Keytruda (pembrolizumab) is among the most expensive and widely used oncology drugs in the U.S. It’s incredibly effective! It’s also a test case for how emerging price transparency tools can reshape what payers, employers, and even policymakers know and do about cancer drug spending and other infusion therapies.

In our earlier blog on why price transparency matters, I explained how transparency represents a foundational shift in market dynamics. Commercial healthcare prices, once hidden, are increasingly a matter of public record. A lot is changing this year, and our May blog highlighted how this transformation is unfolding under several federal actions to improve the mechanics of the Transparency in Coverage (TiC) and Hospital Price Transparency (HPT) regulations. And most recently, we shared our response to the federal RFI on drug pricing disclosures, capturing the acceleration of policy momentum and the growing sophistication of how this data is being used.

Today’s post focuses on the "what" as it relates to physician-administered drugs: What can payer-reported price transparency data tell us about a single high-cost oncology drug, Merck’s Keytruda (pembrolizumab)? What variation exists? And what does that mean for patients, payers, and the US healthcare system as a whole?

Why Now: The OBBB, IRA, and the Rising Cost of Cancer

Under the Inflation Reduction Act (IRA), pembrolizumab was not selected for Medicare negotiation which may have reduced its US spending. Launched in 2014, this blockbuster biologic is expected to become eligible for negotiation by 2028 under the IRA’s Orphan and Biosimilar Blockbuster Breakout (OBBB) provision, a statutory clause delaying eligibility for certain high-spend drugs until they’ve been on the market for at least 13 years or lose orphan exclusivity. Recent reporting by the WSJ notes the recently passed One Big Beautiful Bill (OBBB) reinforces this reality: some of the most expensive therapies will remain just out of reach of federal negotiation.

Meanwhile, Keytruda's budget impact continues to grow. According to MedPAC’s 2025 Data Book, pembrolizumab ranked as the #1 Medicare Part B drug by total spending in 2023, with $4.8 billion in allowed claims. On the commercial side, estimates suggest that Merck earned nearly $9  billion in U.S. net revenue from Keytruda in 2023 alone, driven by its multiple approved indications and continued absence of biosimilar competition. Many providers administering Keytruda further profit from buy-and-bill dynamics, in which they negotiate rates with payers far above the acquisition costs from the manufacturer (e.g., due to discounted 340b pricing for eligible organizations).

This landscape underscores the urgent need for market-based action, particularly in the commercial space. While IRA timelines inch forward, employers and private payers already have powerful tools at their disposal. Using price transparency data, stakeholders can now analyze Keytruda’s (and all other physician-administered drugs') negotiated rates payer by payer, provider by provider, and site by site to generate savings. 

The results? Far from consistent. Negotiated rates for Keytruda can vary dramatically, even within the same market as we'll show below.

Keytruda Pricing Is Not One Price

Under Medicare Part B, pembrolizumab is priced using the Average Sales Price (ASP) methodology. The current rate, effective July–September 2025, is $58.562 per 1 mg of the drug. For the most common dose of 200 mg, this equates to $11,712.40 per administration, which Medicare reimburses to providers, typically with an additional 6% markup (or 4.3% under sequestration). This ASP-based pricing is updated quarterly and reflects Merck’s reported sales data net of any rebates or discounts.

However, using payer-reported negotiated rate data we observe that the negotiated commercial rates for pembrolizumab, while often anchored around Medicare pricing, often vary by as much as 5–10x across providers and plans, even within the same geography. Much of that variation stems not from clinical factors, but from geographic factors, billing class, place of service, and negotiation power.

Across U.S. states, average, per-treatment commercial rates for a standard 200 mg dose of pembrolizumab range from under $12,000 to over $30,000, with significant regional clustering. States in the Southeast and Mountain West tend to have lower rates, while states like New York, Illinois, and California reflect consistently higher averages.

Substantial variation exists not only geographically, but also across payers and over time. The chart below shows median in-network commercial rates for a 200 mg dose of pembrolizumab across major BUCA payers, comparing data from July 2024 to July 2025. Rates are drawn from Transparency in Coverage files and reflect allowed amounts between payers and providers.

Some payers, like Blue Cross Blue Shield of Illinois, saw sharp rate reductions year-over-year, while others, like BCBS Oklahoma and Highmark networks in New York, posted notable increases. These differences translate directly into spending: payers and employers may face tens of thousands in extra cost per patient, and patients with coinsurance or high deductibles could see out-of-pocket bills ranging from $3,000 to over $8,000 for the same drug.

It remains unclear who benefits most from these disparities, whether it’s the manufacturer, PBMs, or health systems, but high variation in negotiated rates doesn’t appear to align with clinical value or health policy goals around value-based reimbursement.

Health systems and other providers certainly play a role in driving differences in pricing for Keytruda, with negotiated rates observed across various dimensions of provider type:

• Provider NPI Specialty: Providers with hematology/oncology or hospital-affiliated specialties tend to have higher rates than general internal medicine or multi-specialty groups, likely due to negotiated leverage and site affiliation.
• Place of Service: Rates are highest in Hospital Outpatient Departments (HOPDs), followed by Emergency Rooms; Office-based settings and ASCs show significantly lower median rates, especially when bundled under professional billing.
• Billing Class: While not surprising, institutional rates consistently show higher rates than professional claims, reflecting facility fees and broader cost structures captured in institutional billing.

What Can Be Done?

Despite the realities of federal policy, health system market power, and remaining opacity around PBM rebates, this variation is actionable. For example, employers and other payers are increasingly building tools informed by price transparency data to:

• Benchmark what they pay relative to other plans, regions, and sites
• Design site-of-care steerage programs that lower cost without compromising access
• Negotiate oncology drug carve-outs or bundled rates based on real-world contracted data

Yet, key questions remain. Who benefits from these pricing differences? It’s not always the patient. Depending on the flow of payments and rebates, manufacturers, PBMs, or providers may be capturing value in different parts of the system.

As emphasized in earlier blogs, this is a data-first moment. As scrutiny increases and real-world price variation becomes more visible, change is inevitable.Policymakers are watching. Employers are benchmarking. And innovative organizations are adapting and growing through this. And over the next few years, we expect greater clarity, more standardization, and a sharper focus on value. Stay tuned!

If you’ve read this far, we’d love to hear from you. Let’s talk about how our price transparency data and tools can help your organization take the next step. Please reach out to hello@serifhealth.com or book time here. Also feel free to check out our sample data on our web platform Signal.