Negotiate More Effectively by Sharing Your Value Story

Stefan A. Kloss

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Economic realities have hit the great majority of global healthcare systems head-on. Even in the U.S., a longtime haven for secured reimbursement, payers are embracing more careful “money for value” funding decisions. At the same time, manufacturers are introducing specialty therapies at an unprecedented rate, aiming to offset revenue losses from commodity treatments by charging higher prices for drugs targeted at smaller populations. The pharmaceutical and biotech industry on one hand and payers on the other may soon find themselves at the center of a perfect storm. Their survival depends on securing funding under more and more challenging circumstances.

Not surprisingly, both industry and payers see reimbursement negotiations as a vital means to tilt the struggle for resources in their favor. Not only have the stakes grown higher, but also the negotiators seem to return to the table more often as payers seize any opportunity to drive down expenditures. In this contentious environment, prices are negotiated at multiple levels—national, regional and local—and renegotiations to readjust reimbursement and access occur more frequently as value assessments evolve in a competitive clinical environment.

Pharmaceutical manufacturers have long had negotiation processes and capabilities in place but are struggling to adapt. Reimbursement negotiations are mostly a country-specific exercise, and country-based market access departments have finite capability to handle negotiations for an entire portfolio of therapies. Health technology assessment and reimbursement processes have become significantly more complex during the past decade, which amplifies capacity constraints at the local level. Moreover, payers’ stakes in negotiations have risen, and their negotiating approaches have become more sophisticated. Many of today’s payers in the EU and U.S. apply greater scrutiny to manufacturer-provided evidence and may even bring their own real-life data and cost analyses to the negotiating table. This means that skillful negotiation across a range of possible concessions and agreement alternatives has become more important than ever to find common ground.

All of these trends—limited healthcare budgets, a rise in high-cost specialty therapy launches, lean local commercial organizations, and increased payer sophistication—are raising the stakes. Success now demands an approach fit to deal with emerging challenges to support the successful negotiation of both price and market access.

About the Expert

Stefan A. Kloss is an associate principal in ZS's New York office and a leading member of the market access pricing practice area. He has worked with pharmaceutical and biotech companies worldwide on pricing and market access solutions.

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