UNDERSTANDING THE SOCIAL VALUE MANUFACTURER REVENUE AND REINVESTMENT - A CASE STUDY USING PALBOCICLIB IN HR+/HER2- ADVANCED BREAST CANCER
Author(s)
Thomas Flottemesch, MS, PhD1, Marlon Graf, MPP, PhD2, Jacki Chou, MPP, MPL3, Beata Korytowsky, MA4, Cory Williams, MPA2, Justin Yu, PharmD4, Justin Doan, MPH, MSc, DrPH5, James Baumgardner, PhD6.
1Precision AQ, Bethesda, MD, USA, 2Precision AQ, Los Angeles, CA, USA, 3Vice President, Precision AQ, Los Angeles, CA, USA, 4Pfizer, New York, NY, USA, 5Pfizer, Farragut, TN, USA, 6Precision Health Economics, Los Angeles, CA, USA.
1Precision AQ, Bethesda, MD, USA, 2Precision AQ, Los Angeles, CA, USA, 3Vice President, Precision AQ, Los Angeles, CA, USA, 4Pfizer, New York, NY, USA, 5Pfizer, Farragut, TN, USA, 6Precision Health Economics, Los Angeles, CA, USA.
OBJECTIVES: The ISPOR value flower framework articulates novel value elements important for complete understanding of treatment benefits and their value. Many value elements, such as scientific spillover, remain conceptual and unquantified. Here, an approach to modeling scientific spillovers through revenue reinvestment (R&D), which is lost at the time of investment but recovered later as returns, is considered within the broader framework of a societal value model (SVM) of palbociclib, a CDK4/6 inhibitor indicated for HR+/HER2- advanced breast cancer.
METHODS: Manufacturer reinvestment occurs in two phases: development and returns. The duration of development reflects the time required from first-in-human (FIH) trials to FDA approval, 10 years on average. During development, R&D reinvestment risks trial failure that would yield zero returns. Thus, reinvestment’s required rate of return must both adjust for overall failure risk and consider foregone returns of a risk-free alternative (e.g., a 10-year US treasury bond). The length of the returns period is assumed equal to development in the base case with payments distributed equally (a fixed-rate annuity).
RESULTS: From 2015-2044, palbociclib is estimated to generate $358.2B of direct social value from 1.8M LYS (details elsewhere). $163.7B is classified as net revenue (manufacturer profit). According to 2015-2025 financial disclosures, ~17.3% of that will be reinvested. Considering both the industry-wide average >90% failure rate during development and the average T-bill yield of 4.5%, R&D reinvestments surviving development must return greater than 49.3%. This generates an additional $36.3B of social value attributable to palbociclib of which ($25.4B) accrues to patients, ($10.4B) to manufacturers and ($0.4B) to other healthcare stakeholders.
CONCLUSIONS: As policymakers consider various pricing and reimbursement strategies, manufacturer incentives and downstream patient value must be considered to properly align current treatment need and future breakthroughs.
METHODS: Manufacturer reinvestment occurs in two phases: development and returns. The duration of development reflects the time required from first-in-human (FIH) trials to FDA approval, 10 years on average. During development, R&D reinvestment risks trial failure that would yield zero returns. Thus, reinvestment’s required rate of return must both adjust for overall failure risk and consider foregone returns of a risk-free alternative (e.g., a 10-year US treasury bond). The length of the returns period is assumed equal to development in the base case with payments distributed equally (a fixed-rate annuity).
RESULTS: From 2015-2044, palbociclib is estimated to generate $358.2B of direct social value from 1.8M LYS (details elsewhere). $163.7B is classified as net revenue (manufacturer profit). According to 2015-2025 financial disclosures, ~17.3% of that will be reinvested. Considering both the industry-wide average >90% failure rate during development and the average T-bill yield of 4.5%, R&D reinvestments surviving development must return greater than 49.3%. This generates an additional $36.3B of social value attributable to palbociclib of which ($25.4B) accrues to patients, ($10.4B) to manufacturers and ($0.4B) to other healthcare stakeholders.
CONCLUSIONS: As policymakers consider various pricing and reimbursement strategies, manufacturer incentives and downstream patient value must be considered to properly align current treatment need and future breakthroughs.
Conference/Value in Health Info
2026-11, ISPOR Europe 2026, Vienna, Austria
Value in Health, Volume 29, Issue 12S
Code
EE382
Topic
Economic Evaluation
Topic Subcategory
Novel & Social Elements of Value
Disease
Oncology