Unaffordable Cancer Drug Costs US policymakers and payers are urged to consider a novel approach to addressing the escalating costs of cancer drugs in the country. Recent research conducted by two German oncologists has proposed the adoption of indication-based pricing as a potential solution.
The study, which was published just last month, delved into the pricing strategies associated with cancer drugs that receive approvals for multiple indications in the United States.
The authors of the study pointed out the alarming lack of affordability of new cancer drugs within the United States. Their analysis encompassed 145 cancer drugs that had gained FDA approval, covering a total of 373 different indications. Shockingly, the average monthly cost for these cancer drugs was found to be $24,000, with a median monthly price of $16,000. It was also highlighted that over 95% of these drugs carried a monthly price tag exceeding $10,000.
One of the key insights offered by the research is that pharmaceutical companies operating in the US tend to set the initial price of a drug at the highest feasible level upon its first indication approval. Subsequently, with subsequent approvals for additional indications, this inflated pricing structure is perpetuated. Daniel Michaeli, the lead author of the study, explained that this pricing strategy fails to reflect the diverse value across different indications accurately.
Indication-specific pricing can take various forms, as observed in certain European nations like France and Switzerland, where this model has already been implemented. In the study, the researchers hypothesized that the current drug pricing system in the US is fundamentally tied to the original FDA-approved indication, thus neglecting to adequately capture the value, unmet needs, and innovative aspects of supplementary indications.
Michaeli emphasized that there is a prevailing notion that a drug’s cost should correlate with its efficacy, indicating that more effective drugs should command higher prices, while those with marginal benefits should be priced more affordably. However, the study’s findings challenge this assumption, showcasing data that establishes a weak correlation between prices for drugs in their original indications and improvements in overall survival and progression-free survival.
Despite the potential benefits of indication-based pricing in enhancing accessibility to innovative drugs, concerns have arisen regarding the potential consequences for pharmaceutical companies’ research and development (R&D) investments. Michaeli acknowledged that any shift in pharmaceutical policy should strike a delicate balance between expanding drug access and affordability and safeguarding the incentives for sustained R&D efforts by these companies.
Unaffordable Cancer Drug Costs