In health care, the term ‘Payer’ generally refers to people or bodies other than the patient that finance or refund the cost of medicinal products and health services. Payers can be government ministers deciding the price or reimbursement of products at a national level, administrators within health technology assessment (HTA) bodies, medical insurance companies or they can be a pharmacist in a hospital who helps determine which products the hospital uses. In certain circumstances, the patient can also be thought of as a Payer, particularly if they must pay for the full cost of the treatment themselves.

The main objective of the Payer is to ensure that they deliver the best possible health outcomes from their budget. This means they are looking for products which offer “value for money”. In order to achieve these objectives, Payers fund new products that are either innovative, have a low impact on their budget or offer improved results versus other available treatments on the market, thus offering good value for money.

The importance of the Payer has increased in recent years. This is due to several reasons, including people across the world are living longer and the global birth rate is increasing fast; increasing access to health information widely available on the internet and the introduction of new medical treatments and technologies. The result is that patients have an increasing awareness of health and treatment options, all of which lead to greater demands on the healthcare system. However, government healthcare budgets are tighter with stricter controls on spending and therefore, Payers are required to make decisions on which products to reimburse. Payers want to reimburse products that offer good value for money and are therefore responsible for making decisions around price, funding and patient access.

Payers can be broadly categorised into three levels within a country: National, Regional and Local. Each payer category may focus on different aspects of a treatment’s value during their pricing and reimbursement decision-making process.

  • National level Payers (e.g. Government ministers) may review the product in terms of whether the product offers value for money versus comparators and the impact it will have at a population level
  • Regional (state) Payers, will review the product as to how it will affect their region. Although they do not have responsibility at a national level, politics and regional budget will drive their decision making. In countries with decentralisation regional Payers are more important
  • Hospital (local) Payers are often more interested in the direct impact the product will have on their hospital budget and the benefit to individual patients

Any uncertainty that Payers have can make it harder for them to decide whether to fund treatment.

In summary, governments have limited healthcare budgets resulting in insufficient resources to fund all their population’s healthcare wants and needs. It is, therefore, the role of the Payers to make informed, evidence-based decisions on which treatments to fund. Due to the differences in how healthcare systems are set up in each country, and the process in which treatments are reimbursed and prescribed, pricing and reimbursement decisions can vary from country to country.

Companies wanting to gain funding for a new pharmaceutical product launch must provide clinical evidence that meets the needs of the different Payers. Remap Consulting is a Market Access Consultancy, with over 40 years combined experience in pharmaceutical pricing and reimbursement. We can help you understand the clinical and economic evidence requirements that drive payer decision making as well as to determine a potential price range for your product. A recent example of our expertise is available here.