OBJECTIVES:  Manufacturers seeking high prices for new or in-line agents are leveraging incentives that all but guarantee coverage in certain “sensitive” indications. Recent high-profile cases include the launch of Sovaldi (curative benefit), Sarepta (data issues), the price increase of the EpiPen (no competitors), some new oncology therapies. In “sensitive” indications, what are the constraints on “the sky is the limit” pricing incentives? This paper presents a conceptual model that seeks to explain and identify key factors driving manufacturer pricing behavior and payer reactions to it. METHODS:  Combined deductive / inductive approach; conceptual pricing-strategy model based on small-n qualitative analysis and comparison of salient cases of price-premium strategies. RESULTS: Moderately high prices in large population indications (Sovaldi launch), have led to tighter payer scrutiny and stronger public reaction than substantially higher prices in smaller population orphan diseases, or in oncology indications supported by compendia listings. Superior clinical benefits are leveraged by manufacturers to justify high prices, while inferior clinical benefits are leveraged by payers for coverage rejections. As drug pricing has become a salient issue in the US, manufacturers are increasingly considering “reputational costs” in their pricing strategies. CONCLUSIONS:  When seeking high prices in “sensitive” indications, manufacturers face three strategic choices: 1) Maximize price – which potentially maximizes revenue but imposes reputational & PR costs and possible payer scrutiny/rejection (data issues-Sarepta); 2) Restrain price – which boosts the company’s goodwill, creating reputational & PR capital, but has the downside of “leaving money on the table;” 3) Optimize price (to highest level below the payer radar) – which results in capturing significant revenue and maintaining goodwill, while sacrificing some revenue gain. Reputational costs / benefits are a new factor with significant influence on choice of premium-pricing strategy by manufacturers and a tool for payers and other system actors to indirectly contain costs through PR exposure.