Cost Utility Analyses Demonstrating Support for Indication-Specific Pricing for the Targeted Therapy Bevacizumab

J Clin Pathways. 2025;11(3):12-17. doi:10.25270/jcp.2025.05.1

The US Food and Drug Administration (FDA) approves medications based on ef­ficacy and safety, but the prices of these medications are not based on the efficacy for the approved indication. Prices are determined through negotiations among manu­facturers, wholesalers, pharmacy benefit managers, and insurance plans. New cancer drug prices now commonly exceed $100 000 per course of treatment. Price is not necessarily related to a novel mechanism or magnitude of benefit.¹ Addressing cost is crucial because personal bankruptcy is a growing consequence of a cancer diagno­sis.^2,3

In the US, prices for medication are set regardless of the indication. For in­stance, the cost of cisplatin for a patient who has a particular insurance plan is the same whether cisplatin is being used intravenously to treat small cell lung cancer or intraperitoneally to treat epithelial ovarian cancer. The same cost exists on a specific plan despite potentially large differences in efficacy.⁴ A more notable example is with the tyrosine kinase inhibitor (TKI) erlotinib. Should the same amount be paid for a survival increase of 10 days for pancreatic cancer vs several months for lung cancer?⁵ Evaluating and possibly changing this “one size fits all” price is important with the advent of biologics, which have extremely high prices.⁶ Prices already dif­fer greatly among plans and across countries, so indication-specific pricing would not be a radical concept.

In this study, we are basing indication-specific pricing on efficacy and not effec­tiveness because relatively few patients would be treated annually. In the US, we have already pursued value-based formularies and outcome-based contracts.^7,8 A 2023 online survey noted that 26 of the 46 plans surveyed had at least one oncologic drug priced by outcome.⁹ With limited resources, can society afford to pay the same tens of thousands or hundreds of thousands of dollars for a biologic targeted therapy that has great efficacy in one disease but minimal efficacy in another dis­ease for which it is approved or used? Why not base price upon efficacy? The insurer Cigna is already doing this to a limited extent with Novartis for its heart failure combination therapy sacubitril/valsartan.¹⁰ With this outcome-based contract, the ultimate price is based on avoidance of hospitalization. If the medication does not perform as well as expected, Novartis may have to rebate money to Cigna. Cigna and Novartis have gone a step beyond basing the price on clinical trial efficacy and mak­ing the ultimate price based on real-world effectiveness. That is one of the differences between indication-specific pricing and outcome-based pricing.

Furthermore, indication-specific pricing will likely lead to multiple prices for one drug. In 2018, the President’s Cancer Panel noted that cancer drug prices should be based on their value to patients.¹¹ Using indication-specific pricing would ful­fill this call to action. In 2011, Owens and colleagues in the Clinical Guidelines Committee of the American College of Physicians discussed that paying a higher price for higher ben­efit makes sense in society.¹²

The purpose of this study is to demonstrate, using pharma­coeconomic techniques, potential indication-specific pricing of the targeted therapy bevacizumab for two of its FDA-approved indications: metastatic colon cancer and advanced cervical can­cer. Differences in benefit and side effects will affect the poten­tial prices for each indication.

Decision analytic models using Markov and probability sen­sitivity analyses were created to study bevacizumab in colon cancer and cervical cancer (Figure 1 and Figure 2). Medica­tion prices were based upon the January 2025 Medicare aver­age sales price (ASP) file.¹³ The prices used in this study were ASP plus 6%. The perspective in this study is a limited soci­etal perspective for US Medicare-age patients.¹⁴ Utility values are from published literature.^15,16 A 3% discount rate was used with a time horizon of 5 years.¹⁶ The deterministic sensitivity analyses were performed only on the cost of the bevacizumab because the objective of the study was to determine potential indication-specific pricing based on clinical trial efficacy data.

For this study, an average real-world patient was assumed to be a 65-year-old woman with US Medicare coverage, a body surface area of 2 m2 (21.5 sq ft), height of 165 cm (5 ft 5 in), weight of 100 kg (220 lb), an ideal body weight of 57 kg (125.7 lb), and a creatinine level of 0.8 mg/dL (Cock­croft-Gault actual weight). These metrics were used to give a real-world perspective to the ideal patient.

The primary regimen analyzed for bevacizumab pricing in colon cancer was the first of three phase 3 randomized con­trolled trials demonstrating its benefit in metastatic colorectal cancer.¹⁷ This trial was chosen for analysis for its higher efficacy compared with other phase 3 trials used for approval.^18,19 The analyzed regimens used to estimate indication-specific price were irinotecan/fluorouracil/leucovorin with or without beva­cizumab (Table 1). Costs of treatments and medications are in Table 2. Probabilities of events for colon cancer treatment and survivorship are listed in Table 3.16,18 The probability of dying from a thromboembolic event after the occurrence of such an event is 63.6% at 1 year.²⁰

The main source of the data for analyzing the price of beva­cizumab in cervical cancer is the Gynecologic Oncology Group (GOG) 240, authored by Tewari and colleagues, because it is the sole phase 3 randomized trial showing significant benefit for overall survival.²¹ The analyzed regimens used to estimate differential pricing for cervical cancer were cisplatin/paclitaxel with or without bevacizumab (Table 1). Costs of treatments and medications are in Table 2. Information regarding cervical cancer survival, side effects of treatment, and probabilities are in Table 3. Fistulae mortality (16%) was estimated from Cham­berlain and colleagues.²² The probability of neutropenic fever/ sepsis was 5% in both arms, so it was not used in this model for comparative costs.

Microsimulation with 1000 trials were run for each indication. The per-cycle cost of bevacizumab for both indications is cur­rently $11 637.21 for a standard 100 kg (~220.46 lb) patient ($77.58/10 mg, Medicare ASP plus 6%) (Table 3).

If a willingness-to-pay (WTP) threshold of $50 000 per quality adjusted life-year (QALY) is used, the cost of beva­cizumab should be lowered to $39.96/10 mg for cervical cancer and $30.70/10 mg for colon cancer. If instead a WTP threshold of $100 000/QALY is the target, the cost would be increased to $79.92/10 mg for cervical cancer and $61.53/10 mg for colon cancer. Alternatively, if a target of $150 000/ QALY is chosen, the price would increase to $119.88/10 mg for cervical cancer and increase to $92.40/10 mg for colon cancer. This would be a 54.5% increase in cost per dose for a cervical cancer indication and a 19.1% increase in cost per dose for an indication of colon cancer.

A cycle of treatment for the colon cancer regimen was 6 weeks and cost $11 777.77. This demonstrates that 98.8% of the drug costs come from the biologic agent (bevacizumab). Using indication-specific pricing and a WTP of $100 000/QALY, the cost per cycle would decrease to $9380.56, and bevacizumab would be 98.5% of the cost.

Cervical cancer is treated with a three-week cycle that costs $11 698.11. Bevacizumab accounts for 99.5% of the medica­tion costs. With indication-specific pricing and a WTP of $100 000, a cycle of therapy would increase to $12 048.90, and the biologic agent would still account for 99.5%.

An Institute of Medicine report by Sox and Greenfield de­scribed the four pillars of comparative effectiveness research²³: real-world settings, representative populations, personalization of health care, and the measurement of all relevant outcomes. However, it does not address one of the most important is­sues—cost. As medication prices increase, it is essential to find ways of controlling cost without limiting care.

The use of QALYs in cost-effectiveness studies is consid­ered controversial by some experts in the field.^24,25 This has led to lack of adoption of health technology assessment and US value-based pricing. In a 2023 article, Rand and colleagues showed that although QALYs are not universally accepted, they are currently the best measure.²⁴ Arguments against the use of QALYs in value-based pricing are both methodological and ethical in nature.²³ The ethical arguments center around the general public’s perception, which often affects QALY determi­nations, may not accurately reflect the perception of those liv­ing with chronic diseases. Furthermore, some experts believe that QALY over value cures.

In the US, prices paid for medications are often proprietary knowledge and lack transparency, preventing manufacturers, wholesalers, pharmacy benefit managers, and insurance plans from knowing what deals have been given to others. Similar­ly, in Europe, actual prices paid for medications are also un­clear.^26,27 In fact, van Harten and colleagues showed that actual prices can be up to 58% below what is listed in Europe.¹⁰

The prices of biologic and targeted therapies are much high­er than previous medications. Many different avenues are be­ing considered to try and corral these skyrocketing prices. One such avenue is value-based contracts, where formulary tiers are designed to reflect a drug’s value rather than just its cost in the patient’s cost-share. Premera Blue Cross has shown this meth­od is possible.⁴ Another avenue is outcomes-based contracts, where the manufacturer assumes that the medicine’s effective­ness in treating the public will closely mimic the efficacy shown in clinical trials. If the contracted outcome is not reached, the manufacturer rebates money. A third avenue is indication-specific pricing, proposed by Peter Bach from Memorial Sloan Kettering Cancer Center in 2014.²⁸ This method, as seen in our current study, examines the cost in relationship to the specific indication for which the drug is being used. Prior authorization would allow the tracking of this information.

Indication-specific pricing is a drug pricing model based on a pricing strategy in which the cost of a medication varies depending on the specific disease or condition (indication). This concept acknowledges that a medication may have different levels of clinical effectiveness, value, or cost-effectiveness de­pending on the indication. Hence, this leads to different pricing for different indications. Michaeli and Michaeli looked at indi­cation-specific pricing and weighted average pricing for cancer drugs in the US could lead to cost savings compared with the current model.²⁹ In 2017, Pearson and colleagues reported on a forum held by the Institution for Clinical and Economic Re­view, bringing together experts from the stakeholders.³⁰ They explained that significant policy change would have to take place because of the guidelines involving the US Centers for Medicare & Medicaid Services (CMS).²⁶

The current study focuses on colon cancer and cervical cancer because overall survival benefits were found in these cancers. Ovarian cancer is not addressed because GOG 218 did not show overall survival benefit to the addition of beva­cizumab at the time of publication.³¹ With no overall survival benefit and no increase in quality of life, it is difficult to calcu­late the pricing of the medication in the way which this study is proposing.³²

WTP thresholds of $50 000 to $100 000/QALY have been in use for more than 40 years.³³ What the threshold should be now is a matter of controversy.³⁴ Vanness and colleagues demonstrated in 2021 that the WTP should increase from $50 000/QALY to $100 000/QALY or higher because of the changing value of the US dollar over time.³⁵ If the US con­sumer price index is analyzed for changes in the dollar value since the WTP was first introduced in 1982, what was worth $50 000 in 1982 is now worth more than $168 000. This makes a WTP threshold of $100 000 reasonable.

Our study proposes indication-specific prices for bevaci­zumab based on set WTP thresholds. Another way to develop indication-specific prices is to set the highest price for a medica­tion’s most efficacious indication, with prices for other indica­tions based on degree of improvement compared with the top indication rather than based on a specific WTP threshold. Less efficacious indications would be priced lower than the top indi­cation by a percentage of how much less efficacious it is.

A challenge of indication-specific pricing may come from focusing on highly prevalent diseases. If a drug’s most effec­tive indication is for a low-volume disease, the pharmaceuti­cal company could face financial disadvantages. For example, if a drug is approved for both cervical and colon cancer, but its highest efficacy is in cervical cancer, the lower patient volume could result in reduced revenue compared with a highly preva­lent condition (metastatic colon cancer).

As the prices for new biologic therapies increases, novel ap­proaches to medication pricing must occur. Indication-specific pricing is one such novel approach. Demonstrating this method with bevacizumab in cervical and colon cancer shows that pric­ing would be different than what is currently paid using the formula of ASP plus 6%. Of course, part of the difficulty with indication-specific pricing is determining the target or WTP threshold that is used. Determining an acceptable WTP to pay­ers, manufacturers, government, and patients is beyond the scope of this paper.

Affiliation:

¹Trinity School of Medicine, Trinity Medical Sciences University, Ratho Mills, Kingstown, St. Vincent and the Grenadines, West Indies; Warner Robins, GA, USA

Correspondence:

John P. Geisler, MD, MS, PharmD

Trinity School of Medicine

Trinity Medical Sciences University

Email: wlvrnhwky@me.com; john.geisler@tmsu.edu.vc

Disclosures:

The authors disclose no financial or other conflicts of interest.