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

Background: Worldwide, prices for cancer drugs have been under downward pressure where several governments have mandated price cuts of branded and generic products. A better alternative to mandated price cuts would be the estimation of a launch price based on drug performance, cost effectiveness and a country’s ability to pay. In this study, the development of a global pricing index for new drugs that encompasses all of these attributes in patients with metastatic colorectal cancer (mCRC) is described. Methods: A pharmacoeconomic model was developed to simulate clinical outcomes in mCRC patients receiving chemotherapy with the addition of a “new drug” that improves survival by 1.4, 3 and 6 months. Cost and health state utility data were obtained from cancer centers and oncology nurses (total n=112) in Canada (n=24), Spain (n=24), India (n=24), South Africa (n=16) and Malaysia (n=24). A price per dose was estimated for each survival increment using a target value threshold of three times the per capita gross domestic product (GDP) for each country, as recommended by the World Health Organisation (WHO). 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 wealthier countries such as Canada and Spain. For a nation like Argentina with a per capita GDP of $15,000 and a Gini coefficient of 51, it is 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 could command a price of $US 2,775 and still be considered cost effective according to the WHO criteria. Conclusions: A global pricing index was presented that can be used to estimate a value based price in different countries for new drugs in mCRC. The application of this index to estimate a price based on cost effectiveness would be a good starting point for opening dialogue between the key stakeholders and a better alternative to governments’ mandated price cuts