Value model sets low price for Lilly's necitumumab

With many new cancer drugs now costing $100,000 a year or more, US researchers have developed a model that works out a price range firmly based on their clinical value.

The aim is to curb a worrying escalation in the cost of providing drug treatment to cancer patients as a new generation of targeted therapies roll out onto the market, with many now suggesting that prices are becoming unsustainable.

The first drug candidate to be put through the model is Eli Lilly's necitumumab, which was recommended for approval to treat patients with locally advanced or metastatic squamous non-small cell lung cancer (NSCLC) in the US last month.

According to the research team at Emory University and Georgia Institute of Technology in the US, necitumumab's modest benefits – an increase in median overall survival of 1.6 months when added to chemotherapy – provide a value-based range for the cost of necitumumab from $563 to $1,309 per cycle.

That would be well below the $10,000-plus per month often charged for new cancer drugs, according to lead author Daniel Goldstein, an oncologist at Emory.

The model makes use of the quality-adjusted-life-years (QALYs) rating also deployed by health technology assessment agencies such as NICE in the UK, factoring in variables such as survival estimates, the predicted frequency of adverse events and the cost of drug administration, among others.

At a price of $563 or less per cycle, the cost of necitumumab per QALY would probably be less than $100,000, rising to $200,000 at $1,309 per cycle. At a price greater than $6,628 per cycle, the results give a 99 per cent likelihood that the cost-effectiveness ratio would exceed $500,000 per QALY.

"The current system of paying for cancer drugs provides little incentive for manufacturers and physicians to consider value when pricing and using drugs," write the authors, who maintain that value-based pricing provides an incentive to pharma companies and researchers to develop truly innovative drugs rather than those providing just modest gains.

"These rising prices are unsustainable to the system," said Goldstein in a press release. "Potentially life-saving drugs should carry a high price tag, but drugs such as necitumumab that extend life expectancy by only a matter of weeks should cost significantly less."

The work, published in the journal JAMA Oncology, echoes the efforts of the American Society of Clinical Oncology (ASCO), which published a 'conceptual framework' for assessing the value of new cancer treatment options based on clinical benefit, side effects, and cost in June.

At the time of publication, the chair of ASCO's Cancer Care Task Force Lowell Schnipper said: "Cancer patients are increasingly burdened by the rising costs of care [and] even well-insured patients are often unprepared for the high out-of-pocket cost of some cancer therapies.

"Too often, that leads to severe financial strain and even bankruptcy," he continued, adding it is critical to distinguish between value and cost.

ASCO's plans are still being drawn up, and in the meantime the new JAMA Oncology study provides another example of how value-based pricing can be applied.

In the US, one recommendation is to use $50,000 per QALY gain, and $200,000 per QALY as the lower and upper boundary of society's willingness-to-pay value threshold, according to Benjamin Djulbegovic of the University of South Florida, Tampa, in an editorial accompanying the paper by Goldstein et al.

Applying those criteria, "it is obvious that not all spending on cancer care generates value that the US should pay for," he writes, noting that escalating prices are creating a 'prisoners' dilemma' in which societal interests are pitted against those of individual patients.

"Reducing the price of cancer drugs can help us escape the prisoners' dilemma and substantially ameliorate the increasingly untenable situation of excessive costs of cancer drugs," he concludes.