Medicare Cancer Drug Costs Not Linked to Clinical Value

TOPLINE:

A new analysis suggests that Medicare spending on anticancer drugs is not based on a drug’s clinical value, highlighting “a misalignment between drug pricing and the clinical benefits they offer.”

METHODOLOGY:

• Medicare typically accepts the drug prices set by the manufacturer, instead of negotiating drug prices like many other countries do. As a result, manufacturers have had little incentive to align a drug’s price with its value or ensure affordability.
• In the current study, researchers evaluated the factors associated with Medicare spending on anticancer drugs approved in the US from 2012 through 2021.
• Cost data came from Medicare claims available on the Centers for Medicare and Medicaid Services (CMS) website from the “Medicare Spending by Drug” section for Parts B and D medications.
• The researchers obtained data on all the approved drugs, which included overall and progression-free survival as well as toxicity information, such as boxed warnings.

TAKEAWAY:

• A total of 112 new anticancer drugs were approved during the study period, with 97 meeting the inclusion criteria, and 93% received expedited development designations from the US Food and Drug Administration. Of those approved, 40% included data on progression-free survival, 19% provided overall survival data, and 29% were designated as first-in-class drugs.
• The average spending per beneficiary rose from $121,000 in the first part of the decade to $204,000 in the latter part. The prevalence of single-arm trials increased from 43% to 60% across this period.
• Value-based outcomes, such as overall survival, progression-free survival, or safety profiles, were not significant predictors of drug prices, indicating that the pricing did not necessarily reflect the therapeutic value of the drug.
• Factors related to the size of the patient population, such as the requirement for a biomarker test, use in later lines of therapy, and classification as a rare disease, were positively associated with higher prices, suggesting that “manufacturers set higher prices to offset limitations in market size.” Prices of new drug also largely depended on the reference prices of existing treatments, with new entrants being priced higher.

IN PRACTICE:

“Our findings challenge the common industry assertion that drug prices reflect therapeutic value, suggesting a market-driven pricing strategy instead,” the authors wrote. “The substantial price escalation observed in the latter half of the study period, particularly alongside the rise in single-arm accelerated pathway studies, underscores how [the value narrative that supports high prices] may be driving prices upward and highlights the need for closer scrutiny of these evolving practices.”

SOURCE:

The study, led by Ashley Nee, Warren Alpert Medical School of Brown University, Providence, Rhode Island, was published online in the Journal of Cancer Policy.

LIMITATIONS:

This retrospective analysis relied on Centers for Medicare and Medicaid Services payment data and information from anticancer drug package inserts, which could have introduced bias. Additionally, uncertainty exists regarding whether cost savings from discounts and rebates benefit patients through reduced premiums or copays as private entities might retain these discounts or rebates as additional revenue.

DISCLOSURES:

This study received support from Arnold Ventures. The authors reported that they had no known competing financial interests or personal relationships that could have influenced the work.

This article was created using several editorial tools, including AI, as part of the process. Human editors reviewed this content before publication.