Net Price Competition in the Ocular VEG-F Drug Market
This is the second in a series of posts in which BluePath will examine biopharmaceutical net pricing dynamics as they relate to the US physician-administered drug (PAD) market. In our previous post, we evaluated the size and structure of the PAD market in the US. Today’s post will provide a detailed look into brand net price competition within the ocular VEG-F therapeutic class – this case study highlights the net price response of two brands to competitor and biosimilar competition.
Net price concession estimates for the PAD market are informed by Pricescape, a proprietary BluePath market intelligence tool. Pricescape estimates net price concessions at the brand level, providing insight to discretionary price concessions manufacturers make to their commercial trading partners for PAD brands in the US market.
Ocular VEG-F Brand Price Competition Dynamics
Figure 1 below shows net price concession levels over a two year period among two brands in the Ocular VEG-F PAD market. Quarter X represents a random initial quarter selected to evaluate Ocular VEG-F brand net price competition. Each quarter after Quarter X is numbered sequentially relative to the initial quarter.
Brand A had a higher list price which required greater double-digit price concessions to compete with Brand B on net price. The ratio between the brand price concession levels stayed relatively stable over time, suggesting a disciplined contracting strategy by both manufacturers. This net price trend continued over the time period evaluated in Figure 1, which was prior to the introduction of biosimilar competition to this therapeutic class.
Figure 1. Brand Price Competition in the Ocular VEG-F Market
Ocular VEG-F Brand Response to Biosimilar Competition
Figure 2 represents a continuation of the time period seen in Figure 1. The distinction in this time period is the introduction of biosimilar competition to the Ocular VEG-F brand market. Quarter 9 represents the approximate quarter in which the first biosimilar version of Brand A was approved; a second biosimilar version of Brand A was subsequently approved in Quarter 12.
As seen in Figure 2 pre-biosimilar price concession levels in Quarter 8 are similar to those previously seen in Figure 1; price concessions for Brand A begin to increase in Q9 and accelerate over time in response to the second biosimilar entrant to the market.
The manufacturer of Brand A elected to respond aggressively to biosimilar price competition; these concessions grew materially after the introduction of the second biosimilar, reaching levels of over 60% in a little less than 2 years after the introduction of the second biosimilar. These brand price concessions illustrate how biosimilars may reduce net spend in a therapeutic category by reducing the net price of the existing brands, regardless of biosimilar adoption rates.
Brand B’s net pricing response to the launch of a Brand A biosimilar was muted. Given that Brand B only had indirect exposure to biosimilar competition (e.g., there was no biosimilar version of Brand B at the time), it is not surprising that price concession levels grew at a slower rate than that seen with Brand A.
Figure 2. Brand Response to Biosimilar Competition in the Ocular VEG-F Market
Implications for Manufacturers
Net price competition among brands in the Ocular VEG-F market resembles what might be expected of an oligopolistic market type. With two companies driving the market, firms must carefully consider competitor reactions to price decisions. This example highlights how two manufacturers skillfully navigated price competition through a disciplined approach to net price decisions.
In our biosimilar case study, we see that a brand subject to direct biosimilar competition (Brand A) may extend its time on market after the launch of biosimilar options. While there are many factors which effect the decision for a brand to compete with a biosimilar, this example shows it may be possible to successfully compete on net price and extend the brand lifecycle. In the case of indirect biosimilar competition (Brand B), the manufacturer maintained a reasonable pace of net price concessions in response to the changing market dynamics.
Net price competition in the PAD market is on the rise, and manufacturers should actively monitor net price differentials between their brand and competitors to ensure brand access is not being potentially compromised by competitor net price actions. BluePath can help your brand optimize pricing strategies by providing data-driven insight so your organization can get in front of price concession trends and proactively manage net pricing decisions.
Questions or inquiries on the latest in physician-administered drug net price or other market access trends? Please contact us at info@bluepathsolutions.com.
