Novel Cancer Drugs Must Adopt Value-Based Pricing

August 2017, Vol 10, Special Issue: Payers’ Perspectives in Oncology: ASCO 2017 Highlights
Chase Doyle

Chicago, IL—Although the cost of novel oncology drugs continues to rise, their clinical benefit has not managed to keep pace, suggesting a decrease in value over time.

According to a new study, the 28-day cost of drugs approved between 2006 and 2015 increased by 98% during this 10-year period, whereas the American Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology (ESMO) scores, which measure clinical benefit, decreased by 32% and 13%, respectively.

To minimize the financial burden of cancer treatment on patients and the healthcare system, value-based pricing that reflects the clinical benefits of a treatment is needed, said Ronak Saluja, BSc, Medical Oncologist, Odette Cancer Centre, Sunnybrook Health Sciences Centre, Toronto, Ontario, Canada, and colleagues.

“With a rapid rise in anticancer drug costs, there is growing concern that prices of these drugs may no longer reflect their expected benefits,” said Mr Saluja at the 2017 ASCO annual meeting. “It seems like these drugs are just being priced based on what the market is willing to bear, not on what the benefit of these medications may be.”

ASCO and ESMO have independently published value frameworks that assess the clinical benefit of oncology treatments.

Mr Saluja and colleagues identified 43 drugs with a first indication approval between January 2006 and August 2015. These drugs’ respective randomized controlled trials were then scored with the ASCO Value Framework and the ESMO Magnitude of Clinical Benefit Scale. The researchers obtained the launch price for the FDA approval year for each drug from RED BOOK. The dosing schedule outlined in randomized controlled trials was used to determine each drug’s 28-day cost, which was adjusted to 2015 US dollars using the Consumer Price Index.

Drug Prices Do Not Reflect Clinical Value

During the 10-year study period, the predicted mean 28-day cost of oncology drugs increased by 98%, from $8153 in 2006 to $16,130 in 2015. The predicted mean incremental drug costs increased by 583% during the same period, from $28,158 in 2006 to $164,174 in 2015. Despite the nearly 5-fold increase in incremental cost, however, the clinical benefits of these therapies did not follow the same trend.

“Over 10 years, we found that the 28-day cost of these drugs is increasing by approximately 8% per year, but ASCO and ESMO scores are not increasing proportionally,” Mr Saluja reported. “There were some scores that decreased, and some that increased, but overall, clinical benefit remained relatively stagnant.”

The predicted mean scores for both frameworks decreased numerically from 2006 to 2015, with ASCO’s and ­ESMO’s scores falling by 32% and 13%, respectively. Moreover, said Mr Saluja, no statistically significant correlations or relationships were observed when comparing costs directly to scores.

Although not surprised by the study’s conclusion, the magnitude of the difference between cost and benefit gave Mr Saluja and colleagues pause.

“Most people know that the costs are rising exponentially and the benefit of these medications may not be rising at a similar rate, but we were surprised by the degree. We did not expect there to be a nearly 600% rise in incremental cost.”

According to Mr Saluja, the analysis was based on publicly available prices of these drugs, which may differ from real-world contracts.

“In reality, hospitals and large institutions may have their own contracts with pharmaceutical companies, so they’re not paying what’s actually reported by the manufacturer, but those data are impossible to find,” said Mr Saluja. “Nobody is going to reveal their contracts or prices.”

Value has a broad definition, Mr Saluja noted. Although some patients may view 5% improvement as a huge difference, from an administrator’s perspective, that same 5% may not justify the cost. Nevertheless, he added, the work being done by ASCO and ESMO to quantify clinical benefit of therapies represents major progress in the drive for value-based care in oncology.

“The frameworks are definitely not perfect, and they don’t capture everything, but they’re an important step forward,” Mr Saluja concluded. “We must continue to examine cost-effectiveness as we’re funding new drugs.”

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Last modified: September 11, 2017
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