Angiomax Case
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What is the value in use of Angiomax to a hospital? Is it the same for all types of patients?
Unlike heparin, the effects of a dose of Angiomax are very exacting and very crisp. The medicine has predictable results which are important for minimizing uncertainty in an acute care setting.
Angiomax works better among patients at risk for bleeding
Angiomax works faster than heparin. It takes only 1/6 to 1/4 of the time heparin use to take full effect.
There is no immune reaction to Angiomax
Percentage of patients in adverse condition within 7 days of treatment
Very High Risk
High Risk
Low Risk
Heparin
21.4%
16.5%
Angiomax
Relative benefits of Angiomax over Heparin
-13.6%
-3.5%
Savings/per patient
Because on average a hospital incurs an additional $8,000 to treat a person who experience complications, the cost saved for using Angoimax is shown in the above table.
What price should the Medicines Company charge for a dose of Angiomax? Why?
The cost for Angiomax:
Fixed cost:
Acquisition and development cost: $2+$28=$30 million
Royalty: (6%+20%)/2*Sales volumes=13%*sales volumes
Marketing expense: $3 million
Variable cost:
Cost of Goods Sold: $40 per dose*the volume of Angiomax sold
In the industry, the typical price to cost of goods sold ratio is 10 to 1, so the price should be around: $40*10=$400 per dose
Which hospitals will be the innovators and early adopters of Angiomax? Will this be an easy or a tough sell? Why?
If you were the Medicines Company, how would you promote adoption?
There are three major groups that influence the purchase and use of new drugs:
The doctors: They are concerned with the results of the drug.
The hospital pharmacists: They are concerned with price.
The hospital administrators: They care about whether the drug makes economic sense.
Drug companies rarely have direct access to administrators. So they have to work through the doctors and the pharmacists and get them to push for the drugs:
Forming a sales force with people who have existing