Market access largely depends on the magnitude of the drug’s “value” (its clinical benefits) relative to its price (cost impact). By comparing a new drug’s profile with recent drug launches, Equinox Group can objectively assess whether a new drug’s cost is commensurate with the benefits it provides.
Mapping Value (x-axis) against Cost Impact (y-axis)
We quantify the clinical improvement a drug offers over the standard of care (SOC): net changes in safety/tolerability, dosing, and efficacy, and hence in mortality and morbidity. The magnitude of that improvement is mapped on the X-axis in Figure 1: the larger the benefit, the further to the right it is plotted. The cost impact of the drug is the incremental total drug cost, reduced by any cost offsets, relative to that of the SOC. The higher the net cost of the new drug, the lower it is plotted on the Y-axis.The dotted line running through the origin represents value equal to cost or, put another way, the price at which all of the drug’s clinical benefit is clawed back by increased cost. Drugs to the right of the dotted line offer more value than cost (the more favorable that balance, the further to the right), and drugs to the left of the dotted line cost more than the value they deliver.Drugs that achieved high patient share are colored in green, failures in red, and those with ambiguous commercial results in grey. There is a strong correlation between commercial success and being on the right side of this “cost equals benefit” line. For instance, for all the controversy about the price of Harvoni (for hepatitis C), our analysis shows that it offers excellent value for its price (scroll to right of figure). Approved in October 2014, Harvoni achieved sales in 2015 of $13.9 billion.Profiles characterizing drugs in R&D can be mapped into this space, and the sensitivity to assumptions about attributes and price can be explored. The results provide developers with insight into the degree of payer resistance they may face, and suggest appropriate historical analogs.Please call or email us about your need to assess the market access outlook for your new drugs. We welcome the chance to discuss the challenges you face.Walter Brooks