The Impact of AstraZeneca’s Price Increases for Lynparza on Pharmaceutical Innovation
Net prices for ovarian cancer drug Lynparza have nearly tripled over the last 6 years.
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 AstraZeneca, a multinational pharmaceutical firm with a diverse portfolio in oncology, respiratory, gastroenterology, and infectious diseases. 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.
AstraZeneca Case Study
- Headquarters: Cambridge, United Kingdom
- Drug Analyzed: Lynparza (olaparib)
- 2021 Company Revenue: $37.2 billion
- 2021 R&D Spending: $9.7 billion
- Other Key Products: Tagrisso (osimertinib), Vaxzevria (ChAdOx1-S COVID-19 vaccine), Farxiga (dapagliflozin), Symbicort (budesonide/formoterol), Imfinzi (durvalumab)
AstraZeneca gained notoriety in 2020–2021 for developing a COVID-19 vaccine in partnership with Oxford University, with sales focused in Europe. However, the company is diversified in multiple disease areas, with a particular focus in oncology treatments.
We analyzed AstraZeneca’s pricing behavior for Lynparza, a treatment for advanced ovarian cancer. Lynparza’s net price has skyrocketed in the last six years, rising from about $199 per daily treatment (600mg) in 2015 to more than $582 in 2021; an increase of more than 192 percent. Most of the increase occurred from 2015–2017, and has remained far above its initial price since.
It is therefore no surprise that Lynparza’s revenue growth since its launch in 2015 is almost entirely driven by price increases. Nearly 74 percent of the drug’s revenue growth came from price increases, totaling $2.1 billion over six years.
If the price of Lynparza remained flat since 2015, the loss of $2.1 billion in revenue would therefore have resulted in $520 million less in R&D spending. We estimate that, based on the drug development scenarios used in our analysis, AstraZeneca spends $7.7 billion (IQR: $4.8-$12.3 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 Lynparza rarely leads to the development of innovative new medicines.
