The pricing of a one-time cancer treatment called Kymriah has created a lot of controversy lately and has reignited debate on the costs of prescription drugs. Novartis, the pharmaceutical giant behind the cancer drug, has set the price tag at $475,000. Despite the outrageously high price, some investors have hoped for it to be higher, owing to the complexity of the new treatment.
Kymriah is part of a series of relatively new cancer treatments called CAR-T cell therapy. It involves taking blood cells from the patient, modifying them so they attack the cancerous B cells responsible for many types of leukemia and reinjecting the patient with the treated blood cells.
Novartis has argued that it was difficult for them to determine the right price to charge for the drug and claimed that various pricing models have suggested that it should cost somewhere between $500,000 and $800,000. The company has also offered something rather unique in the pharmaceutical industry: a money-back guarantee. If the patient doesn’t respond to the treatment during the first month, there is no charge for the cancer drug.
While this guarantee may sound like a fair deal, critics believe that it favors the company rather than the patient. It isn’t clear how Novartis will determine whether a patient has “responded” to the treatment. There is also the issue that cancer patients often experience short-term benefits when starting a new treatment, but what matters the most is completely eliminating the cancer down the road and keeping it from coming back.
Another reason why the price of the treatment has generated so much talk is that Novartis has received help from the taxpayer when developing the drug. They and several other pharmaceutical companies have received an estimated $200 million in public funds to help develop the technology behind Kymriah. According to information from Knowledge Ecology International, a consumer group serving as a watchdog for access to medicine, Novartis has additionally received a tax credit adding up to half the cost of clinical trials it conducted for its new drug.
The company claims that they have invested over $1 billion in the cancer drug, which includes the cost of running clinical trials necessary to have the treatment approved and creating production facilities. However, they have not provided any detailed breakdowns on how the funds were spent.
Furthermore, critics claim that Novartis hasn’t been forthcoming about using research funded by taxpayer money to create the drug. This could give the mistaken impression that the price of the treatment is so high because of large investments the company has made during its development. According to David Mitchell, a cancer survivor and head of the Patients For Affordable Drugs organization, analysis based on information available to the public shows that the price may be too high by nearly $150,000.