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Novartis's $475,000 Price on Cancer Therapy Meets Resistance

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The $475,000 price tag on Novartis AG’s latest breakthrough cancer therapy came under fire from one of the biggest managers of drug costs in the United States, underscoring the challenges the Swiss drugmaker will face in promoting the potential blockbuster.

The cost of the leukemia treatment, called Kymriah, is “dramatically higher” than other such complex treatments, and the health care system isn’t ready to pay for it, Steve Miller, chief medical officer at Express Scripts Holding Co., said Thursday in a blog post on his company’s website. Gene therapies like Novartis’s are targeted at a small number of patients and typically used just once, meaning that drug companies have limited chances to recoup their investment.

“Therein lies the challenge,” Miller wrote. “We need a new payment model.”

(Related: CVS Health has Amped Up Pharma’s U.S. Drug Price Wars)

Kymriah is the first drug approved from a new class of treatments called CAR-Ts that have been heralded as a promising approach to treating and potentially curing cancers as well as genetic conditions such as blindness. Paying for CAR-Ts and similar therapies, some of which cost as much as $1.4 million, will require new collaborative approaches among payers, drugmakers and policymakers, the executive wrote.

Cost Hurdle

Novartis has said it will attempt to address the pricing hurdle with a new type of agreement: for patients whose care is covered by U.S. government programs, the company will get paid only if patients show signs that the treatment is working within a month of getting it.

Other value-based payment approaches for Kymriah and CAR-T therapies are under discussion, Novartis said Friday in an emailed statement. Studies show its drug would still be cost-effective at $600,000 to $750,000 for treating leukemia, while the only other potentially curative option for young patients is a stem-cell transplant costing $500,000 to $800,000 for the first year.

“We are committed to doing everything we can to help children and young adults who can benefit from Kymriah have access to the therapy,” the company said. “We are working with payers to ensure they fully understand the value of Kymriah and provide coverage for patients.”

Shares of the Swiss company rose 0.6% to 83.45 Swiss francs as of 3:55 p.m. in Zurich.

Express Scripts, a pharmacy benefit manager in the U.S., negotiates prices with drugmakers to lower costs for its clients, which include employers and insurers. Cancer drugs like Kymriah that are administered at hospitals are usually paid for by health insurers, rather than PBMs.

The approval of Novartis’s CAR-T therapy last month came just two days after Gilead Sciences Inc. announced an $11.9 billion deal to buy Kite Pharma Inc., which is developing a rival CAR-T therapy scheduled for an FDA ruling by Nov. 29.

—-Read Europe Warms to New Novartis Heart Drug Amid Glacial U.S. Sales on ThinkAdvisor.

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