Health Economics for Builders and Backers, July 2026

What’s New and What Matters this Month

In this month’s briefing, we start by providing our commentary on the three desmoid tumor reports we released this month and close by discussing our recent publication on how to make cost-effectiveness analyses more realistic and our recent podcast on how trade policy is intersecting with drug pricing.

Will a desmoid tumor drug be worth it to society?

We estimated the gap in health, healthcare resource utilization, and workforce participation between patients requiring systemic treatment for desmoid tumors and the general US population. Closing those gaps could generate an estimated $2.3-$7.5 million in societal value per patient through improvements in health, while also avoiding more than $320,000 in disease-related healthcare costs and restoring approximately $540,000 in lifetime labor productivity.

For builders and backers: A safe and effective desmoid tumor drug would create enormous societal value. Even if priced like other chronically administered orphan drugs that carry price tags in the hundreds of thousands of dollars over the exclusivity period, they would be worth it. The societal value the drug would create per patient would extend far beyond the exclusivity period and would continue to generate societal returns long after its “high” price tag.
 
What clinical endpoints drive the value proposition of a desmoid tumor drug and need to be collected in the evidence package?

Two endpoints account for the majority of the pharmacoeconomic value proposition: progression-free survival, driven by the hazard ratio for disease progression, and objective response rate, including both partial and complete response. These endpoints determine how much time patients spend in healthier and lower-cost health states and how much time is avoided in progressed disease where healthcare utilization, caregiver burden, and quality-of-life losses are greatest. Other product characteristics including time to response, treatment duration, and the safety profile will also influence the pharmacoeconomic profile.
For builders and backers: Evidence on progression-free survival and response are essential for demonstrating the health economic proposition.
 
Are the prices of approved desmoid tumor treatments worth it?
Based on our economic modeling, yes. We evaluated the total added health system costs relative to the expected health outcomes gained for a hypothetical patient treated with an approved desmoid tumor drug versus symptom management alone. At a current annual net price of around $300,000, US payers are paying approximately $140,000–$258,000 per health-adjusted year gained. We don’t have a single or explicit threshold in the US, but $500,000 has been used for rare conditions and thresholds higher than $600,000 have been suggested for conditions with prevalence estimates similar to desmoid tumors.

For builders and backers: Even at current prices around $300,000 per year, the prices of these treatments are priced lower than the value they provide. The health system and society will continue to win over the product’s lifecycle as the drug will continue to provide value long after the exclusivity period.    
 
Could a novel desmoid tumor treatment be priced at a premium?
Under our current modeling framework, if a drug had a hazard ratio on progression less than 0.29 and an objective response rate greater than 41% (i.e., more efficacious than current options), a price premium would be supported by its pharmacoeconomic profile. Our report provides value-informed price ranges based on different clinical efficacy profiles.

For builders and backers: Therapies with stronger efficacy profiles generate greater lifetime health gains and larger reductions in downstream medical costs, allowing them to support higher value-informed prices. Market forces, budget impacts, and price negotiations will impact the ultimate price that is paid, but pharmacoeconomics can be used to inform pricing.
 
How can cost-effectiveness analysis more realistically inform opportunity costs?
Economic models are often used to estimate the opportunity cost of adopting a new therapy. However, they typically assume a branded drug’s price persists over the entire model time horizon which can extend for decades. In a recent commentary I authored with Dr. Jon Campbell, we suggest that holding a drug’s price constant does not accurately forecast long-term costs because it ignores that prices decline substantially after loss of exclusivity. We propose a plan to incorporate lifecycle price dynamics into economic models in order to provide more realistic estimates of long-term costs and support the objective of forecasting long-term opportunity costs.

For builders and backers: Cost-effectiveness analyses are done to inform pricing and reimbursement decisions, yet it is common practice for these analyses to ignore future expected price declines. This will often result in overestimating the costs.
 
Is drug pricing becoming a trade policy issue?
On the latest episode of Perspectives, I spoke with Ron Lanton, President of Lanton Strategies International, about the US Trade Representative’s Section 301 investigation into Germany’s pharmaceutical pricing and reimbursement practices. We discussed how the investigation fits into broader policy initiatives such as Most Favored Nation pricing and what it could mean for pharmaceutical companies operating in a world where trade policy, reimbursement, and commercialization strategies are becoming increasingly intertwined. The conversation explored why launch sequencing, global pricing strategies, and market access decisions may become more complex if trade policy influences pharmaceutical pricing.

For builders and backers: One of Ron’s central messages was that the “status quo is over” and that biotech executives and investors should prepare for a world in which geopolitical and trade considerations become an important part of commercialization strategy.