-restricted Use High-Risk Patients 14
Test for pricing thresholds Employ Wisdom of Crowds questioning technique to cancel out estimation error • 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 15
Test for pricing thresholds Employ Wisdom of Crowds questioning technique to cancel out estimation error Sample WoC Question 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 16
Test for pricing thresholds Employ Wisdom of Crowds questioning technique to cancel out estimation error Proportion of Hospitals Covering in the Outpatient Setting n=15 Their Institution National Estimate* 100% 100% Unrestricted Restricted Unrestricted Restricted 66% % Hospitals % Hospitals 58% 52% 51% 50% 50% 33% 42% 42% 40% 41% 44% 25% 25% 33% 18% 17% 17% 10% 8% 0% 0% $500 $800 $950 $500 $800 $950 WAC Price WAC Price 17
Our thinking Experimental qualitative is the only way Carefully select respondents 1 Keep sample small 2 Identify clinical and economic motivations 3 Experimental Segment like-minded individuals 4 Qualitative Approach 5 Encourage engagement 6 Refine value proposition Test for pricing thresholds 7 18
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