Comparing the Social and Private Value Created by Pembrolizumab 2014-2022
Author(s)
Paula G. Chaves da Silva, MS, PhD1, Gregory Vaughan, PhD2, Fred Ledley, MD3, Payal Arya, PhD1.
1Center for Integration of Science and Industry, Bentley University, Waltham, MA, USA, 2Bentley University, Waltham, MA, USA, 3Professor, Bentley University, Waltham, MD, USA.
1Center for Integration of Science and Industry, Bentley University, Waltham, MA, USA, 2Bentley University, Waltham, MA, USA, 3Professor, Bentley University, Waltham, MD, USA.
Presentation Documents
OBJECTIVES: Pharmaceutical innovation creates value for society in the form of health benefits, job creation, R&D, and support of public institutions and for the private sector in the form of revenue and profits. This research describes a novel framework for assessing the social and private value created through commercialization of pembrolizumab (KeytrudaTM).
METHODS: The analysis posits that the total value created by new medicine is embodied in the health benefit provided to users and this value is distributed between the social or private sector through price paid and use of product revenues. Total health value was estimated as QALYs gained/person times the number of individuals benefiting and a globally adjusted willingness-to-pay (WTP)/QALY=$52,619.4. Social value was estimated as residual health value (total health value net price paid) plus job creation, R&D, and social payments. Private value was estimated as shareholder value plus expenses paid to private entities. QALYs were from CEVR. Merck’s financials (2014-2022) were from Compustat with pembrolizumab sales from 10-K filings. Expenses associated with pembrolizumab revenue/year were inferred by polynomial regression of financial data from 143 pharmaceutical companies with product revenues (2010-2022).
RESULTS: The first million global sales of pembrolizumab (through 2022) created a total health value of $60.5B and residual health value of -$8.3B. Total social value was $21.8B including residual health value (-$8.3B), R&D ($9.2B), job creation ($18.4B), and social payments ($2.6B). Total private value was $105.2B including shareholder value ($59.8B) and network value ($45.4B). Using WTP/QALY range (50K-100K), total social value was $18.9B-$76.4B, not accounting for rebates.
CONCLUSIONS: The first million global sales of pembrolizumab generated proportionally greater private than social value. This finance-based framework of value creation may be used to assess returns on both public and private sector investments in pharmaceutical innovation and inform policies that balance the needs and expectations of all stakeholders.
METHODS: The analysis posits that the total value created by new medicine is embodied in the health benefit provided to users and this value is distributed between the social or private sector through price paid and use of product revenues. Total health value was estimated as QALYs gained/person times the number of individuals benefiting and a globally adjusted willingness-to-pay (WTP)/QALY=$52,619.4. Social value was estimated as residual health value (total health value net price paid) plus job creation, R&D, and social payments. Private value was estimated as shareholder value plus expenses paid to private entities. QALYs were from CEVR. Merck’s financials (2014-2022) were from Compustat with pembrolizumab sales from 10-K filings. Expenses associated with pembrolizumab revenue/year were inferred by polynomial regression of financial data from 143 pharmaceutical companies with product revenues (2010-2022).
RESULTS: The first million global sales of pembrolizumab (through 2022) created a total health value of $60.5B and residual health value of -$8.3B. Total social value was $21.8B including residual health value (-$8.3B), R&D ($9.2B), job creation ($18.4B), and social payments ($2.6B). Total private value was $105.2B including shareholder value ($59.8B) and network value ($45.4B). Using WTP/QALY range (50K-100K), total social value was $18.9B-$76.4B, not accounting for rebates.
CONCLUSIONS: The first million global sales of pembrolizumab generated proportionally greater private than social value. This finance-based framework of value creation may be used to assess returns on both public and private sector investments in pharmaceutical innovation and inform policies that balance the needs and expectations of all stakeholders.
Conference/Value in Health Info
2025-05, ISPOR 2025, Montréal, Quebec, CA
Value in Health, Volume 28, Issue S1
Code
HPR57
Topic
Health Policy & Regulatory
Topic Subcategory
Pricing Policy & Schemes, Public Spending & National Health Expenditures
Disease
SDC: Oncology, STA: Biologics & Biosimilars