Profit On $475,000 Novartis Cancer Drug Could Be A While Coming

Novartis's new gene-modifying cancer therapy's $475,000-per-patient sticker price has drawn fire from advocate groups calling for cheaper drugs, but analysts said the Swiss drugmaker could initially struggle to break even.

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.