Determine How Different Pharmaceutical Companies Price Their Prescription Drugs-Management Sample


Write a 750 to 1,000 word paper on the following: Conduct research to determine how different pharmaceutical companies price their prescription drugs. Be sure to study and to understand the process and costs of developing new drugs. Discuss why their prices and output can vary from market to market and how the prices might change over time. (Some of these companies include Johnson & Johnson, Pfizer, Roche, and GlaxoSmithKline, among others, and visiting their company websites will prove useful.) Now assume that your drug company is in the final stages of developing three new drugs. One of these helps to reduce cholesterol, one is a treatment for an extremely rare disease, and the third is a treatment for cancer. Create a pricing and output plan for these drugs that is in line with the expected development costs, market demand, production costs, and the competition that you will face in the market for your drug. Be sure to defend your answer.





Medication organizations have an irregular capacity to work moderately unregulated and to raise sedate costs past expansion rates. This permits the medication organizations to expand their incomes ceaselessly, regardless of whether the interest for at least one medication isn’t high. The outcome is a colossal outpacing of interest in the U.S. from 2010 to 2015. The development of physician endorsed medication income has arrived at the midpoint of 61%, which is multiple times higher than the expansion in solutions for those medications. There has been a lot of spotlight on new medications that have been discharged with out of this world costs. There has likewise been expanded spotlight on recently discharged medications under new proprietorship that have experienced suddenly expanded costs. Medication organizations do this, obviously, to produce income. In any case, most of an organization’s income originates from an example of consistently expanded costs of medications that have been available for quite a while. The quantity of medications that sedate organizations have in their pipelines will likewise influence each medication’s cost. In light of medication organizations’ estimating power and their capacity to build costs without guideline, the stress over slow interest is far down on the rundown of worries in connection to valuing. Pharmaceutical organizations worry about an assortment of elements when evaluating drugs. The uniqueness of the medication must be considered; that is, what number of different medications are as of now accessible that treat a similar condition. On the off chance that the market is intensely soaked with medications to treat a specific condition, new medications for a similar condition will probably be estimated lower. Rivalry is another factor that influences evaluating. Medication organizations must think about the prevalence and accomplishment of the medication’s opposition, and they should decide whether new medications have included advantages over contending drugs. According to Henrard S, Devleesschauwer B,(2013,Dec 20) Extra advantages lead to more expensive rates. Medication organizations must think about whether new medications have the potential (or have demonstrated through clinical preliminaries) to change the present routine with regards to prescription used to treat the conditions the medications target. The organizations should likewise think about whether their medications can keep the requirement for certain restorative medicines or the need for medical procedures or different methods. Medications that can eliminate costly medical procedures, clinic treks, and specialist visits are frequently evaluated higher due to the investment funds they offer clients toward the back. Medication organizations likewise issue more expensive rates to drugs that can expand or even spare lives.

Eventually, the fundamental goal for pharmaceutical organizations when valuing drugs is to produce the most income. This regularly implies confronting rivalry, which serves to drive costs lower. According to Luzzatto L(2015, Feb 28) Be that as it may, sedate organizations have adjusted estimating drugs excessively low with the capacity to authorize cost increments at enduring interims. Valuing a medication inaccurately is one of the greatest missteps a medication organization can make. Evaluating a medication excessively low or too high greatly affects its potential for progress. In the event that, for instance, a medication is estimated excessively high, payers might be reluctant to repay for it or doctors might be unwilling to endorse it. They may trust the medication does not merit the surprising expense on the off chance that almost certainly, it will offer too little advantage to warrant the expense. As opined by Hollak CE(2015,Feb 28) Then again, if a medication is evaluated excessively low, doctors may reason that it offers a limited type of treatment, less successful than a progressively costly medication that as of now exists.

The innovative work (R&D) encompassing each medication is another fantastically vital issue with respect to valuing. The measure of time, exertion and cash that is put resources into the R&D for each medication must be weighed when the medication is estimated. According to Graf von der Schulenburg JM(2015, Mar 16) This regularly prompts more expensive rates to guarantee that the income created will surpass the uses behind the medication’s improvement.

The market demand and the competition for the drug for reducing cholesterol is very high. The competitors are decreasing the price of the cholesterol drugs a lot. Amgen has decreased the price of its cholesterol medicine Repatha by 60 percent. As per the opinion of Frank M(2015,Mar 16) The new medicine will be priced around $5850 per year down from $14100 per year. Another company is also decreasing the price of its drug Praluent from $14600 to range between $4500 and $8000. So, considering the market condition the price can be kept around $6000-$7000 and it will be competitive.

The price of the drug for extremely rare disease should be kept around $30,000 considering the different factors and barriers of the market. There is constant scrutiny by WHO for the price of such drugs so it should not be priced much.

The price of the drug for cancer can be kept at around $15,000-$20,000 as it is a highly competitive market and the competitors have also priced it in the same range.

The cost is to a great extent set by the arranging guarantor and is dictated by what the going rate is for contending treatments The NHS/NICE, has a genuinely direct and straightforward methodology utilizing the Pharmaceutical Price Regulation Scheme. According to Henrard S, Hermans C(2015,Dec 13)this depicts a blend of a Value-Based Pricing with QALY yet NICE will likewise survey regardless of whether the medication gives adequate incentive to the system. The normal precedent is for uncommon ailments which have a little generally cost to the system yet are frequently overrated contrasted with their QALY esteem.

Some portion of that framework takes into account adaptable valuing. On the off chance that new signs of a medication are recognized or the proof of the viability of the medication changes, at that point the cost would be balanced as needs be. Be that as it may, there is likewise a money related top on how rapidly those costs can rise. Another viewpoint is the idea of Patient Acccess Schemes where things like refunds and limits are joined.


  • Henrard S, Devleesschauwer B,(2013) retrieved on Dec 20, retrieved from Institute of Health and Society (IRSS), Université Catholique de Louvain, Clos Chapelle-aux-Champs, 30 B1.30.15, 1200 Brussels, Belgium
  • Luzzatto L(2015) retrieved on Feb 28 retrieved from National Institute for Health and Disability Insurance (RIZIV/INAMI), Brussels, Belgium.
  • Hollak CE(2015) retrieved on March 28 retrieved from Rare diseases and effective treatments: are we delivering? Lancet. 2015 Feb 28;385(9970):750–2. pmid: 25752159
  • Graf von der Schulenburg JM(2015) retrieved on March 16 retrieved from Rare diseases and orphan drugs in Belgium and in the European Union: what is the current situation? Louv Med. 2015 Dec;134(10):527–34. French.
  • Frank M(2015) retrieved on October 27 retrieved from The health and economic burden of haemophilia in Belgium: a rare, expensive and challenging disease. Orphanet J Rare Dis. 2014 03 21;9(1):39. pmid: 24655371
  • Henrard S, Hermans C(2015) retrieved on Dec 13 retrieved from Orphan drugs expenditure in the Netherlands in the period 2006-2012. Orphanet J Rare Dis. 2014 10 11;9(1):154. pmid: 25304026