Pharmaceutical companies often continue to charge high prices for cancer drugs despite indication expansion

Using a cost-based pricing model, developed by Carin Uyl-de Groot and Bob Löwenberg in 2018, the research group explored what might happen to the prices of these drugs under continuous indication expansion.  

Both drugs are immuno-oncology drugs. Pembrolizumab was initially used for only one tumour type, but it is now prescribed for about 35 different indications in various tumour types. Daratumumab was originally used for one type of cancer, namely multiple myeloma. Now it is also prescribed for 8 other indications within multiple myeloma. Development costs for new drugs can be significantly high for the first indication, but are disproportionately lower with each expansion of use in new indications.  

However, this financial gain for the pharma companies is often not passed on to society, despite the lower costs when expanded. 

The researchers looked at a way to determine the price of these drugs, where the investments made in the development of the drug, production costs and profits are all included. They found that the prices of both drugs calculated using this method are usually lower than standard prices in the Netherlands.  

Furthermore, the researchers calculated a price of €885 in 2014 and €143 in 2021 per infusion vial for pembrolizumab. In contrast, the list price for this drug is now €2,860 per infusion vial. For daratumumab, the researchers calculated the following prices: €31,941 in 2015 and €1,402 in 2021. However, the list price for daratumumab is now €4,766 per infusion vial. Thus, the currently used prices for both drugs are significantly higher than those calculated by the researchers. 

This study concludes that while expanding the use of these drugs does provide new treatment options for patients, prices remain very high even after such expansions. However, price reductions are essential to reduce healthcare costs and ensure the affordability of care. The model used by the researchers to determine price shows that the number of patients eligible for the drug and initial development costs have the greatest impact on price. Using this model provides new guidance for negotiations between manufacturers and the Ministry of Health on reimbursement of expensive drugs.