In the example shown in the graph, the ICER for an anti-PD-1 antibody drug used to treat 1L ES-SCLC was used with a placeholder price (not an actual price). In a previous post, the ICER was explored using the base case of hospital-based treatment for the full course. Alternatives would be in cases where outpatient services and facilities were used in addition to the wide variances in patient characteristics that will be further divulged at a later time. Here, we look at the pricing mechanisms in the U.S. for prescription and hospital-administered drugs. Today, these fall into four main categories: wholesale acquisition cost (WAC), ASP (average sales price) which is comparable to AMP (average manufacturer price), Medicare Best Price, and the 340B Price. To show the potential impact from an ICER-based price we show the different pricing mechanisms side-by-side with a simple case of a hospital that treats 20 patients with ES-SCLC in a year.
Despite, recent attempts to repeal or change 340B protections to limit revenue losses from Pharma companies, it remains an important part of the healthcare system to sustain hospitals and their operating budgets when they treat low-income and uninsured people. Similarly, Medicare remains entitled to the lowest price that is charged in the commercial market after rebates and discounts. This is where purchasing dynamics and market segments become a critical factor. Hospitals often procure drugs through the buy-and-bill method at WAC or MBP/340B price and are reimbursed at WAC (commercially-insured patients) or ASP + 6%. From the manufacturer's perspective, it becomes difficult to determine whether customers (hospitals) are in fact using the drugs procured at a certain price on the population that the laws specify. For most people, it's not that important considering that we are in favor of a financially-stable public health system.
Price transparency is a good move not only because it holds manufacturers accountable for decisions they make in the market, but also because it should motion towars a more pure competitive situation that requires less government intervention in the long run.
Media Sources: CMS, NASHP, STAT, ICER, Firstword Pharma