A $475,000 cancer drug: Wall Street sees ‘bargain’; patients see ‘completely broken’ system

Kevin Lomangino is the managing editor of HealthNewsReview.org. He tweets as @KLomangino.

We’ve long been calling for news stories to address cost when they discuss new health care interventions.

But it’s exceedingly rare – if not unheard of — for cost to figure prominently in nearly every story about a new drug approval.

Yet that’s what we saw in the coverage of Novartis’s innovative new leukemia therapy Kymriah, whose $475,000 price tag proved impossible for most journalists to ignore.

Predictably, there was a great deal of discussion and disagreement as to the implications of this staggering figure.

STAT, citing Wall Street analysts and the complex process needed to make the customized drug for each patient, called the nearly half-million-dollar price tag “a bargain” in its headline (one of two stories from STAT on the approval – more below).

Whereas The Guardian, citing a patient advocate group, said the astonishing figure reflects a “completely broken” drug pricing system in the U.S.

Crucial context lacking in some coverage

We think that any mention of cost in a story about health care is almost always going to be a good thing. And it was great to see the New York Times putting the $475,000 figure right in its headline.

To provide any reasonable understanding of where this figure comes from and whether it’s justified, however, news stories needed to explore both the pharma and consumer/patient perspective.

And while they may have done an excellent job reporting on the science and clinical aspects of the treatment (issues I’m not going to focus on in this post), some stories tilted perceptibly in favor of the pharma narrative on costs.

CNN, for example, seemed to justify the price by referencing a Novartis pledge that “patients who do not respond within a month of treatment will not be charged.”

The Times carried the same disclaimer and compared the price of Kymriah to the cost of bone marrow transplants. A Novartis official said that procedure, also used to treat leukemia, can reportedly cost anywhere from $500,000 to $800,000.

Missing from both of these stories was an acknowledgment that 30 days is an exceedingly short window to determine whether patients are deriving any meaningful benefit from the drug.

STAT, in an editorial co-authored by noted drug pricing expert Peter Bach, MD, called attention to this concern and called it a “fair criticism” of the Novartis approach. Bach wrote: “In the pivotal trial of Kymriah, 25 percent of patients who at first responded to the drug had disease progression by six months.”

Vinay Prasad, MD, an oncologist at Oregon Health and Sciences University, emphatically called for a much wider window for refunds. Writing on Twitter, he said that Novartis’s definition of treatment failure will preclude many payers from getting their money back despite patients receiving little if any benefit. He said the company should issue a refund for any relapse within three years.

Misleading analogy to bone marrow transplants

And what about that comparison to the cost of bone marrow transplants?

Walid Gellad, MD, Co-Director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, told me he didn’t think the comparison was a fair one. He noted that the transplant costs cited by Novartis represent the total cost of the transplant, “including weeks in the hospital, staff, meds, supplies, etc. The $475K for the Novartis product does not count any of those items.”

In other words, $475,000 represents the price of the drug only and the other costs still need to be factored in.

As STAT wisely pointed out in its investor-focused coverage, those additional costs may make Kymriah much less of a “bargain” for patients and insurers.

To get Kymriah, patients will have to travel to one of just 32 sites around the country. From there, doctors harvest patients’ white blood cells and ship them off to a Novartis facility in New Jersey where they can be edited and mailed back. The entire process takes about 22 days, the company said. And the $450,000 price tag covers only Novartis’s role, not the costs of travel, hospitalization, or any drugs needed to tamp down Kymriah’s side effects.

Some coverage acknowledges significant public investment

A truly complete discussion of Kymriah’s price would also address the significant public investment that led to its approval. And that’s something we saw in stories from NBC, NPR, and The Guardian, all of which referenced the criticism of the advocacy group Patients for Affordable Drugs.

Whereas pharma companies often justify their high prices by citing huge research and development costs, David Mitchell, president of Patients for Affordable Drugs, says that’s no excuse in this case.

“But let’s remember, American taxpayers invested over $200 million in CAR-T’s discovery. To date, Novartis has not acknowledged the significance of taxpayers’ investment, and the company declined to detail its own investment.

While Novartis’ decision to set a price at $475,000 per treatment may be seen by some as restraint, we believe it is excessive. Novartis should not get credit for bringing a $475,000 drug to market and claiming they could have charged people a lot more.

The drug pricing system in America is completely broken. Until policy in this country changes, the vicious cycle of patients struggling under high drug prices will continue.”

Here’s the analysis that’s the basis for the $200 million tally.

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Comments (1)

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Jeremy Engdahl-Johnson

September 7, 2017 at 9:32 pm

In this blog, Milliman’s Scott Weltz discusses the factors contributing to the high cost of prescription drugs.   Review more:  http://www.healthcaretownhall.com/?p=7761&utm_source=twitter&utm_medium=social&utm_campaign=health%20%26%20group%20benefits#sthash.ViJDSumX.vjjCLpwU.dpbs