OBJECTIVES: In the US single drug prices do not reflect the value of supplemental indications approvals. Therefore, indication-specific and weighted-average pricing were suggested to price multi-indication drugs. Under indication-specific pricing, a distinct price is assigned to the differential value a drug offers in each indication. Under weighted-average pricing a single drug price is calculated reflecting the value and/or volume of different indications. This study estimates potential price reductions and resulting cost savings for cancer drugs under indication-specific pricing or weighted-average pricing.

METHODS: All anti-cancer drugs and their original and supplemental indications with FDA approval between 2000-2022 were identified in the Drugs@FDA database. Data on each indication’s innovativeness, disease, trial, price, and spending were collected from FDA labels, the Global Burden of disease, clinicaltrials.gov, and the Centers for Medicare and Medcaid Services (CMS). A multivariate regression analysis, informed by original indications’ innovativeness, disease, and trials characteristics, was used to predict indication-specific prices for supplemental indications. These indication-specific prices were combined with each indications’ prevalence data to estimate weighted-average prices and potential cost savings for both policies.

RESULTS: The FDA approved 170 anti-cancer drugs with 455 indications between 2000-2022. Of these, price data were available for 148 on-patent drugs. Spending on these drugs amounted to $28.3 billion in 2020. Adopting an indication-specific pricing reduced drug prices by an average of -2.9% with cost savings of -$3.4 billion (-12.1%). Spending was particularly reduced on orphan drug treating rare and common diseases, e.g. partial orpahns (-19.9%). However, higher prices for ultra-rare diseases increased spending by 27.1% (+$70 million). Adopting weighted-average pricing also reduced spending by -$3.4 billion (-12.1%). Weighted-average pricing reduced prices for and spending on ultra-rare diseases by -15.9%.

CONCLUSIONS: Indication-specific and weighted-average pricing could help to align new indications’ value and price; thereby reducing Medicare and Medicaid’s expenditure on cancer drugs with multiple indications.