What is Drug Pricing?
Drug pricing is the process by which the list price of a drug is determined. It is usually led by pricing personnel who work within the market access group and use a variety of techniques to recommend potential prices for a new drug. Ultimately, the final pricing decision is often made by executive leadership including potentially the CEO.
Amongst the considerations that pricing personnel consider are results of various market research that is conducted to gauge what providers and payers think about the drug candidate and how they would react at various price points as well as the pricing of competitor drugs. They also use forecasting models and incorporate what expected rebates or discounts may be at various price points to determine the optimal price.
The Senate Finance Committee’s investigation of Gilead on the pricing of their hepatitis C medication Sovaldi made public much of Gilead’s process in coming to the price for that product.