In honor of Uwe Reinhardt – the Sahara Model & Why it Matters

Uwe Reinhardt makes a number of brilliant points in this post, published in February of 2017 –

There’s an incredible amount to unpack in this piece. And it’s one of the closest pieces I’ve seen to how drugs are actually priced in the United States. Understand the power dynamics of a given market and you’re on your way to understanding pharmaceutical pricing.

The comments about the middle class, especially as they pertain to out-of-pocket expenses for drugs are also excellent.

Clearly losing Dr. Reinhardt is a big loss.

But where does all this leave us? It depends – fully implemented the new finance models mentioned toward the end of the article completely dismantle the global pharmaceutical model as we know it today. Is that likely to happen? No. Is it important for more people within the industry to understand and appreciate these proposals? Yes.

Why? Because application of the Sahara model as illustrated by the recent spate of $250,000/year and now even $475,000/treatment drugs is creating a furor that the industry, Bio, and Phrma can’t control. Rather than talk about pharmaceutical pricing, why not implement (voluntary!) caps on sales and market expenses as a percentage of gross revenues? If we don’t get control of the narrative, some of these innovative R&D strategies are likely to be imposed, especially in a political climate that’s becoming more polarized, and could swing wildly in any direction with each coming election.

To be clear, I believe in the current venture-backed small company to big company R&D system. I believe many of the recommended R&D funding strategies would lead to even more horrible outcomes for new drugs. But I have serious concerns that we need our political class to focus on creating a stable healthcare payments system that covers as many Americans as we can, instead of focusing on how to pay for innovation. But if we continue to lose the battle, by making spurious arguments about needing high prices to support R&D, when we’re really supporting Sales & Marketing, then we make our industry vulnerable to wholesale changes that threaten patients and investors even more.





A (partial) list of Pricing and Market Access questions to answer before Launch

Last night I got a call from a Regulatory consultant who’s working with a pre-clinical biotech. They need pricing and market access insights before their NDA is approved. The technology is great, the leadership team is experienced, and they want to make sure they ‘get it right’.

Instead of doing a capabilities presentation, I decided to put together the list of pricing and market access questions that EVERY brand team needs to have nailed in advance of launch to be successful. In the spirit of helping the industry in general, I figured I’d share the framework here. Chiral Logic has extensive experience in answering these questions both from the manufacturer’s and consultant’s point of view.


·       What is your likely weighted average net price cut by relevant books of business?

·       What is the optimal WAC price to communicate the value of the product to the market?

·       Are there relevant price versus access tradeoffs for your product? What are competitors likely to do in response to your competitive launch? What will you do to avoid a price war over the life of the asset?

·       Are there other indications, patient types, or clinical attributes that your product will develop over time that may unlock additional value? How do they influence pricing at launch and over the course of the asset’s lifecycle?

·       What are the expected discounts to achieve your market access goals? What are your breaking points – where you’d like to return to senior management for guidance and potentially delay contracting due to margin erosion?

 Market Access

·       What is your plan for the period when the product will be NDC blocked by most payers?

·       What are the likely restrictions on your product if you do minimal contracting?

·       What is the BEST possible market access that you can achieve, whether through extensive payer education, contracting, or both?

·       Are there restrictions including Step Edits, Prior Authorization, or quantity limits (etc.) that dramatically decrease your commercial opportunity? Conversely, are there sets of these restrictions that you can ‘live with’ because >90% of your target market will already have completed them?

·       What kind of payer segmentation can you expect for your product? Is it based on behavioral or perceptional criteria?

 Patient Pay / Out-of-pocket / Couponing

·       Will you employ Relay Health or Coupons or both to keep patient out-of-pocket reasonable?

·       What is your strategy regarding transitioning your coupon program from launch mode into long-term growth stability mode?

·       What are your expected out-of-pocket costs for patients? What will your TARET copay be? What are your maximum contribution limits? Why? (these should be tied to your market access and profitability objectives)

 Answering these questions is the FIRST STEP on the road to generating your payer launch strategy. As I’ve mentioned before, it’s possible to answer these questions via qualitative or quantitative means AND feed your forecast. While the legwork to get these answers doesn’t have to be time consuming and expensive, this probably isn’t an area to skimp. After all, now more than ever, pricing provides critical input into overall product profitability.

So as my dermatologist says, ‘even if you don’t come to me, get checked out’. Invest to answer these questions – your stakeholders deserve the answers and your commercial partners (including payers) will expect that you know the answers and have a plan.

We’re happy to help you work through these questions as you prepare for launch. For more information – or

Image credit: Maina Kiai –
Used via Creative Commons License image used without any modification