Pioneering cancer drug, just approved, to cost $475,000 — and analysts say it’s a bargain 
 
 The Food and Drug Administration on Wednesday approved a futuristic new approach to treating cancer, clearing a Novartis therapy that has produced unprecedented results in patients with a rare and deadly cancer. The price tag: $475,000 for a course of treatment. 
 
 That sounds staggering to many patients — but it’s far less than analysts expected. ||||| Joseph Jimenez, the chief executive of Novartis, is celebrating a triumph. The Food and Drug Administration approved Kymriah, a new treatment for kids with leukemia. But he’s also taking heat from all sides over his decision to charge $475,000 for the treatment, and, in a major first, to negotiate deals that charge only patients who go into remission. For Wall Street, the sum is 36% less than investors expected, and could stunt a whole field. For patients, it is still far too expensive. 
 
 Jimenez admits the number is big “in the absolute.” But he says medical science can’t advance unless companies will invest in it, and companies can only do that if they get an adequate financial return. “I think in this instance we priced at a point where we can get a return, although I have to tell you that the cost of goods, the cost of manufacturing these cells and processing is very, very high.” 
 
 One person not buying it: David Mitchell, a cancer survivor and the founder of Patients For Affordable Drugs, an advocacy group. “While Novartis’ decision to set a price at $475,000 per treatment may be seen by some as restraint, we believe it is excessive,” he said in a prepared statement. “Novartis should not get credit for bringing a $475,000 drug to market and claiming they could have charged people a lot more.” 
 
 Novartis is claiming exactly that, but a lot more. Jimenez sees Kymriah as his chance to put into practice new ideas about drug pricing he has advocated for years as a solution to the pharmaceutical industry’s bad reputation and unsustainably rising prices: "indication-based" or "value-based" pricing. Drugs, he says, should be priced on the value they bring to the healthcare system, and insurers and governments should pay based on whether the medicines work. That’s why Novartis has approached the Centers for Medicaid and Medicare Services and insurers about schemes where only patients who have responded to Kymriah in a month will incur a charge, despite the high cost of administering the treatment. 
 
 Kymriah is a special medicine. It created a national stir when, in an early trial at the University of Pennsylvania, it saved a young girl named Emily Whitehead who was near death. In a clinical trial, 83% of children with acute lymphoblastic leukemia who got the medicine went into remission. Based on earlier studies, one would expect that about 60% would remain in remission after a year, says Stephen Grupp of the University Pennsylvania, who led Novartis’ study. 
 
 Still, that’s an amazing rate, considering that modern medicine had otherwise failed these kids entirely and that after a year relapses are rare. But this is no simple drug: patients’ own white blood cells are removed, genetically engineered, and reinserted, a process that, for the Novartis product, takes 22 days. (It’s called CAR-T, for chimeric antigen receptor T-cell, the scientific name of the genetically altered white cells.) Investors had expected that kind of clinical benefit could yield a price as high as $750,000 per treatment, a sky-high figure that was even backed by cost-effectiveness analyses of other groups. 
 
 That calculation also figured in Monday’s announcement that Gilead, the top maker of drugs for HIV and hepatitis C, would purchase Kite Pharma, a biotech firm that is Novartis’ biggest rival, for $11 billion. Kite is developing a similar treatment, but for adults with another blood cancer called diffuse large b-cell lymphoma (DLBCL). Novartis is close behind, there. In a note to investors Monday, Brian Skorney estimated that the initial opportunity in DLBCL would be between $375 million and $563 million at a $750,000 price point. 
 
 But Jimenez confirms that it is “a fair assumption” that prices for Novartis CAR-T therapies might never get that high, certainly not for DLBCL. “The outcomes [in DLBCL] are still very, very strong -- remission rates in the high thirties or even 40% -- but are below the complete response of pediatric ALL. So if we are able to pursue indication-based pricing, in that situation you would say the value of that medicine is lower,” he says. Memorial Sloan-Kettering's Peter Bach, who first proposed the idea of indication-specific pricing three years ago, said he needs to see more analysis of the price, but that the mechanics move us toward a better framework for pricing. 
 
 It’s conceivable that later on other CAR-T’s could be worth more – Jimenez points to promising data combining Novartis’ technology with AbbVie’s cancer drug Imbruvica. But it’s also possible they could be worth less. This is an inconvenient stance for other drugmakers, but Jimenez has come to see it as increasingly important that prices be linked to what disease a patient has. He points to the challenge of another result the company recently presented, for its drug Ilaris. That medicine is sold to treat a rare form of arthritis, but appears to be beneficial in heart disease. Using it for heart patients, though, would mean dropping its $200,000 price, something that is not possible under the current system. 
 
 Regardless, Jimenez pushes back hard against charges that Novartis is just profiteering based on research that was mostly done by academics and funded by the National Institutes of Health. Mitchell, the patient advocate at Patients For Affordable Drugs, has calculated that the NIH poured $200 million into research that led to CAR-T therapy. Jimenez says that’s just not so. 
 
 “We have spent a considerable amount of money bringing this therapy to market through development and through the manufacturing process, investments which we have not disclosed but which dwarf anything the government has invested through NIH grants,” Jimenez says. 
 
 He puts a number on it, saying bringing Kymriah to market cost Novartis more than $1 billion. He also says the $200 million figure is wrong, that as of 2012, when Novartis became involved, only $16 million had supported CAR-T development. (Mitchell disagrees: he says $16 million barely covers the grants given just to Novartis’ partner, Penn scientist Carl June.) Jimenez also point out that Novartis’ investment will lead to additional uses for CAR-T, which he says the company will price in a way that is “responsible” and “sustainable.” 
 
 Grupp, the Penn doctor who led Novartis’ trials, says that he’s generally uncomfortable with the high cost of cancer drugs but sees this as a good value, because it can save kids from a bone marrow transplant, an equally expensive treatment that does not save life. “For an individual patient or even an individual insurer, this is not a bad way to spend that money compared to a lot of other ways we spend money for treatment,” Grupp says. 
 
 The biblical figure King Solomon became the embodiment of wisdom by threatening to split a baby in two. Two mothers had claimed the child. The real one couldn’t bear to see the baby harmed, while the imposter was happy to see it die. But what works in the Bible doesn't work in the land of drug prices, which have gotten so high that splitting them leaves both sides angry, and may not make anyone look wise.
– "The cancer world is forever changed." That's what a researcher is saying following the FDA's approval of America's first-ever treatment that genetically alters a person's cells to fight cancer. The customized treatment to be administered at certified medical centers involves drawing a patient's blood, genetically engineering their white blood cells, called T cells, turning them into a "living drug" that fights the disease, before re-dripping them back into the patient. It's expected to be a 22-day turnaround for Novartis' Kymriah treatment. Kymriah, which can cause a potentially life-threatening immune reaction, is so far approved only for B-cell acute lymphoblastic leukemia, but companies are working to develop similar therapies for additional cancers. Just don't expect them to come cheap; Kymriah carries a $475,000 price tag, reports the New York Times. Though analysts had expected Kymriah to cost $750,000, the founder of Patients for Affordable Drugs tells Forbes the cost is "excessive," while Stat News notes that that number doesn't include hospitalization and travel fees. Novartis CEO Joseph Jimenez, however, says developing the treatment cost more than $1 billion. And in order for investors to continue to advance medical science, they need to get a proper financial return, he says. His compromise: There will be no charge if a patient doesn't respond within a month. For those who do respond—in a trial, 52 of 63 leukemia patients went into remission within three months of treatment, though the disease often kills quickly—the cost is less than that of a bone-marrow transplant, a doctor tells the Times. "This is a big paradigm shift, using this living drug," says a pediatric oncologist. "It will provide a lot of hope. This is the beginning."