This article is more than 5 years old. Information may no longer be current.
Researchers develop value-based framework for cancer drug pricing
Researchers have developed a framework for establishing value-based pricing for new oncology drugs that are entering the U.S. market.
“Cancer drug prices have been skyrocketing in recent years, and these prices are not linked to the benefit that the drugs provide,” Daniel A. Goldstein, MD, a third-year fellow in the department of hematology and medical oncology at Winship Cancer Institute of Emory University, said in a press release. “Most new cancer drugs cost in excess of $10,000 per month.”
Goldstein and colleagues evaluated the framework by assessing the cost-effectiveness of adding necitumumab (Eli Lilly) to standard treatments for metastatic squamous cell lung cancer.
Value-based pricing links the price of a drug to the benefit that it provides.
Overall, results of the economic analysis showed the addition of necitumumab had a significantly lower value-based cost than most cancer drugs entering the marketplace. The value-based price of necitumumab per 3-week cycle should range between $563 and $1,309 per cycle, according to the researchers.
The SQUIRE trial (Thatcher N, et al. Lancet Oncol. 2015;doi:10.1016/S1470-045(15)00021-2.) demonstrated that the addition of necitumumab — which is currently awaiting FDA approval — to chemotherapy for patients with metastatic squamous cell lung cancer increased median OS by 1.6 months (HR = 0.84; 95% CI, 0.74-0.96). However, researchers noted the costs and value associated with its implementation remain unclear.
Goldstein and colleagues developed a Markov model using data from multiple sources — including survival distributions and frequency of adverse events based on the SQUIRE trial — to evaluate costs and patient life expectancies associated with each therapy regimen. The model included a scenario in which patients received gemcitabine and cisplatin for six cycles, or gemcitabine, cisplatin and necitumumab for six cycles followed by necitumumab maintenance.
The model calculated drug costs in 2014 dollars based on Medicare average sale prices and costs of drug administration and management of adverse events based on Medicare reimbursement rates.
Results of the base case analysis showed the addition of necitumumab to the chemotherapy regimen produced an incremental survival benefit of 0.15 life-years and 0.11 quality-adjusted life-years (QALY). When necitumumab cost $850 per cycle, it had an approximate incremental cost-effectiveness ratio (ICER) of $100,000 per QALY, whereas when necitumumab cost $1,850 per cycle, the approximate ICER was $200,000 per QALY.
Researchers conducted a probabilistic sensitivity analysis to establish the cost range for which necitumumab would be cost-effective, common thresholds for which include $50,000 per QALY, $100,000 per QALY, $150,000 per QALY and $200,000 per QALY.
Results showed that when necitumumab cost less than $563 per cycle, researchers achieved 90% confidence that the ICER for the addition of necitumumab would be less than $100,000 per QALY. A cost of less than $1,309 per cycle would equate to an ICER of $200,000 per QALY.
A price greater than $6,628 per cycle demonstrated 99% likelihood that the ICER would exceed $500,000 per QALY.
“These rising prices are unsustainable to the system,” Goldstein said. “Potentially life-saving drugs should carry a high price tag, but drugs such as necitumumab that extend life expectancy by only a matter of weeks should cost significantly less.”
As oncology drug costs rise, value-based pricing could allow clinicians to continue providing the most effective cancer care, Benjamin Djulbegovic, MD, PhD, distinguished professor and professor of medicine and oncology at University of South Florida and Moffitt Cancer Center, wrote in an accompanying editorial.
“Rising costs in cancer drugs will inevitably pit societal interests against those of the individual patients, creating the classic prisoners’ dilemma, which is increasingly dominating modern health care,” Djulbegovic wrote. “Physicians are increasingly put into the difficult position of divided loyalty: simultaneously to uphold the dignity and values of the individual patient while being good stewards of societal resources. Neither physicians nor patients should be put in this position. Reducing the price of cancer drugs can help us escape the prisoners’ dilemma and substantially ameliorate the increasingly untenable situation of excessive costs of cancer drugs.” – by Cameron Kelsall
Disclosure: Goldstein reports no relevant financial disclosures. Please see the full study for a list of all other researchers’ relevant financial disclosures. Djulbegovic reports no relevant financial disclosures.