Can Indication-Based Pricing Be a Reality?

Government rule currently prevent allowing drugs prices to fluctuate based on the stage in which the drug is being used, but changing sentiment may allow for more creativity in how drugs are priced, according to Scott Gottlieb, MD.

Kavita Patel, MD, MS, thinks granting Medicare the ability to negotiate drug prices is unlikely, but indicate-based pricing, or something in that direction, could happen. However, John L. Fox, MD, MHA, noted that the challenge with indication-based pricing is explaining what it is and then administering it.

“So I can see a 10% co-insurance if you have stage 4 metastatic cancer first line, but, I'm sorry, you’ve got metastatic recurrence disease and now you are second line and it's going to go up to 20%,” he said.

Dr Gottlieb moved the conversation to formulary design and what changes are expected to be seen. Ted Okon, explained that the Community Oncology Alliance has seen narrowing networks and plans going into more of a formulary basis.

“The problem in in oncology that's tougher to do,” he said. “But I think what’s going to sort of change some of the rubric here is the advent of biosimilar. You’re getting more biologic completion here and CMS is really adamant about—whether that is going to destroy a nascent industry or not—but they are really adamant about putting all of those under the same codes and allowing prices to be driven down and using it that way.”