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Navigating the Rules of Drug Pricing

The debate over drug pricing and reimbursement, which has grown louder and more incessant on both sides of the Atlantic in recent years, reached a new high as the payer backlash against costly new products intensified. In this charged environment, even developers of truly innovative, life-changing drugs can struggle to win what they believe is a fair price. The only chance of success is to enter payer negotiations with a data-laden value proposition—and this means rethinking R&D.

Until recently, drug developers viewed regulatory approval of their products as the last major hurdle between them and the chance to start recouping a return on their hefty investments in R&D. Innovative new products almost unquestionably commanded premium prices. The main challenge was to demonstrate to physicians why they should prescribe a particular treatment. Gradually, this model, which pharma companies understood and were designed to serve, has given way to a new normal. Now, budget holders, not
regulators, are the main gatekeepers to market access.

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