Mercks new Keytruda flat dose could add $1B each year to U.S. healthcare spending

While some drug price hikes in the hundreds or thousands of percentages appear to be purely about profit and generate plenty of criticism, a new paper in the Journal of the National Cancer Institute highlights another lucrative strategy for drugmakers that may not grab as many headlines.

As the authors write, Merck & Co.’s decision to adopt a flat dose of 200 mg for Keytruda in first-line non-small cell lung cancer, regardless of patient weight, could generate quite the windfall for the New Jersey-based drugmaker.

All told, a flat dose for the costly immuno-oncology drug creates an extra $825 million in costs for the U.S. healthcare system for Keytruda alone, according to a study in the Journal. In an accompanying editorial, Memorial Sloan Kettering Cancer Center experts Peter Bach and Leonard Saltz wrote that the figure may be even higher, above $1 billion per year.

Merck pursued the flat dose despite the fact Keytruda "has been extensively studied and was initially registered at a dose of 2 mg/kg every three weeks," Bach and Saltz write, meaning a 75 kilogram (165 pound) patient would need 150 mg during that time.

As it awaited FDA approval for the 200 mg flat dose, Merck pulled its 50 mg vial from the market, according to Bach and Saltz, and "only made the drug available in 100 mg vials."

"From an economic perspective, the impact is obvious," according to the editorial authors. "A milligram of pembrolizumab has an average sales price of around $47, which means for a 75 kg patient, the company earns an additional $2350 per dose just through this dosing change."

The company adopted the flat dose "without any clinical or biologic rationale," according to Bach and Saltz. 

Merck said the dosing change reflected uncertainty up front and accumulated data as trials progressed. When the company first asked for FDA approval, two doses—2 mg/kg and 10 mg/kg—were in testing. "[O]ur manufacturing decisions—decisions that need to be made years in advance—were based on the uncertainty of which of the two would be the approved dose," the company said in an emailed statement.

Keytruda's efficacy proved to be the same for both doses, Merck said, and now, only the 200 mg dose is approved in the U.S. "Fixed dosing helps to eliminate wastage," the statement said, and "it will also make reimbursement consistent across patients."

For U.S. healthcare costs, there’s another potential issue. Bach and Saltz note that the high flat dose offers a financial incentive for practitioners to use Keytruda over other, potentially cheaper options. According to their research, average blended markups across providers and payers for patients with cancer are approximately 37%.

"This added profit may incentivize more doctors to use the drug, further magnifying the excess cost to the system," the editorial notes.

Under that calculation, the authors said extra costs from the flat dose to the U.S. healthcare system each year for Keytruda alone are above $1 billion.