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The Influence of US Drug Price Dynamics on Cost-Effectiveness Analyses of Biologics

Published:December 22, 2022DOI:https://doi.org/10.1016/j.jval.2022.12.010

      Highlights

      • Previous studies have revealed that accounting for a chronic drug’s future loss of market exclusivity can improve the results of cost-effectiveness analyses. Nevertheless, no studies have examined the extent to which US price increases during the period of exclusivity may counterbalance this effect.
      • Using frameworks from previous Institute for Clinical and Economic Review biologic treatment assessments, we found that yearly price increases of 3% or higher in the years before a drug’s loss of exclusivity more than counterbalanced the effect of post–loss of exclusivity price reductions, resulting in an overall increase in the cost per quality-adjusted life-year gained.

      Abstract

      Objectives

      This study aimed to evaluate the influence of drug price dynamics in cost-effectiveness analyses.

      Methods

      We evaluated scenarios involving typical US drug price increases during the exclusivity period and price decreases after the loss of exclusivity (LOE). Worked examples are presented using the Institute for Clinical and Economic Review’s assessments of tezepelumab for the treatment of severe asthma and targeted immune modulators for rheumatoid arthritis.

      Results

      Tezepelumab case: yearly 2% price increases during the period of exclusivity and a post-LOE price decrease of 25% yielded an incremental cost per quality-adjusted life-year (QALY) gained that increased over the base case from $430 300 to $444 600 (+3.2%). Yearly 2% price increases followed by a steeper post-LOE price reduction of 40% resulted in a cost per QALY gained of $401 400 (6.8% reduction vs the base case). Rheumatoid arthritis case: incorporating post-LOE price reductions for etanercept (intervention) and adalimumab (comparator) ranging from 25% to 40% yielded an incremental cost per QALY of $121 000 and $122 300, respectively (< 3% increase from the base case of $119 200/QALY). Including a 2% yearly price increase during the projected exclusivity periods of both intervention and comparator increased the cost per QALY gained by > 60%.

      Conclusion

      Two biologic treatment cases incorporating price dynamics in cost-effectiveness analyses had varied impacts on the cost-effectiveness ratio depending on the magnitude of pre-LOE price increase and post-LOE price decrease and whether the LOE also affected the comparator. Yearly price increase magnitude during the period of exclusivity, among other factors, may counterbalance the effects of lower post-LOE intervention prices.

      Keywords

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