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 In a first for gene therapy in the United States, regulators
approved Kymriah on Wednesday for patients up to 25 years of age who
have relapsed or not been helped by previous treatment for B-cell
acute lymphoblastic leukemia (ALL).
While patient groups hailed the potent immunotherapy as a potential
cancer game-changer, the Swiss drugmaker was also criticized for
setting a price that places Kymriah among the most-expensive drugs
ever. It trails only a couple of gene therapies for ulta-rare
diseases.
Since taxpayers have chipped in more than $200 million over the
years for related research -- much early work on the drug was done
at the University of Pennsylvania -- Novartis should have used more
restraint, the Patients for Affordable Drugs lobby group said.
"We believe it is excessive," said David Mitchell, a cancer patient
who founded the group. "Novartis should not get credit for bringing
a $475,000 drug to market and claiming they could have charged
people a lot more."
Novartis estimates that only 600 ALL patients a year would be
eligible for Kymriah, making the initial pool for the treatment
relatively scarce and worth less than $300 million.
The company is also targeting the several thousand people a year who
have relapsed or refractory diffuse large B-cell lymphoma (DLBCL)
diagnosed, but it will not file Kymriah for that group until later
this year.
BREAK-EVEN POINT?
Success with those patients is key to Novartis turning Kymriah into
the $1 billion-a-year blockbuster drug the Swiss company predicts it
will eventually become, but analysts say it is anyone's guess when
it will start covering its costs.
"It is not clear what the break-even point for profitability is, as
this is a very capital intensive endeavor," said Bernstein analyst
Tim Anderson, adding that Novartis is likely to cut the price of
Kymriah for DLBCL patients.
On Thursday Novartis said that its cost of goods per Kymriah
treatment is confidential commercial information, but analysts
estimate it could be as high as $200,000.
The process is complex. Doctors remove T cells from each cancer
victim and ship the material to its factory in Morris Plains, New
Jersey. After re-engineering them to attack cancer, frozen cells are
returned a couple weeks later for reinfusion into patients.
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Additionally, Novartis partner Oxford BioMedica, which supplies a
key ingredient, may be due $100 million over the next three years,
plus royalties on sales.
Furthermore, competition is on the horizon. Gilead Sciences this
week announced an $11.9 billion deal to buy Kite Pharma to gain
access to a similar drug, while Bluebird Bio and Juno Therapeutics
are all working on their own CAR-T therapies.
While Kymriah's price tag will grab headlines, it pales in
comparison with some other gene therapy treatments.
For instance, UniQure's Glybera, for a very rare blood disorder,
runs at about $1 million per patient. Meanwhile, GlaxoSmithKline’s
Strimvelis, for so-called “bubble boy” disease, comes in at about
$700,000 per patient.
OUTCOME PRICING
Novartis points out that some groups think the company could
actually have charged more for Kymriah.
British health authorities, for instance, had said that up to
$650,000 might have been justified if the treatment added years to
children's lives.
Novartis plans to charge insurers and payers only when the drug
proves to be effective one month into treatment, a so-called
"outcome-based" pricing scheme that puts some of the risk of the
drug on its manufacturer.
Even so, analysts hardly expect that to shield Novartis from
criticism.
"Expect turbulent public discussions on drug pricing, demonstrating
that the road to hell is paved with good intentions," said Bruno
Bulic of equity research firm Baader Helvea.
Bulic forecasts that Kymriah will start adding to Novartis's bottom
line only after 2019, when it is expected to be given to more
patient groups.
(Additional reporting by Ben Hirschler; Editing by David Goodman)
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