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Predictive Analytics: setting a suitable prize for a new drug

By Sushmita Rai, 3rd Eye Advisory Ltd
Predictive Analytics: setting a suitable prize for a new drug

Predictive analytics involve the extraction of information from existing data sets so as to predict the outcomes and trends with an acceptable level of accuracy and reliability. Predictive analytics is a process that uses machine learning to analyse data and make predictions. It has been used for a long time, though the adoption has been low because of the complexity and costs.

Drug pricing and reimbursement methodologies are changing, largely due to new legislation and regulations regarding drug price transparency. The drug price solution that most accurately tracks true acquisition cost and assists with drug prize transparency, price setting, cost containment, and insightful analysis is Predictive Acquisition Cost.

Figure: PAC Methodology

Prediction Acquisition Cost (PAC) employs predictive analytics to estimate acquisition cost by considering various factors, including industry MAC benchmarks, published price lists, existing price benchmarks, drug dispensation and supply demand measures. PAC meets the criteria defined by the pharmacy industry for a successful new drug price benchmarks:

  • Transparency
  • Accessibility
  • Comprehensiveness
  • Timeliness

Basically, PAC addresses two fundamental drug pricing activities:

  • Establishing or assessing specific drug prices
  • Measuring the overall quality of a price list

The PAC leverages the power of predictive analytics, marring it with deep domain expertise, to deliver powerful and robust outputs to support drug pricing activity. Using various available factors associated with the cost of a drug, via a multi-dimensional predictive analytics model we can easily estimate the acquisition cost to within sufficient accuracy to support drug pricing activity. The defined statistical model helps to synthesize various known attributes into an overall estimation of acquisition cost.

Over the past decade, predictive models have become increasingly intelligent and accepted widespread. At 3rd Eye Advisory®, we work to develop and help deploy advanced systems and technologies for the healthcare industry in order to accomplish the objective of setting a suitable price for drugs through Predictive acquisition cost (PAC). PAC is an estimate of the acquisition cost of a drug created from a multi-dimensional predictive analytics model. It is used to improve the pricing of drug as it makes us aware of each and every drug used. It helps in finding individual choice of drugs for each patients. Incentive given to pharmaceuticals industry in order to produce medicines for smaller requirements. Nowadays, physicians are finding their changed role as they are more centralized part of healthcare industry.

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Article by: Sushmita Rai, 3rd Eye Advisory Ltd
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