Pricing in the Market for Anticancer Drugs

34 Pages Posted: 20 Jan 2015

See all articles by David H. Howard

David H. Howard

Emory University - Department of Health Policy and Management

Peter Bach

Memorial Sloan Kettering Cancer Center - Department of Medicine

Ernst R. Berndt

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Rena Conti

University of Chicago

Date Written: January 2015

Abstract

Drugs like bevacizumab ($50,000 per treatment episode) and ipilimumab ($120,000 per episode) have fueled the perception that the launch prices of anticancer drugs are increasing over time. Using an original dataset of 58 anticancer drugs approved between 1995 and 2013, we find that launch prices, adjusted for inflation and drugs’ survival benefits, increased by 10%, or about $8,500, per year. Although physicians are not penalized for prescribing costly drugs, they may be reluctant to prescribe drugs with prices that exceed subjective standards of fairness. Manufacturers may set higher launch prices over time as standards evolve. Pricing trends may also reflect manufacturers’ response to expansions in the 340B Drug Pricing Program, which requires manufacturers to provide steep discounts to eligible providers.

Suggested Citation

Howard, David H. and Bach, Peter and Berndt, Ernst R. and Conti, Rena, Pricing in the Market for Anticancer Drugs (January 2015). NBER Working Paper No. w20867, Available at SSRN: https://ssrn.com/abstract=2551675

David H. Howard (Contact Author)

Emory University - Department of Health Policy and Management ( email )

1518 Clifton Road NE
Atlanta, GA 30322
United States

Peter Bach

Memorial Sloan Kettering Cancer Center - Department of Medicine ( email )

New York, NY 10065
United States

Ernst R. Berndt

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Room E52-452
Cambridge, MA 02142
United States
617-253-2665 (Phone)
617-258-6055 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Rena Conti

University of Chicago ( email )

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