Xu, Qingyang and Andrew W. Lo
We examine the disruptive pricing strategy of abaloparatide, an osteoporosis drug launched by Radius Health in 2017 at a list price 45% lower than its main competitor. This strategy allowed Radius to gain rapid access to this market and achieve a corresponding growth in patient volume. It now faces two challenges: the perverse incentive of Medicare Part D rebates, and the paradox of coverage structure that prevents lower list prices from necessarily leading to lower out-of-pocket costs for all patients. Nevertheless, this pricing strategy is sustainable for the drug manufacturer, beneficial for the patient, and may have potential applications in other therapeutic areas.