Efficiency frontier approach recommends 71% price reduction for psoriasis drugs in US

Key takeaways:

• The efficiency frontier (EF) approach maps the cost of each therapeutic option to disease-specific outcome measures.
• The EF found that the U.S. must reduce the prices of psoriasis drugs by a median of 71%.

Using the efficiency frontier approach to negotiate prices for plaque psoriasis biologics may lead to substantial price reductions that better align with clinical benefits in the U.S., according to a study.

In 2022, the Inflation Reduction Act gave the Centers for Medicare & Medicaid Services the authority to negotiate Medicare drug prices with established state prescription drug affordability boards. However, the implementation of this approach has been shaky.

“Although value-based assessment of drugs is new to the U.S., many other countries, including Australia, Canada, France and Germany, use health technology assessment to systematically evaluate the efficacy and safety of new medications and to negotiate prices based on a drug’s added clinical benefits compared with existing therapeutic alternatives,” Alexander C. Egilman, BA, of the program on regulation, therapeutics and law, division of pharmacoepidemiology and pharmacoeconomics in the department of medicine at Brigham and Women’s Hospital, and colleagues wrote. “After negotiating prices based on these assessments, other countries generally pay less than half of the prices for brand-name drugs compared with the U.S.”

To assess a drug’s benefit, these other countries use quality-adjusted life-years to measure how well a treatment lengthens and improves a patient’s quality of life. However, pharmaceutical companies and certain patient groups in the U.S. have criticized this measurement method as discriminatory, which has resulted in the method being prohibited from use by Medicare and some states.

Since then, the U.S. has sought alternatives to this conventional method. While none have been widely adopted yet, one method has been suggested: efficiency frontiers (EFs).

Formally adopted by Germany in 2011, the EF method maps the cost of each therapeutic option to outcome measures that can be disease specific.

“By identifying the expected market price for drugs based on the actual level of benefit offered to patients, EFs can help policymakers decide whether a drug’s price is appropriate compared with therapeutic alternatives,” the authors wrote.

To investigate the usage of EFs in the U.S., the authors conducted a study using plaque psoriasis as an example. The authors evaluated the cost and benefit of 13 biologics according to the annual treatment costs as of January 2023 and PASI 90 response rates according to data.

Results showed that the PASI 90 response rates of these 13 biologics for plaque psoriasis ranged from 17.9% with etanercept to 71.6% with risankizumab, and the U.S. net annual treatment costs ranged from $1,664 for infliximab-dyyb to $79,277 for risankizumab.

More specifically, the EF found that infliximab-dyyb had a PASI 90 of 57.4% and an annual cost of $1,664, ixekizumab had a PASI 90 of 70.8% and an annual cost of $33,004 and risankizumab had a PASI 90 of 71.6% and an annual cost of $79,277.

When compared with other countries, the median net annual treatment cost was higher in the U.S. vs. the pre-rebate costs in Australia, Canada, France and Germany ($34,965 vs. $9,179-$15,556).

Overall, the EF concluded that prices for psoriasis drugs in the U.S. need to be reduced by a median of 71% to align with prices for the most cost-effective therapeutic alternatives. In comparison, the EF approach yielded smaller price reductions in Canada (41%), Australia (36%) France (19%) and Germany (11%).

‘The EF approach could be implemented in the U.S. to achieve substantially lower prices and to better align prices with clinical benefits to patients,” the authors concluded.

While this approach may be an alternative to the “politically charged” assessments that were previously used, the authors noted that “its use is limited to situations in which there are multiple therapeutic alternatives for which differences can be adequately summarized by a single outcome measurement.”