The Impact of Astellas’ Price Increases for Xtandi on Pharmaceutical Innovation

The pharmaceutical industry has long argued that high drug prices are a good thing because the profits from these price hikes allow companies to spend more on research and development to discover and launch the cures of the future.

To test the claim that higher drug prices drive innovation, we gathered data from the industry, individual companies, and the FDA to conduct a counterfactual analysis: what would happen at some of the largest pharmaceutical companies in the world if prices on certain blockbuster drugs had remained constant over the last 10 years?

The following case study examines drug pricing at Astellas, a large pharmaceutical firm with treatment areas in immuno-oncology and rare genetic disorders. This analysis is part of a larger study on the impact of pharmaceutical price increases on medical innovation. To read the full study, click here.

Astellas Case Study

• Headquarters: Tokyo, Japan
• Drug Analyzed: Xtandi (enzalutamide)
• 2021 Company Revenue: $11.8 billion
• 2021 R&D Spending: $2.1 billion
• Other Key Products: Prograf (tacrolimus), Betanis (mirabegron)

Astellas manufactures drugs in oncology and immunotherapy. Xtandi, a treatment for prostate cancer, is its top-selling drug sold in partnership with Pfizer. The drug’s origins are unique, in that the original development occurred at UCLA and R&D development was funded by the federal government. As such, the drug’s annual list price of $158,000 is controversial, given its development was funded by American taxpayers.

We analyzed Astellas’ pricing behavior for Xtandi, which the company markets in partnership with Pfizer (the companies share profits equally). Overall, Xtandi’s price increased more than 48 percent from 2013–2021.

Though Xtandi’s revenue is historically driven by prescribing volume, an increasing share of the drug’s revenue is driven by price increases in recent years. Overall, about 25 percent of the drug’s revenue growth came from price increases, totaling $1.3 billion over eight years.

If the price of Xtandi remained flat since 2011, the loss of $1.3 billion in revenue would have resulted in $227 million less in R&D spending. We estimate that, based on the drug development scenarios used in our analysis, Astellas spends $3.5 billion (IQR: $3.0–3.8 billion) in R&D per new drug developed. Therefore, the impact to new drug development would be negligible, with 0.07 fewer drugs developed.

The results are further evidence that profit growth driven by price hikes on older, branded, monopoly drugs like Xtandi rarely leads to the development of innovative new medicines.