OnCo
ideasIdea

Automatic price cuts when a cancer drug's approved indications and volumes expand

When a cancer drug is approved for more uses, the company sells far more of it but the price stays the same. Japan cuts prices automatically when sales balloon; others should too.

Japan's market expansion repricing rule lowers the reimbursement price when a drug's sales exceed forecasts by a defined margin, and was applied to nivolumab, whose price was cut by half in 2017 after expansion beyond melanoma. Most other systems renegotiate slowly or not at all as indications multiply. The proposal is a rule-based repricing schedule in other public systems: price falls by a published formula when cumulative approved indications or annual volume cross thresholds, reflecting the lower per-unit development cost and the fact that later indications rely on the same molecule.

Hypothesis
Rule-based repricing reduces spend on multi-indication oncology drugs by at least 20% within three years of adoption without reducing the number of new indications filed in that market.
Rationale
A drug's development cost does not scale with its indications, so returns balloon as indications expand; a predictable formula avoids case-by-case negotiation and gives manufacturers certainty.
What would test it
Compare spend trajectories for checkpoint inhibitors in Japan with those in comparable markets without expansion repricing; adopt a formula in one further market and measure spend and filing behaviour.
Maturity
being tested at scale
Who has to act
payer
Cost to try
Small (under $1M)
Years to first evidence
3
Bottlenecks it attacks
  • Prices and value · New cancer drugs routinely cost over $150,000 a year, often for months of benefit. Systems cannot afford them and patients go bankrupt.

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