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The median launch price of
oncology drugs increased by over 8,000% between 2008 and 2021, according to a new report compiled by the office of Rep. Katie Porter (D-Calif.),
from $2,115 to $180,087. The report, which draws mainly on data from the
FDA's Center for Drug Evaluation and Research (CDER), calls for reforms to
the FDA approval process and Medicare’s market access rules in order to curb or
unwind launch price growth, which have made oncology drugs unaffordable for
many critically ill patients.
Medicare price negotiation
could create incentive for even higher launch prices
- The report
found that as of August 2022, the median launch price for 13 new drugs
introduced this year is $257,000, and oncology drugs launch at prices
3.7 times higher than non-oncology drugs.
- In addition,
the average price of cancer therapies rose from approximately $185,000
in 2017 to over $283,000 in 2021, a 53% increase. By 2026, when Medicare
drug price negotiation begins, the average cancer drug launch price will
be nearly $325,000 per year for self-administered cancer drugs and over
$525,000 for specialty oncology drugs if current trends persist.
- Stacie
Dusetzina, Ph.D., a professor of health policy at the Vanderbilt
University School of Medicine, tells AIS Health that she agrees with the
assertion that drug price negotiation creates an incentive for
manufacturers to drive up launch prices in excess of the current trend.
- “I think this
is likely to be the case for new cancer drugs,” Dusetzina says.
“Medicare requires coverage for cancer drugs, which means that companies
have virtually no limit on the prices they can charge. Because the
negotiations [in the Inflation Reduction Act] do not impact new drugs
directly, companies entering the market with new drugs are likely to
increase their initial prices to make up for potential losses.”
Feds have some existing
authority to rein in price hikes
- Going forward,
Dusetzina says that CMS has some options to control launch prices.
- “Under the
current system there has been discussion around using formulary
management (including product exclusion) as a way to help plans and
their PBMs to negotiate for more favorable pricing for the Medicare
program,” she says. However, “this has to be done very carefully to make
sure that access to cancer drugs is not harmed since today they are part
of a ‘protected class’ that requires coverage of all drugs, regardless
of their benefits.”
- The most
aggressive possibility under the federal government’s existing authority
could be leveraging its intellectual property rights: Grants from
agencies like the National Institutes of Health and National Science
Foundation make much of the research behind breakthrough drugs possible.
But Dusetzina doesn’t think that the government is likely to call in
those rights, which could potentially yield royalties, any time
soon.
- “I think [it]
would still only be considered as a last resort,” Dusetzina says.
However, “the Inflation Reduction Act does include government funding
for products as a part of the information they will consider for
negotiations for older products.”
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