Impact of Incorporating Future Mandatory Price Reductions with Generic Drug Entry on the Cost-Effectiveness of New Drugs: A Policy Simulation Study of Dupilumab in Atopic Dermatitis Treatment

Abstract

The introduction of high-cost medications often poses challenges in achieving cost-effectiveness for drug insurance coverage. Incorporating future price reductions for these medications may enhance their cost-effectiveness. We examined the influence of future cost reductions mandated by the national insurer’s equal pricing for equivalent drugs (EPED) policy on the cost-effectiveness of dupilumab, a biologic drug for moderate to severe atopic dermatitis in the Korean healthcare system. We conducted a policy simulation study using semi-Markovian cost utility analysis of dupilumab in combination with supportive care (SC) versus SC alone, with and without the EPED policy adjustment. The EPED would lower dupilumab’s price to 70% following the entry of a biosimilar drug in 10.3 years. Scenario analyses quantified the impact of changing time to the EPED, chemical versus biological designation, response criteria, discount rates, and time horizons on the Incremental Cost-Effectiveness Ratio (ICER) and acceptability with and without EPED adjustment. The EPED adjustment of dupilumab’s future price significantly improved its cost-effectiveness, with a 9.7% decrease in ICER and a substantial 14.6% increase in acceptability. Assuming EPED in 5 years, the ICER fell below the predefined willingness-to-pay threshold. If dupilumab were a chemical drug, EPED adjustment demonstrated a 19.1% increase in acceptability. Incorporating future cost reductions via the EPED system in economic evaluations is crucial, especially for drugs facing imminent generic entry. This study underscores the importance of EPED adjustment in the cost-effectiveness analysis of innovative medications, especially for those nearing willingness-to-pay thresholds.