Planning the Price of a Cure

Drug makers typically undertake extensive pricing and-market access planning many years before clinical evidence from any pivotal Phase III trials become available. These activities invariably involve extensive consultations with business consultants, expert clinicians and payers.

A prime case-study is the pre-launch activities involved in the pricing of sofosbuvir (Sovaldi) – the groundbreaking treatment of Hepatitis C. This 2018 chart via the World Health Organization outlines the timeline of price planning activities for sofosbuvir.

The expected price of the product evolved from less than US$ 50,000 per course (prior to acquisition) to its final launch price of US$ 84,000 per course. The final price was decided based on an anticipated rise in revenue even though the manufacturer expected the number of patients receiving the medicine would decline, and various stakeholders would react negatively to the company's final pricing of the product.

Furthermore, the manufacturer set a high price for Sovaldi with a view to consolidate the market’s price expectation in preparation for setting an even higher price for a combination product that contains sofosbuvir (Harvoni) that would be launched after Sovaldi.

Both products have become the bench, establishing the best back-to-back commercial drug launches in modern pharmaceutical history.