How pharmaceutical marketing specialists can prepare for the 200% pricing threat of Trump

If you are a commercial setting for life sciences and you find it difficult to analyze recent policy declarations, you are not alone.

The problem stems from what seems to be competing positions: the administration offers prices at the same time as the price ceilings.

By putting aside the policy of this situation at the moment, let us explore how some of these policies can actually work in reality and how they can influence the decision -making of the industry.

A prediction: the factors in force are likely to encourage manufacturers to make discounts of advertising and force on the ground, to look more in the commitment of the omnichannel hearing and to go further on the way of the disintermediary of payers thanks to direct sales.

Situational analysis

Let us examine the situation that drug manufacturers face. In March, President Donald Trump promised an import rate in the sector. Since then, it has floated prices on the industry which can increase up to 250% over 12 to 18 months. The prices in the US sector probably remained “a few weeks old”, pending the government’s survey results in article 232 on pharmaceutical imports, Reuters reported last Wednesday.

The new samples, if they came, would reach the following categories:

• The more than 60% of drugs imported as finished products

• Almost 90% of the API for a brand product from abroad, including the EU, the United Kingdom, India, Singapore and Australia

• Therapeutic zones with concentrated offshore manufacturing and no double source source

Consequently, the Phrma commercial group warned that American drug prices could increase up to 13%, disturbing patient access. Again, it is also possible that all additional costs are absorbed elsewhere in the system, for example by co-payment limits or patient assistance programs.

The prices are supposed to draw manufacturing in America, the logic will, reducing dependence on other countries for its supply of drugs. Although several companies have announced such commitments, it will take years to build a new pharmaceutical manufacturing plant and validated by the FDA.

Another White House policy with which industry must affirm that the pricing of the most favored nation’s medicines (MFN) was published via a decree in May. The president said that pharmaceutical companies had until September 29 to reduce the prices of doctors to align with those of other countries. It is not clear if this directive can be applied, however.

Constraints

There is still a lot of uncertainty surrounding the prices. Assuming that a certain level of price arrives, the manufacturers would become less profitable, perhaps much less, because they absorb part of the price by lower gross margins and delayed price actions.

In the past, the natural inclination would have been to increase prices. But these increases are strongly limited by government regulations (even before the MFN) and by the vast majority of commercial payer contracts, which require a certain prices. The only line of conduct without constraint on the price would be for new products, which should start at higher levels than the previous comparable brands.

In addition to the pricing constraint, a P&L is a P&L: most of the P & L pharmacy elements are fixed in the short term.

R&D expenses, which in no case control, remain almost the same. As for manufacturing, all new factories, even just for packaging, would take at least five years.

Almost all COGs (cost of goods sold) come from abroad and are subject to the price. The only significant lever is SG & A (sales, general and administrative expenses).

Resolutions

SG&A discounts could lead business managers to reduce sales and market the workforce, probably online with the amount of rate rates, as well as reducing purchase purchases or field investments. But the best course of action seems to be more supported by omnichannel engagement.

The life sciences sector goes to omnichannel engagement – with lighter sales forces and personalization on a large scale – and this could give specialists in pharmaceutical marketing a degree of flexibility, given its ability to compose and descend if necessary.

The other area where business managers could deepen their existing commitment implies an increase in the “Gardist directly”. A constant flow of pharmaceutical majors already chooses to sell their medicines directly to patients.

Last month, Astrazeneca said he was weigning such a plan. This followed the previous commitments of Pfizer, as well as companies such as Eli Lilly and Abbvie.

For prescription and realization, some companies conclude agreements with TV companies like RO and Hims & Hers. They also launch their own DTC platforms, such as Pfizerforall and Lillydirect.

The sale of treatments directly to consumers reduces costs. The services do so by bypassing the pharmacy service manager (PBM), eliminating prices concessions (i.e. discounts, discounts and costs) taken by PBM and other intermediaries such as insurers, wholesalers and pharmacies.

The cost of these concessions can represent approximately 20% to 30% of the price of the list of brand medicines. If other areas of the pharmaceutical society assessments become in a hurry, this can become a target.

In addition, drug manufacturers feel political pressure to continue the direct channel. The letters sent to 17 drug manufacturers last month by the administration forced them to implement direct distribution models to consumers for high -volume drugs and high volume content.

Following

According to reports, the next manufacturer of drugs on the point of following the direct road can be rock, a company whose RX drug portfolio is mainly composed of treatments specialized in fields such as multiple sclerosis, eye diseases and cancer. These are not categories traditionally associated with DTC sales.

If Roche will adopt direct sales in the United States, it would be a potentially unprecedented decision. But in a forced environment, where COGs should increase with very little price flexibility, pharmaceutical CEOs may be willing to cancel the previous one if that means capturing average savings of 30%.

As the final scope and the tariff calendar appears and the administration contributes its probe to article 232, search for other pharmaceutical companies to start taking the direct path, reducing fixed costs such as sales forces and increasing the use of omnichannel. These will be additional evidence to show that what could already happen.

Publisher’s note: neither the author nor his business have a relationship with the companies / products mentioned.

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