# Price a cancer drug by how well it works in each cancer

Source: https://onco.cc/ideas/idea-cost-indication-based-pricing/  
OnCo record `idea-cost-indication-based-pricing` (Idea). Data CC BY-NC 4.0, attribute "Data from OnCo (onco.cc)"; commercial use needs a licence.

## TL;DR

A drug that adds a year of life in one cancer and six weeks in another sells at the same price for both; indication-specific prices would pay for the benefit actually delivered.

## Summary

Most oncology drugs carry several indications, and the benefit differs from one indication to the next. Indication-based pricing sets a price per indication, either through separate national drug codes or through rebates keyed to the diagnosis on the claim. Italy and Germany use indication-level agreements; in the US, pharmacy benefit managers have run pilots. The barrier is claims data that reliably carries the indication.

## Fields

- Kind: Idea
- Last checked: 2026-09-10
- Hypothesis: Indication-based rebates will lower the effective price of low-benefit indications by at least 30% without reducing the launch price of high-benefit indications, and manufacturers will accept them in exchange for coverage.
- Rationale: Value frameworks (ESMO-MCBS, ASCO Value Framework) already grade benefit by indication; the payment system simply ignores the grade.
- Proposed test: A Medicare Part B demonstration for three multi-indication checkpoint inhibitors with indication-linked rebates, measuring net price by indication, prescribing patterns and access.
- Maturity: early-clinical
- Actor: payer

## Sources

- ESMO Magnitude of Clinical Benefit Scale: https://www.esmo.org/guidelines/esmo-mcbs
- ASCO Value Framework update (JCO 2016): https://doi.org/10.1200/JCO.2016.68.2518

## Connected records

- drugs: [Atezolizumab](https://onco.cc/drugs/atezolizumab/), [Nivolumab](https://onco.cc/drugs/nivolumab/), [Pembrolizumab](https://onco.cc/drugs/pembrolizumab/)
- institutions: [American Society of Clinical Oncology (ASCO)](https://onco.cc/institutions/asco/), [European Society for Medical Oncology (ESMO)](https://onco.cc/institutions/esmo/)
- terms: [ICER and health technology assessment](https://onco.cc/terms/icer-value-assessment/)
- bottlenecks: [Incentives reward me-too drugs and marginal gains](https://onco.cc/bottlenecks/b-incentive-misalignment/), [Prices and value](https://onco.cc/bottlenecks/b-drug-pricing/)
- key papers: [Updating the American Society of Clinical Oncology Value Framework: Revisions and Reflections in Response to Comments Received](https://onco.cc/key-papers/paper-schnipper-j-clin-oncol/)

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