A Call for Value-Based Pricing of Oncology Drugs

It is time to start providing value-based pricing for new oncology drugs entering the US marketplace, according to researchers from Winship Cancer Institute of Emory University and Georgia Institute of Technology. They are suggesting that a new framework be adopted that establishes value-based pricing for all new oncology drugs that are approved by the US Food and Drug Administration (FDA).

In an article published in JAMA Oncology,¹ researchers demonstrated that the value-based price for necitumumab (a new agent awaiting FDA approval) ranges between $563 and $1,309 per 3-week cycle, which is significantly lower than most cancer drugs that have entered the marketplace recently. The SQUIRE trial demonstrated that adding necitumumab to chemotherapy produced an incremental survival benefit of 0.15 life-years and 0.11 quality-adjusted life-years (QALYs).

The researchers used their economic model to factor medication and administration costs with life expectancy, frequency and management of adverse effects, and quality of life. A Markov model was developed using data from multiple sources, including the SQUIRE trial. That trial looked at standard chemotherapy with and without necitumumab for first-line treatment in patients with metastatic squamous lung cancer. The researchers evaluated the costs and life expectancies associated with each regimen.

In this analysis, the patients were modeled to receive gemcitabine and cisplatin for 6 cycles or gemcitabine (Gemzar), cisplatin, and necitumumab for 6 cycles followed by maintenance necitumumab. This particular model’s clinical inputs were the survival estimates and frequency of adverse events (AEs) based on the SQUIRE trial. The analysis included drug costs based on the Medicare average sale prices, and also factored in were the costs for drug administration and management of AEs.

"Cancer drug prices have been skyrocketing in recent years, and these prices are not linked to the benefit that the drugs provide. Most new cancer drugs cost in excess of $10,000 per month," said lead study author Daniel A. Goldstein, MD, who is with Emory University in a press release. "These rising prices are unsustainable to the system. Potentially life-saving drugs should carry a high price tag, but drugs such as necitumumab that extend life expectancy only by a matter of weeks should cost significantly less."²

The researchers believe that an evaluation of cost and value is a crucial element in the drug development and approval process that currently is missing. They write that the current system of paying for cancer drugs provides little incentive for manufacturers when pricing drugs. Further, they suggest that clinicians are left in a difficult position as to whether prescribing some of the newest agents may be the best treatment course for a significant number of patients. Although the study determined pricing for one specific drug, the researchers report that this is a model by which other cancer drugs can similarly be assessed in the future to develop value-based prices.

References:

• Goldstein DA, Chen Q, Ayer T, et al. (2015). Necitumumab in Metastatic Squamous Cell Lung Cancer. JAMA Oncology.
• Emory Winship Cancer Institute. (2015). Researchers develop framework for value based pricing of cancer drugs.