The Economic Value of Innovative Treatments over the Product Life Cycle: The Case of Targeted Trastuzumab Therapy for Breast Cancer


Louis P. Garrison, Department of Pharmacy, University of Washington, Health Sciences Building, Seattle, WA 98195-7630, USA. E-mail:


Objective:  Pharmacoeconomic analyses typically project the expected cost-effectiveness of a new product for a specific indication. This analysis develops a dynamic life-cycle model to conduct a multiindication evaluation using the case of trastuzumab licensed in the United States for both early-stage and metastatic (or late-stage) human epidermal growth factor receptor 2 (HER2)-positive breast cancer therapy (early breast cancer [EBC]; metastatic breast cancer [MBC]), approved in 2006 and 1998, respectively.

Methods:  This dynamic model combined information on expected incremental cost-utility ratios for specific indications with an epidemiologically based projection of utilization by indication over the product life cycle—from 1998 to 2016. Net economic value was estimated as the cumulative quality-adjusted life years (QALYs) gained over the life cycle multiplied by a societal valuation of health gains ($/QALY) minus cumulative net direct treatment costs. Sensitivity analyses were performed under a range of assumptions.

Results:  We projected that the annual number of EBC patients receiving trastuzumab will be more than three times that of MBC by 2016, in part because adjuvant treatment reduces the future incidence of MBC. Over this life cycle, the estimated overall incremental cost-effectiveness ratio (ICER) was $35,590/QALY with a total of 432,547 discounted QALYs gained. Under sensitivity analyses, the overall ICER varied from $21,000 to $53,000/QALY, and the projected net economic value resulting from trastuzumab treatment ranged from $6.2 billion to $49.5 billion.

Conclusions:  Average ICERs for multiindication compounds can increase or decrease over the product life cycle. In this example, the projected overall life-cycle ICER for trastuzumab was less than one half of that in the initial indication. This dynamic perspective—versus the usual static one—highlights the interdependence of drug development decisions and investment incentives, raising important reimbursement policy issues.