It Is Never Too Early – or Too Late – to Tell Your Drug’s Value Story
It Is Never Too Early – or Too Late – to Tell Your Drug’s Value Story
A Brief Guide to GCEA by Stages of Clinical Development: Why showing the world a drug’s value before declaring its price can prevent a breakthrough medicine from being under-appreciated or unfairly maligned.
Nobody would invest the time and money in the risky and expensive drug development process if they weren’t sure that their drug would be very valuable if it proves to be as safe and effective as they intend it to be. If you’re a biotech CEO, you’re certainly convinced your drug candidate is valuable. But other than you, who else appreciates that value?
The investors that fund your work obviously have done their diligence; they’ve written you some big checks and they’re on board with your story. But what about payers? What about potential partners or acquirers? What about patients and their families? The media?
A successful run through the development and regulatory gauntlet does not guarantee commercial success. And whether or not the world appreciates the value of what you’ve created plays a huge part in whether or not patients can access your drug and whether or not your investors’ risk tolerance earns a reward.
And so it’s essential to construct and quantify your value proposition at every step of clinical development and company building. To do so, we recommend using the generalized cost-effectiveness analysis (GCEA) framework.
If running a net present value (NPV) analysis is how you might estimate the value of a company, then think of GCEA as a way of calculating the societal value of a product. When a stock trades below its estimated NPV, it’s perceived to be a bargain and worth buying. Similarly, when a drug’s price is below the limit of what a GCEA estimates to be cost effective (i.e., money well spent), it should be appreciated as offering a bargain to society.
But just as a stock’s value can be debated with dueling sets of NPV model inputs, value can be debated with different inputs and different ways of constructing a cost-effectiveness model. Biotech executives and investors understand the importance of revenues, costs, discount rates, probabilities of success, and terminal values for an NPV; they should likewise have command of the inputs into cost-effectiveness math, which include but are not limited to healthcare costs, quality of life, survival, caregiver spillover, productivity, time to loss of exclusivity, future generic price, discount rate, and population risk reduction.
Each input has to be estimated and defended to persuade others to see the value you see.
These model inputs are expressed as math, but they represent very real things that can be conveyed in plain English. For example, GCEA recommends using a lower societal discount rate, around 1.5-2%, instead of the 3% rate commonly used in traditional CEA. This is because it is demonstrably true that people love their children and grandchildren and are willing to spend money today to help them many years from now. In other words, we don’t actually discount the distant future as much as 3% would suggest. And factoring in productivity simply recognizes that a healthy person can and does work, which has value to society. For example, the biopharma industry has created HIV medicines that today keep over one million people who are HIV+ in good health. This not only saves society billions of dollars in healthcare spending but also allows those people to earn over $70 billion in annual wages. That productivity dwarfs the roughly $12 billion the US spends on those medicines each year (at least until they go generic).
When you can clearly convey the value of your medicine to society, describing its impact on a patient, their family, and their community not only today but for generations to come, you can then convert that story into math that yields an estimate for your drug’s societal value. And that’s a powerful tool for conveying value to people who like their stories quantified.
And it’s deeply gratifying. If your drug is impactful and destined to become a blockbuster; odds are that quantifying the many ways it will benefit society will make you even more proud of the good that your team is bringing into the world. Conventional CEA is over-simplified and by design under-estimates a medicine’s societal value; it’s a guillotine that slices off value elements (e.g., benefit to caregivers, how it restores productivity, that it will go generic, etc.). GCEA is more like a pedestal on which to display the world-changing impact of a new medicine for the rest of time. You have a choice: which one do you want to build?
We had quite a bit of fun with our recent GCEA case study for Cidara’s one-shot-per-season flu antiviral CD388. And this pilot application has shown that applying GCEA analysis earlier in the product development lifecycle can inform and reinforce your value narrative and support internal and maybe even external conviction. Merck later acquired Cidara for $9.2B, suggesting that they also believe in CD388’s value to society. Now GCEA is a tool in their hands as they look ahead to global commercialization.
By integrating GCEA methodology strategically across clinical phases, biotech innovators can be smarter about gathering inputs during trials, strengthen their value narratives, and ultimately improve patient access and welfare.
Before Phase 2: Aligning Vision with Value
Early in development, the properties of the product you hope to invent are likely conceptual. You can’t quantify them precisely since you don’t know how well your product works, but you can work up hypothetical values based on how well you hope the invention will work and draw on existing literature.
Take CD388, for example, and think about the burden of flu on your daily life.
Catching the flu almost certainly means having to take time away from work, impacting your (and possibly others’) “productivity.”
Having the flu often means your family members might have to take time to care for you and they might risk catching the flu themselves. This impact on their lives and productivity is what economists call “caregiver/family spillover.”
Some people (especially those with pre-existing conditions or anyone susceptible to severe infection, such as the elderly) might be so scared of catching the flu that they are anxious and avoid social gatherings during flu season. That anxiety and avoidance can be mapped to all the risk-related petals.
[value flower graphic]
Mastering GCEA can feel like learning a new language, but it’s worth becoming fluent or at least working with people who can wield GCEA just as many executives can do an NPV or know how to commission one. As we learned from our Cidara case study, the best way for an investor or executive to fully understand GCEA is to immerse themselves in their own GCEA analysis, which is easy to commission from an experienced economist.
Elements of value like health gains, productivity impacts, equity considerations, and broader societal benefits align remarkably well with what savvy investors already evaluate. Referencing this framework early helps teams identify which value dimensions matter most for their specific therapeutic area and target population, and sets the stage for more rigorous analysis as clinical data emerges from Phase 2 trials. Understanding which elements of value matter most for your potential product can begin to inform clinical trial design and evidence generation strategies down the road.
End of Phase 2: From Qualitative to Quantitative
Once Phase 1/2 trials yield data, you can start quantifying value. This inflection point is ideal for applying the NPLB GCEA calculator to conduct an initial value assessment. Even with preliminary data, this exercise helps teams understand their therapies’ potential societal value and confirm those key value drivers – whether they’re clinical outcomes, quality-of-life improvements, caregiver burden reduction, peace of mind, or productivity gains.
This early quantitative work serves multiple strategic purposes. First, it gives you a sense for the value of your invention to society and therefore how it could be profitably priced while still offering society a bargain. Second, it reveals critical data gaps that should be addressed through modified trial protocols or companion real-world studies, ensuring that pivotal trials capture all the evidence required for comprehensive value demonstration. This can also be the time to begin developing a full GCEA model that can evolve alongside the clinical program; commissioning the GCEA is inexpensive (a few hundred thousand dollars) compared to product development itself.
With Cidara, we learned that the certainty patients gain by using CD388 (which features consistent year-to-year efficacy that is higher than the best data reported for flu vaccines, whose efficacy varies) improves quality of life and will likely be an important value driver. This could be robustly quantified in follow-on work.
Importantly, GCEA's broad value elements can be tailored into distinct stories and messages for different stakeholders that might prioritize certain value elements above others. Patients may care most about quality-of-life and functional improvements. Clinicians focus on clinical outcomes and treatment burden. Payers emphasize budget impact and long-term cost offsets. Starting this audience-specific storytelling early ensures consistency and credibility.
Your ultimate narratives do not need to sound like an economics lecture just as marketing for a new car doesn’t sound like an engineering seminar. But mastering the economics and engineering means you have a solid foundation for making claims of value however you ultimately decide to market your product. And if you are ever pressed to justify your claims, there will be plenty of rigor and data with which to win over sophisticated skeptics.
Phase 3 and Beyond: Refining and Defending Value
As pivotal Phase 3 data become available, the GCEA model should be refined with the latest trial results and complementary real-world data. This polished analysis becomes central to launch preparation, supporting health technology assessment submissions, payer negotiations, and stakeholder communications.
Traditional health economic models are typically static. They’re conducted at launch and are rarely updated to reflect real-world outcomes. But GCEA’s utility doesn’t evaporate once your drug is launched. In today's healthcare environment, where scrutiny of drug pricing intensifies post-approval, the GCEA model serves as a useful and dynamic tool for assessing and incorporating real-world outcomes and defending a therapy's value proposition. As post-marketing surveillance and effectiveness data accumulates, companies can demonstrate whether anticipated value is being realized in practice and provide evidence-based responses to policymakers, payers, and patient advocates.
GCEA isn’t what will set the price of your drug. Ultimately you will consider a range of factors, including market prices for products comparable to yours. But GCEA can put the market price into the context of a drug’s societal value so that it’s clearer whether you are offering a bargain or are overcharging. So far, we have observed that GCEAs of blockbuster drugs tend to reveal that their US market prices are bargains relative to their societal value. That is very reassuring to anyone who wonders if the US is paying for value. After all, organizations that insist on conventional CEA would have you believe that the US consistently overpays.
The closer your drug gets to approval and more valuable it is, the more likely it might be selected for a value assessment by organizations like the Institute of Clinical Effectiveness Research (ICER). Invariably these assessments are based on traditional cost-effectiveness analysis that tends to underestimate the societal value of new technologies. ICER chooses to build the guillotine.
While still largely ignored by payors in the US, ICER employs largely the same math as NICE in the UK and CADTH in Canada. And since drugs tend to launch in the US before they launch in the UK or Canada, think of ICER as practice for how the rest of the world will attempt to undervalue your work.
In any debate, the one who sets the terms upfront has an advantage. If you let the simple CEA camp set the terms, then you’ll be playing defense, trying to explain why your drug is worth more than they say. If you do GCEA first and present your results early, you set the terms of the debate and make it clear that your drug, if priced like comparable drugs, would represent a bargain compared to its societal value. You would draw attention to caregiver benefits, the value of your drug someday going generic, and other petals of the value flower. Your sensitivity analysis would include removing all the petals and showing “that a stripped down CEA would yield a lower value, but what credible health economist would ignore all those values?” In this way, you are vaccinating the audience against falling for facile conventional CEA.
And when someday you are preparing to launch in the UK and are told by the NHS that you have to conduct a CEA to NICE’s specification, just submit your GCEA. Say “My team developed a great drug with a lot of demonstrable values. I’m not going to rip the petals off my own value flower just so that you can tell me it’s a worthless weed. You want to pay less? Name your price and we’ll see if we reach a deal. But don’t try to justify your freeriding by telling us that our medicine is worthless using your skimpy math.”
The UK might refuse to cover your drug, which is a loss for patients there who may demand better of their government and its bureaucracies. Your GCEA should give you the pride and spine to stand up for your work. For decades, companies have just followed directions, hired health economists to do conventional CEA on their own products, and insulted themselves, all for the pittance that the UK pays.
That has created a huge backlash in the US against international pricing disparities. Americans are sick of other countries paying less. Doing a GCEA might not get other countries to pay more but at least we shouldn’t be complicit in undervaluing our work and US market-based prices.
Let’s stand up for the value we are creating for patients and society. By embedding GCEA methodology throughout different phases of clinical development, biotech companies transform value assessment from a late-stage box-checking exercise into a strategic tool that supports clinical and commercial decisionmaking, strengthens market positioning, supports sustainable patient access, and makes the case to society for the full value of our work. It’s about time.