May 2, 2016

Bennette, Sullivan find cancer drug prices rise rapidly after market launch

UW School of Pharmacy researchers’ found large increases in oral anticancer drugs even in the face of increasing market competition

A new study published in the May issue of Health Affairs and authored by UW School of Pharmacy’s faculty members, Caroline Bennette and Sean Sullivan, illuminates the complexity of anticancer drug pricing and several market forces that underlie large price increases in the years after a drugs’ launch.

Caroline Bennette, PhD

Caroline Bennette, PhD

As Caroline Bennette was finishing her dissertation in the Pharmaceutical Outcomes Research and Policy Program (PORPP), she read a highly publicized paper that documented rising prices for cancer drugs. The paper claimed that the prices for innovative cancer drugs did not change much after launch. “I remember the news headlines covering that paper—they really emphasized the idea that launch prices was where all the action was. But that didn’t fit with what I was hearing from pharmacists and patients, ” said Bennette, now on faculty in the UW School of Pharmacy.

“I was just curious. What was happening to cancer drug prices after launch? But I couldn’t find the answer in the published literature,” said Bennette, “With encouragement and support from my mentors, Sean Sullivan and Scott Ramsey at the Fred Hutchinson Cancer Center, I started looking at the trends directly.” Using a large database of pharmaceutical claims housed in PORPP, Bennette looked at the prices of oral anticancer drugs approved by the Food and Drug Administration (FDA) between 2000 and 2012 in the years after they’d been introduced. What she found went against the narrative that launch price was where all the action was. On average, the prices of these drugs continued to grow—roughly 5% per year over inflation—for years after their launch.

She shared these initial findings with her mentors and several other faculty members in PORPP. “They thought I might be on to something, but immediately challenged me to dig deeper. Not all of the drugs in our analysis showed the same increases in price over time – some rose much faster and others slower. The real story was going to be explaining those differences.” So Bennette dug deeper. Ultimately, she found that changing prices were associated with certain changes to the market, rising an additional 10 percent with each new FDA-approved indication for the drug and declining 2-3 percent with the approval of a competitor drug.

Bennette points out that many new anticancer drugs are first shown to work in advanced or metastatic cancer – where the clinical benefits are often relatively small – and later approved for use in patients with earlier stages of the disease. In these cases, a supplemental indication for a drug may reflect a larger clinical benefit than in the original indication, which might warrant a higher price. But drugs currently have a single price across indications. Raising the price of a drug for patients with the original indication seems unfair if the value of the drug for those patients hasn’t similarly increased. “There is a lot of discussion around the idea of using a value-based, indication-specific reimbursement system for anticancer drugs in particular,” said Bennette, who recently began working with Peter Bach from Memorial Sloan Kettering Cancer Center on this front.

Sean Sullivan

Sean D. Sullivan, PhD

In addition, the research team found that the introduction of a competitor drug had only a minimal impact on a drugs’ price and concluded that competition is unlikely to rein in the escalating costs of oral anticancer drugs in the near future. Why? Cancer drugs are often used in combination so a new drug won’t necessarily replace an older drug like it might in other conditions. In addition, several policies and regulations require many insurers to include nearly all oral anticancer drugs on their formularies, which further limits competitive pressure on manufacturers.

Bennette says she’s looking forward to further research on the complexities of drug pricing and the tradeoffs in ensuring patents’ access to affordable medications with the goal of fostering pharmaceutical innovation. “I feel very fortunate to be studying this issue at UW. I can walk down the hall and talk with several other faculty members who are interested in this topic, but who all come from different backgrounds and can offer unique perspectives.”

Click to read: Steady Increase in Prices for Oral Anticancer Drugs after Market Launch Suggests a Lack of Competitive Pressure.

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