This document discusses factors to consider when developing pricing strategies for specialty and biotech products. It highlights the importance of understanding key players like physicians, payers and patients; conducting price sensitivity testing at various price points; building the product's value story; benchmarking competitor prices; and using a mix of qualitative and quantitative research methods to inform pricing decisions. The optimal strategy considers attributes like efficacy, benefits, competition and reimbursement environment to maximize profitability and market share.

1. Pricing:
What to Consider in Specialty Care
and Biotech Markets?
Avantika Daing
Director, Market Research and Franchise Development
Eyetech Pharmaceuticals, Inc.

2. 2
The development of Pricing needs to take into account:The development of Pricing needs to take into account:
• The decision maker and influencer
• Market utilization
• How it is represented
• The reimbursement environment
• The competitive framework
Can we justify the value proposition to the payer and patient by
improving the quality and/or extending the length of the patient’s life ?
Pricing in a Vacuum…
BottomBottom
Line…Line…

3. 3
What Drives Price Sensitivity?
Price Points Tested ($)
~ 70% increase in price
P1
$
0%
10%
20%
30%
40%
50%
60%
P3 P5
Share
Highest price
point tested
• Is this product really price insensitive?
• A high price will not impact market share and revenue?
• What is really driving this?
• Reimbursement

4. 4
Price Points Tested ($)
~ 150% increase in price
P1
0%
10%
20%
30%
40%
50%
60%
P3 P5
Share
NEWNEW Highest price
point tested
PX1 PX2 PX3
• How high is too high?
• Need to identify the “hot price points” – the $0.99 effect !!
Price Sensitivity vs. “Hot Price Points” and Ceilings

5. 5
Audience Low Reasonable
High Price,
but Worth It
Anticipated
Tx/Year
Physician:
Opinion Leaders vs.
Community
Payers:
Public vs. Private
Patient:
Co-pay vs. need
Who to Consider – The Key Players….
• Is the physician the appropriate segment to conduct price
sensitivity studies?
• Impact to use vs. frequency of use.

6. 6
Consider the Big Picture…
Six Months One Year Two Years
Revenue/Usage
% Patient Share
Backlash
High efficacy in clinical practice
Low efficacy in clinical practice
HIGH PRICE
MED PRICE
LOW PRICE
Scenarios: Risk Tolerance vs. Revenue Maximization
• Unmet market need and competitive environment
• Political environment and advocacy group impact
• Reimbursement and pool depletion and floor vs. ceiling
• Comparable products and markets – novice agent, biologic v. Primary

7. 7
Maximize
Profitability
Product
Attributes
International
Issues
Reimbursement
Issues
Product
Supply
Key Market
Segments
Competitive
Environment
Marketing Mix &
JV Management
Treatment
Standards
Optimal Pricing and Reimbursement Strategy
Variables: Avoid Pricing in a Vacuum…

8. 8
• Pricing and reimbursement is an integral part of commercializing a
product with direct links to brand positioning and forecasting
Implications of Pricing and Reimbursement
ProductProduct
Brand PositioningPhysician Dynamics
Pricing/ReimbursementCopy Strategy
Competitive Intelligence
Forecasting/Modeling

9. 9
Excellent Very Good Fair/Poor
Value
for Price
P1 P2
Build the Product Value Story…
• Typical price sensitivity may be different vs. product value perceptions
P3
To: (Audience)
Pdt X Is: The FirstFirst….
That: (Benefit)
Because: (Reason to believe)
So That I can help….(Emotional end benefit)
Exciting NEW class
Differentiating benefits
Foundation therapy –
capture it all !!
Exciting NEW class
Differentiating benefits
Foundation therapy –
capture it all !!
Focus on the end benefit
that matters – Patients
Focus on the end benefit
that matters – Patients
ProductValuebyPricePoints

10. 10
Benchmarking Biologics: The Oncology (R)evolution
First Wave: New branded chemotherapeutics and biologics
Chemotherapeutic (Paraplatin, Taxol) priced under $10,000/year
Biologics across tumor types priced above $20,000 (except Gemzar)
Gemzar (pancreatic) $15K
Gleevec (CML) $22K
Herceptin (breast) $75K
Rituxan (NHL) $32K
Camptosar (CRC) $22K
New Wave: Erbitux and Avastin priced at 3-5x higher vs. standard of care
Avastin at $71,500/year (1st line) – 223% higher
Erbitux at $119,808/year (refractory) – 442% higher

11. 11
Qualitative
Interviews
Quantitative Study
(Price Sensitivity
Studies)
Final decision
Price Modeling
Qualitative
Interviews
Analogue
Assessment
Final decision
Forecasting:
- Price
- Product Share
- Utilization
Utilize Appropriate Approach…Not Methodology….
Quantitative Study
Executive
Discussion
Past Present