CAR-TCR Summit: Industry and patients clash on cell therapy cost

Last week’s approval of Novartis’s Kymriah sent shockwaves through biopharma with the revelation that the starting cost of this CAR-T therapy would be $475,000 per patient. The figure has astonished the industry and patient advocates in equal measure – but for opposing reasons.

At this week’s CAR-TCR Summit in Boston the two camps dug in their heels. The patient lobby clearly thinks that $475,000 is too high, and has done its own calculation of how much Kymriah should cost; industry, meanwhile, appears concerned that even $475,000 might not leave room to turn a profit.

What biopharma actually thinks is, of course, a closely guarded secret. But at Wednesday’s CAR-TCR Summit keynote panel executives from six cell therapy companies shrugged off the suggestion that Novartis had just set a ceiling on the cost of cell therapy; the prevailing view was that $475,000 was just a marker.

David Mitchell, founder and president of Patients for Affordable Drugs, was blunt when the same point was put to him by EP Vantage at a session on Thursday. “The drug corporations will charge whatever the market will bear,” he stated.

Pricing is a live issue because just two days before Kymriah’s approval Gilead had shelled out $11.9bn for Kite Pharma (For Gilead Kite is no Pharmasset, August 29, 2017). If Novartis’s pricing strategy constrains that of follow-on CAR-T therapies Gilead’s M&A wisdom could be called into question.

One view of the problem was spelled out by Bernstein’s Tim Anderson, who on August 30 wrote: “Even if Novartis captured 100% of [the ALL] market, and all patients had a response that triggered payment, the target market size would only be $300m. It is not clear what the breakeven point for profitability is.”

The response trigger refers to Novartis’s pledge not to charge for Kymriah if a patient showed no response at one month (World’s first CAR-T approval sweeps away more cell therapy doubts, August 30, 2017). 

$273k

But Mr Mitchell had run his own slide rule over the numbers. Even considering that $475,000 will only be paid in the event of a one-month response, cutting the average cost by 16% or so, “we think [Kymriah] is priced about $125,000-150,000 too high”, he stated.

He is thus urging for $325,000-350,000, which implies an average number, deducting the no-response no-payments, of as low as $273,000. Among the calculations on which this number is based is the $20,000 cost of goods suggested by Penn’s Dr Carl June – this is surely a figure for academic manufacturing – and Novartis’s purchase of three plants for an estimated $150m.

Perhaps most persuasive was Mr Mitchell’s claim that Kite’s chief financial officer had suggested a CAR-T price of just $150,000 two years ago. At last year’s Adopt Summit in London Glaxosmithkline’s head of cellular therapy, Cedrik Britten, said Blincyto’s $178,000 list price was a starting point for CAR-T.

Mr Mitchell expressed reservations about a recent report by the UK price-setting body Nice, which claimed that in some circumstances a cost of over $600,000 might still be acceptable to payers. Speaking to EP Vantage a spokesperson for Patients for Affordable Drugs called the Nice report “a gift” to industry.

Mr Mitchell also poured scorn on the suggestion of Novartis’s outgoing chief executive, Joe Jimenez, in a recent interview that developing Kymriah had cost his group $1bn. “We cannot get to $1bn of investment,” he said, citing the fact that clinical trials had involved only a few hundred subjects.

And profitability? At $475,000 per patient Mr Mitchell calculates that Novartis will actually have a profit margin of some 60%.

Taxpayer-funded?

Another pillar of Mr Mitchell’s argument is that Kymriah is – via a circuitous route – the result of research done at the NCI, a US government body.

There is a special obligation on companies that develop drugs funded largely by the taxpayer, he stated, claiming that the NCI had spent just over $200m on CAR-T research. “This is the platform on which ... Kymriah has been brought to market. This is not a flatscreen TV, it’s a lifesaving medication that was developed based on taxpayer investment.”

Novartis argues that $475,000, combined with indication and outcomes-based pricing, comes in well below its own calculation of what is cost-effective to healthcare systems. But Mr Mitchell claims: “Novartis made a series of judgements about how to price [Kymriah] so they can make a lot of money and claim that they exercised restraint.”

He also cited a meeting he had had with Novartis executives: “They explained to us that ... the problem is the whole rest of the system: the hospitals who charge too much, the doctors who charge too much, the insurers who charge too much, the PBMs. They wanted no responsibility for the price they set and the impact that has on patients.”

Mr Mitchell’s group campaigns for government programmes like Medicare to be able to negotiate directly with industry – something that is currently forbidden. He said the starting point for such discussion should be calculations carried out by groups such as ICER.

He has vowed to continue pressuring Novartis, Gilead and Juno “to encourage responsible pricing”.

This story has been amended to clarify the Patients for Affordable Drugs’ suggestion of the correct net price of Kymriah.

To contact the writer of this story email Jacob Plieth in Boston at [email protected] or follow @JacobPlieth on Twitter