When it comes to prescription drugs, are we getting what we pay for?
Two recent analyses of expensive medications indicate that many drugs are being priced above the value of their actual clinical benefit.
Is lecanemab cost effective?
We previously wrote about the new drug for Alzheimer’s Disease lecanemab (brand name Lequembi). While the drug shows some promise to slow the progression of cognitive decline, it’s still unclear whether the safety issues outweigh the clinical benefits, and whether Biogen’s list price of $26,500 per year is reasonable.
A recent report by The Institute for Clinical and Economic Review (ICER) evaluated the cost-effectiveness of the current list price of lecanemab and concluded that the current price doesn’t accurately reflect the clinical value of the drug. ICER’s estimated cost-effective pricing of it falls between $8,900 and $21,500, which means that manufacturers would need to discount the drug by at least 19% to fall within that range.
Evaluating the cost-effectiveness of lecanemab is difficult because the effectiveness of the drug itself is unclear. On the one hand, clinical trials have showed a slowing in cognitive decline; on the other hand, those same trials showed serious and concerning side effects. The theory behind the drug is shaky as well. Lecanemab is designed to remove amyloid plaques, but the study identifying amyloid plaques as the primary source of Alzheimer’s has been called into question as fraudulent. Thus, ICER classifies the evidence for benefit of lecanemab as “promising but inconclusive.”
The price of lecanemab is a serious one, because if all eligible patients receive it, that could put an enormous strain on Medicare’s finances. ICER calculated that if more than 5% of eligible patients received the drug over five years, Medicare spending would surpass $777 million, ICER’sl budgetary impact threshold of sustainable government spending..
Medicare spends too much for ineffective drugs
Aside from lecanemab, there is evidence showing that Medicare already spends too much on drugs that offer little clinical benefit compared to what’s already on the market. A day after ICER released their report, JAMA published an investigation of the added therapeutic benefit of top-selling brand-name drugs in Medicare. Researchers looked at the drugs Medicare spent the most on in 2020 and assessed their added therapeutic benefit using ratings from national assessment organizations in Canada, France, and Germany.
Of the 49 drugs examined, 27 (55%) had received at least one rating of “low added therapeutic benefit” from another country. This means that compared to existing treatment options, the drugs added little or no benefit for patients. These 27 drugs together made up $19.3 billion in Medicare spending–more than 10% of all Medicare’s prescription drug spending.
The Inflation Reduction Act of 2022 allows Medicare to negotiate the pricing of top-selling drugs, so reform is likely coming. While pharmaceutical manufacturers will push back with claims that lowering drug prices will “stifle innovation,” it’s important to point out that some of these “innovations” aren’t really helping patients. It’s time to negotiate these prices in accordance with their proven therapeutic benefit.