Profitability Of Infused Biologics For Hospitals And Physician Practices: Case Study Of Keytruda

Area of Science:

• Health Economics
• Oncology Drug Markets
• Pharmaceutical Policy

Background:

• Physician-administered drugs and biologics represent a growing segment of pharmaceutical expenditure.
• These high-cost therapies generate significant revenue for healthcare providers through price differentials between acquisition and reimbursement.

Purpose of the Study:

• To analyze insurer expenditures and provider margins for Keytruda, a leading biologic.
• To quantify revenue generation across different healthcare settings (340B-eligible hospitals, non-eligible hospitals, physician practices).

Main Methods:

• Analysis of detailed insurer, provider, and market data for 59,717 patients treated with Keytruda.
• Examination of expenditures and price markups from 2020 to 2024 across 5,008 healthcare facilities.
• Calculation of provider revenue per patient adjusted for various factors.

Main Results:

• Private insurer expenditures for Keytruda surged by 142% from 2020-2024, with patient numbers rising 110%.
• Average price markups for Keytruda were 173% in 340B-eligible hospitals, 78% in non-eligible hospitals, and 16% in physician practices.
• Annual revenue per Keytruda patient was $102,680 (340B hospitals), $67,825 (non-eligible hospitals), and $3,094 (physician practices).

Conclusions:

• Significant provider revenue is generated from Keytruda, particularly in 340B-eligible hospital settings.
• Reimbursement structures create substantial financial incentives for providers administering high-cost biologics.
• Understanding these economic dynamics is crucial for pharmaceutical policy and healthcare cost management.