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Value-based pricing in pharmaceuticals: Hype or Hope? | KPMG Switzerland

In the face of stagnant healthcare budgets and ever-growing demand for care, pharmaceutical companies are under severe pressure to demonstrate the value of their products. Value-based pricing has exciting potential to help improve patient outcomes – and at an affordable cost.

External challenges are forcing pharmaceutical companies to change business models from sales push to a more value-based approach. US President-elect Donald Trump’s comments during his press-conference on 11 January that the sector is “getting away with murder” and that there’s “very little bidding on drugs” sent drugs stocks into a nose-dive. Shortly afterwards, the US Congress decided to start to deconstruct Obamacare.

Clearly, the US drug market, still the most important in the world, is facing substantial change and it’s not alone. Other markets are being forced to adapt as fiscally constrained Western economies have less room to grow healthcare spending and as both public and political pressure increases. In Switzerland, public talks on drug pricing are also becoming more frequent. Traditionally a high price country, Switzerland ranks on per capita spent on healthcare among the top three.

Why focus on pricing?

The portion of spending on drugs has been historically about 10 percent of total healthcare expense in Switzerland. Does it make sense to focus the discussion on a comparatively small item on the whole healthcare bill? In a broader context, the pricing debate is a key element in the attempt to manage and constrain healthcare cost in a health system. And pricing is extremely relevant to the strategic direction of therapies: patient outcomes.

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Value-based pricing in pharmaceuticals: Hype or Hope? – Expert Blog.