TL/DR –
Pharmaceutical and medical device companies are adapting their commercial models to address economic and competitive pressures, with many modifying their engagement with customers, management of large enterprise accounts, and structure of sales teams. Regulatory changes in the US and EU are intensifying these pressures, such as the US’s Inflation Reduction Act (IRA) which seeks to reduce drug prices, and Germany’s Pharmaceutical Market Reform Act (AMNOG) and “Financial Stabilization of the Statutory Health Insurance System” law which impose stricter clinical standards and price caps. As a result, some manufacturers are reconsidering product launches in strict markets, reevaluating their pricing strategies, and seeking markets with less onerous barriers to entry.
Regulation Changes Impacting Pharmaceutical and Medical Device Companies
Pharmaceutical and medical device companies are adapting their commercial model approaches due to economic pressures, as outlined in this column. The new Numerof & Associates 2023 Commercial Model Report reveals how manufacturers are managing accounts and restructuring sales teams in light of global regulatory changes.
The Impact of the Inflation Reduction Act on U.S. Manufacturers
The Inflation Reduction Act (IRA) and its drug price “negotiation” provision impact pharmaceutical companies, as discussed in this previous column. The IRA is a significant U.S. healthcare policy change with far-reaching regulatory implications.
Germany Leading EU in Prescription Drug Price Negotiation
Germany has enacted the Pharmaceutical Market Reform Act (AMNOG) to reduce prescription drug costs. The AMNOG subjects new drugs to more stringent clinical standards. Additionally, it passed the “Financial Stabilization of the Statutory Health Insurance System” law that caps prices for new medicines. These regulations are changing drug pricing negotiations, with potential impacts on research and development (R&D).
EU Proposed Reforms and Industry Response
The European Union (EU) proposed changes to its existing pharma regulatory framework, including shortening the exclusivity period of new drugs. As a result of such changes, pharmaceutical companies are reconsidering their market priorities.
Future of the Commercial Model in the Wake of the IRA
The IRA is expected to have broad impacts on manufacturers. Interviewees from the Commercial Model survey expressed concerns about the law’s effects on their portfolios and pricing. Manufacturers are evaluating the IRA’s impacts and looking at other countries with less stringent barriers to ensure sustainable growth while mitigating risk.
The regulatory landscape has changed, with government-imposed price controls damaging the industry. As the impact continues to unfold, we can expect more challenges for an industry in transition.
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