**Description**

The figure shown above shows a 3-year pricing projection of Kadcyla using ASP as the key metric. As part of this analysis, we also looked at cumulative pricing increases across the antibody-drug conjugate class. We expect strong adoption of this class of drugs, however there is a higher budget impact when we consider the price difference compared to anti-PD-1/PD-L1 drugs. This kind of analysis is useful in many ways and can be used as a segway to overall treatment costs, future prices of drugs, and set the baseline for more event-based modifications like LOE, market entry, or other competitive events. Below is a snapshot of additional analysis conducted.

**Methodology**

The forecasting model was created using both linear (binomial) and simple exponential smoothening (polynomial) where confident intervals were also extracted to provide further insights and certainty. Cumulative price change was another metric that we looked at to quantify how much prices have changed since launch and provide a realistic baseline for other drugs. Projections using the linear method are the roughest estimations, but better than a compound annual growth rate (CAGR) approach. They're basically the same, but is more closely matched to the y-variable. Simple exponential smoothening is the next best option, because it is fit based on a polynomial function of the data trend meaning that it picks up on more than one degree of freedom. ASP is average sale price of a drug across all of its commercial contracts and is a reference for the Medicare reimbursment rate to which they add 6% and measure it in smaller units than vials.

**Insights**

- Over a 5-year period, ASPs for ADCs (and their reimbursement rates) have increased by 25 - 50% since launch.
- There is no competition amongst approved ADCs since they have mutually-exclusive indications
- Most manufacturers use reference pricing to set launch prices for areas of the market where they are late, so projecting future prices and matching it launch dates is a way of zeroing in on parity, premiums, or discounts to the competitor
- Estimations of the direct drug costs for ADCs demonstrate a different pricture than what is shown (unit based) and should be considered as ta more important reference pricing metric

**References**

CMS, PriceRx