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Using decision modeling to determine pricing of new pharmaceuticals: The case of neurokinin-1 receptor antagonist antiemetics for cancer chemotherapy

Published online by Cambridge University Press:  01 August 2004

George Dranitsaris  and
Pauline Leung
George Dranitsaris
Affiliation:
Cancer Care Ontario
Pauline Leung
Affiliation:
British Columbia Cancer Agency
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Abstract

Objectives: Decision analysis is commonly used to perform economic evaluations of new pharmaceuticals. The outcomes of such studies are often reported as an incremental cost per quality-adjusted life year (QALY) gained with the new agent. Decision analysis can also be used in the context of estimating drug cost before market entry. The current study used neurokinin-1 (NK-1) receptor antagonists, a new class of antiemetics for cancer patients, as an example to illustrate the process using an incremental cost of $Can20,000 per QALY gained as the target threshold.

Methods: A decision model was developed to simulate the control of acute and delayed emesis after cisplatin-based chemotherapy. The model compared standard therapy with granisetron and dexamethasone to the same protocol with the addition of an NK-1 before chemotherapy and continued twice daily for five days. The rates of complete emesis control were abstracted from a double-blind randomized trial. Costs of standard antiemetics and therapy for breakthrough vomiting were obtained from hospital sources. Utility estimates characterized as quality-adjusted emesis-free days were determined by interviewing twenty-five oncology nurses and pharmacists by using the Time Trade-Off technique. These data were then used to estimate the unit cost of the new antiemetic using a target threshold of $Can20,000 per QALY gained.

Results: A cost of $Can6.60 per NK-1 dose would generate an incremental cost of $Can20,000 per QALY. The sensitivity analysis on the unit cost identified a range from $Can4.80 to $Can10.00 per dose. For the recommended five days of therapy, the total cost should be $Can66.00 ($Can48.00–$Can100.00) for optimal economic efficiency relative to Canada's publicly funded health-care system.

Conclusions: The use of decision modeling for estimating drug cost before product launch is a powerful technique to ensure value for money. Such information can be of value to both drug manufacturers and formulary committees, because it would facilitate negotiations for optimal pricing in a given jurisdiction.

Keywords

PricingCost analysisAntiemeticsNK-1 receptor antagonistsChemotherapy
Type
GENERAL ESSAYS
Information
International Journal of Technology Assessment in Health Care , Volume 20 , Issue 3 , August 2004 , pp. 289 - 295
Copyright
© 2004 Cambridge University Press

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