Applying a cost-based pricing model for innovative cancer treatments subject to indication expansion: A case study for pembrolizumab and daratumumab

Background: Expanding the indication of already approved immuno-oncology drugs presents treatment opportunities for patients but also strains healthcare systems. Cost-based pricing models are discussed as a possibility for cost containment. This study focuses on two drugs, pembrolizumab (Keytruda) and daratumumab (Darzalex), to explore the potential effect of indication broadening on the estimated price when using the cost-based pricing (CBP) model proposed by Uyl-de Groot and Löwenberg (2018). Methods: The model was used to calculate cumulative yearly prices, cumulative prices per indication, and non-cumulative indication-based prices using inputs such as research and development (R&D) costs, manufacturing costs, eligible patient population, and a profit margin. A deterministic stepwise analysis and scenario analysis were conducted to examine how sensitive the estimated price is to the different input assumptions. Results: The yearly cumulative cost-based prices (CBPs) ranged from €52 to €885 for pembrolizumab per vial and €823 to €31,941 for daratumumab per vial. Prices were higher in initial years or indications due to smaller patient populations, decreased over time or after additional indications. Sensitivity analysis showed that the number of eligible patients had the most significant impact on the estimated price. In the scenario analysis the profit margin contributed most to a higher CBPs for both drugs. Lower estimates resulted from assumed lower R&D costs. Discussion: The estimated CBPs are consistently lower than Dutch list prices for pembrolizumab (€2,861), mainly resulting from larger patient populations in registered indications. However, daratumumab’s list prices fall within the range of modeled CBPs depending on the year or indication (€4,766). Both CBPs decrease over time or with additional indications. The number of eligible patients and initial R&D costs have the most significant influence on the CBPs. These findings contribute to the ongoing discussions on pharmaceutical pricing, especially concerning cancer drugs with expanding indications.