The development of a value based pricing index for new drugs in metastatic colorectal cancer

Abstract

Background Worldwide, prices for cancer drugs have been under downward pressure where several governments have mandated price cuts of branded products. A better alternative to government mandated price cuts would be to estimate a final price based on drug performance, cost effectiveness and a country’s ability to pay. We developed a global pricing index for new cancer drugs in patients with metastatic colorectal cancer (mCRC) that encompasses all of these attributes. Methods A pharmacoeconomic model was developed to simulate mCRC patients receiving chemotherapy plus a ‘new drug’ that improves survival by 1.4, 3 and 6 months, respectively. Cost and utility data were obtained from cancer centres and oncology nurses (n = 112) in Canada, Spain, India, South Africa and Malaysia. Multivariable analysis was then used to develop the pricing index, which considers survival benefit, per capita GDP and income dispersion (as measured by the Gini coefficient) as predictor variables. Results Higher survival benefits were associated with elevated drug prices, especially in higher income countries such as Canada. For Argentina with a per capita GDP of $15,000 and a Gini coefficient of 51, the index estimated that for a drug which provides a 4 month survival benefit in mCRC, the value based price would be $US 630 per dose. In contrast, the same drug in a wealthier country like Norway (per capita GDP=$50,000) could command a price of $US 2,775 per dose. Conclusions The application of this index to estimate a price based on cost effectiveness and the wealth of a nation would be important for opening dialogue between the key stakeholders and a better alternative to government mandated price cuts.