A New WAC-ky Reality: Brands Talk Price

In the past decade, pharmaceutical marketers have significantly transformed their strategies regarding drug pricing. Before notable cases like Zaltrap in 2012 and Sovaldi in 2014, pricing discussions were typically avoided. However, in recent years, there has been a clear shift as many major pharmaceutical companies now proactively include the Wholesale Acquisition Cost (WAC) in their press releases for new product launches. This preemptive measure addresses potential pricing criticisms head-on. This change in strategy underscores a growing awareness of the critical role that drug price perceptions play in determining market access and overall commercial success.

In this post, we delve into the significance of highlighting WAC in marketing messages and explore current mindsets among pharmaceutical marketers. As best practices continue to develop within the US market access landscape, communication about pricing remains one of the most swiftly changing domains.

Background

Working in healthcare pricing before the pivotal case studies of Zaltrap in 2012 and Sovaldi in 2014 was like collaborating with the Wizard of Oz—strategies were crafted behind the curtain, with pricing percentages adjusted quietly in spreadsheets, far from the public eye. Historically, the pharmaceutical industry steered clear of discussing new drug prices in press releases, conferences, and meetings, typically field teams avoided the topic to focus on clinical data. However, a new era is emerging, marked by evolving best practices that embrace open discussions on Wholesale Acquisition Cost (WAC) and market access strategies.Key Considerations of WAC-based Marketing

In the early 2010s, there was a rapid shift in mindset following several high-profile cases. Market access professionals, having seen other products caught off guard, became determined to equip their teams with well-considered responses to pricing inquiries. By 2015, as a healthcare pricing consultant, I often engaged in client-driven discussions about publicly explaining pricing strategies if criticized. Clients no longer sought just a pricing strategy; they demanded clear messaging to support the WAC, thus giving rise to WAC-based marketing. This concept remains relatively novel and may not yet be widely recognized.

Recent analyses reveal that only 1-2 products annually include WAC in their launch press releases, whereas 1 in 3 products highlights their patient support or assistance programs. This barely scratches the surface of WAC-based marketing. A simple search for any new brand name paired with "price" yields numerous resources, including patient websites explaining pricing and support options, news quotes from executives, and articles quoting the company on pricing rationale. Clearly, there is a concerted effort to ensure market understanding of product pricing and the reasoning behind it.

The key lesson from the Zaltrap and Sovaldi case studies is that readiness for discussions on pharmaceutical pricing has become essential. Today, there are generally three approaches: Proactive, Reactive, and Avoidant. Proactive marketers anticipate and address pricing questions before they arise from customers or media. Reactive marketers have prepared messages but use them only when questions emerge. Avoidant marketers attempt to deflect all pricing or value inquiries towards clinical data, adhering to traditional industry norms. Next, we will delve into key considerations of WAC-based marketing.

Key Considerations of WAC-based Marketing

The WAC is the strategic price set by a pharmaceutical company and the number from which nearly all other price metrics directly or indirectly flow. Therefore, given the diversity of acquisition costs and perceptions of cost (e.g., patient out-of-pocket costs) in the market, focusing on WAC provides the most consistent set of messages for discussing drug pricing. However, all stakeholders, both customers and pharma team alike, need to recognize that WAC comparisons do not directly relate to the comparisons of net cost to the purchaser (for example, when there is contracting or channel discounts) and do not necessarily equate to out-of-pocket cost burden to patients (for example, non-preferred brands often have higher out-of-pocket costs than preferred brands regardless of the net cost to the plan).

Moreover, it's intriguing to note that the Wholesale Acquisition Cost (WAC) is largely irrelevant to the acquisition cost for organizations benefiting from 340b pricing. Factors such as time on the market and penalties related to price hikes play a more significant role than the WAC itself in the 340b calculations. Thus, when discussing pharmaceutical pricing with 340b covered entities, like disproportionate share hospitals, WAC is not a particularly useful metric.

Emphasizing the strategic intent behind WAC pricing in your messaging can effectively address these challenges. Even a simple statement of, “a WAC similar to other products in the same class” can help address questions about the price in a world where many stakeholders do not have direct access to the pricing information. Importantly, best practices clearly indicate that supplementing the messaging with simple descriptions of programs to help patients such as Patient Assistance Programs (PAPs) and copay assistance can go a long way to demonstrate a commitment to patient access rather than just market access when interacting with patient-facing stakeholders such as healthcare providers (HCPs) and patient advocacy organizations.

Avoidant Approach

I'll be candid: the Avoidant Approach appears quite disconnected from the current realities of pharmaceutical marketing. Upon examining recent product launch press releases and other media coverage, including executive interviews, it becomes evident that most major pharmaceutical companies have adopted either a proactive or reactive stance. If I were to speculate on who might be avoiding the topic today, it likely pertains to special cases rushed to market without a fully developed market access strategy. Given the impact of public scrutiny on product pricing, everyone should be preparing strategies for this scenario, even if they are only messages reserved for critical situations (i.e., a Reactive Approach). Despite this, I still encounter some reluctance to engage in transparent discussions with non-payer audiences and understand that certain organizations may be particularly risk-averse.

Reactive Approach

At one end of the spectrum of Reactive Approach, I suspect there are some organizations who are still solely relying on the economic evaluations included in the Academy of Managed Care Pharmacy (AMCP) dossier. The dossier format, already in version 4.1, provides a consistent, robust, and transparent approach to providing pharmacoeconomic information to customers. That said, it provides a poor basis for carrying marketing messages and, oftentimes, the methodologies can become the focus rather than the key themes.

The exchange of robust healthcare economic information (HCEI) remains crucial for population-based decision makers (PBDMs), such as institutional and health insurance pharmacy directors. Meanwhile, stakeholders like prescribers, advocacy organizations, and media outlets are increasingly inquiring about the pricing of new products. Since the AMCP dossier is not tailored for these audiences, they may find it overly complex and unhelpful. Therefore, equipping organizational leaders and field teams with responsive Wholesale Acquisition Cost (WAC) messages is vital in an environment where stakeholders frequently express concerns about pricing.

Proactive Approach

In the last few years, new product approval press releases from the largest pharmaceutical companies have begun to include statements like “a WAC competitive to other agents in the same class” while highlighting patient programs including Patient Assistance Programs (PAPs) and copay assistance. Some press releases include a full table summarizing the WAC of the new product along with details about different clinical scenarios which can affect the price (e.g., weight-based dosing, time on therapy).

Another great example of proactive approaches to WAC-based marketing are value websites. Several large brands today have a patient site which addresses the WAC directly and then explains all the different patient support options a patient has for help. In the examples we reviewed, these sites often include a breakdown of the resources for patients based on what type of insurance they have (e.g., Medicare, Medicaid, Employer).

Conclusion

In today's pharmaceutical industry, avoiding price discussions poses a significant risk. Whether you choose a proactive or reactive strategy, addressing questions about pharmaceutical pricing with thoughtfulness, transparency, and directness is crucial. Numerous case studies reveal the pitfalls of mishandling these issues, and it's fascinating to observe how the industry continues to evolve to the ever-changing market realities.

This topic, along with many others, is included in the online courses of Invisible Economics. Learn more here!