Complex pricing decision for BiDil

NitroMed isn’t a particularly innovative company by the usual standards. Its newly approved drug, BiDil is a combination of two generic products. But NitroMed has innovated by seeking and winning approval to market BiDil specifically for African Americans.

Now NitroMed is trying a complex pricing scheme to try to maximize revenue and minimize backlash. Financial analysts expect the strategy to work. They’ve raised their revenue forecasts for BiDil by 50 percent since the pricing scheme was introduced.

There are three tiers of pricing:

  • A regular price of $1.80/pill, or $5.4o-10.80/day depending on dosing. That compares with about $3/day for competitors like Coreg and Inspira
  • $25/month for anyone without prescription drug coverage
  • Free for anyone with an income below 3x the poverty level. (Most such plans cover people with an income of 2x the poverty level or less.)

The idea is to take the heat off the high regular price and get as many people to pay that price as possible. As discussed in today’s New York Times (Maker of Heart Drug Intended for Blacks Bases Price on Patients’ Wealth), in practice charity programs are underutilized because of the amount of paperwork involved and the lack of awareness among physcians and patients.

NitroMed hasn’t announced how it intends to deal with insurance companies. But the low pricing to uninsured patients raising an interesting question: If more pharma companies offer big discounts to the uninsured, regardless of income, as NitroMed and Merck have done, why buy prescription coverage?

Of course, since BiDil is just a combination of two generic drugs, NitroMed is runnning a big risk with its high pricing. NitroMed has tried to blunt the generic threat by making BiDil with different doses of hydralazine and isosorbide dinitrate than those drugs are available in on their own, but that may not be enough.

…[S]ome doctors are willing to experiment with higher and lower doses or split generic pills to achieve similar results…

“It’s just not worth spending an extra $100 a month to avoid taking a few additional pills, said Dr. [Steven] Nissen, [a cardiologist who led the FDA panel that approved BiDil.]

July 8, 2005

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