The approval of Novartis AG’s breakthrough therapy for a deadly form of leukemia opened the door to a new class of treatments even as its $475,000 price tag reignited the debate on how to value potentially life-saving drugs.
Demonstrating its willingness to clear medicines faster, the U.S. Food and Drug Administration on Wednesday approved a radical new one-time treatment from the Swiss drugmaker, weeks earlier than expected. The move heralds acceptance of a promising, potentially curative approach for cancers, genetic diseases and other severe disorders.
“We’re entering a new frontier in medical innovation with the ability to reprogram a patient’s own cells to attack a deadly cancer,” FDA Commissioner Scott Gottlieb said.
The therapies, known as CAR-T, raise a host of questions for doctors, patients, manufacturers and regulators, including who will receive the treatments and how to pay for them. Novartis is attempting to address the pricing question with a new type of agreement: for patients whose care is covered by U.S. government programs, the company will only get paid if patients show signs that the treatment is working within a month of getting it.
“This will support sustainability of the health-care system and patient access while allowing a return on our investment,” Bruno Strigini, chief executive officer of oncology for Novartis, said on a call.
The Basel, Switzerland-based company is wading into a new arena of performance-based pricing, said Sam Fazeli, a Bloomberg Intelligence analyst.
“We’re not used to drugs curing people” of major diseases like cancer, he said. “It’s a paradigm shift.”
Shares of Novartis rose 0.8 percent to 79.85 Swiss francs as of 10:07 a.m. in Zurich trading. The stock has advanced 7.7 percent in the past year.
The U.S. health-care system has grappled with the pricing issue before. In 2013, Gilead Science Inc. introduced an $84,000 cure for the viral disease hepatitis C, prompting a nationwide debate over drug costs. And new cancer treatments that have greatly extended some patients’ lives can cost $150,000 a year.
Yet the almost half-million-dollar price tag on the Novartis CAR-T drug is a new benchmark, and more are likely to follow, with similar new therapies for blindness, blood disorders and other cancers. Spark Therapeutics Inc.’s gene therapy for a genetic disorder that causes childhood blindness is expected to get an agency decision by January.
There are more than 600 gene and cell therapies in clinical trials today, according to Mark Trusheim, a strategic director at the Massachusetts Institute of Technology’s Center for Biomedical Innovation. Those that make it to approval are likely to come with similar costs, in part because of the complex manufacturing process required to make these treatments.
“Gene therapies are different because you’re treated once and then you’re done, as compared to regular drugs where you take them every month or every day,” Trusheim said. “There’s no mechanism for the developer to get paid every month, so the price points start to look pretty high.” He called Novartis’s arrangement to pay only if patients respond to the drug a “huge breakthrough.”
Others, like Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, see the industry’s prices creeping higher and higher with no end in sight.
“We have gotten so comfortable with these numbers that are just beyond belief for these agents. And this is a highly profitable sector,” said Bach, who studies drug prices. “They just continue to move the goal posts” about what is reasonable.
Part of the speed of the approvals is the agency trying to keep pace with science.
“We have real innovation coming out of our industry,” said John Maraganore, a biotech CEO who chairs the trade organization Biotechnology Innovation Organization. “They aren’t incremental types of drugs.” He also said that the quality of drugs is improving, which is making it easier for the FDA to say yes.
For example, in March, Tesaro Inc.’s cancer drug was approvedthree months ahead of the agency’s deadline, at a price of more than $100,000 a year. Kite Pharma Inc., which Gilead agreed to buy for $11.9 billion just this week, has a CAR-T therapy with a Nov. 29 deadline but has said it can be ready to start selling the medicine as soon as next month. It’s likely to come with a similar cost to the Novartis drug.
The pace is also being driven by a five-year-old program at the FDA to get promising drugs through quickly, said Ellen Sigal, chairwoman of the advocacy group Friends of Cancer Research. Known as the breakthrough therapy program, the FDA initiative gives drugmakers more access to agency staff to help design clinical studies that will meet its standards.
“It changed the culture,” Sigal said. “Now, if developers understand the patients that will benefit, they know how to design these trials.”
While the approvals are coming faster, the process is also putting more of the onus onto doctors to assess how well the drugs actually work, said Bach.
“To the extent there’s full data available, what it tells me is at the FDA, the effectiveness bar is being lowered,” Bach said, who doesn’t think safety standards are being lowered in turn.
“They’re expecting us to more and more make the calls on the data, which is okay.”
The Novartis drug, which will be sold under the name Kymriah, was approved on the condition that the drugmaker continue to track the patients who get it for another 15 years. At first, it will be used to treat children and young adults up to age 25 with acute lymphoblastic leukemia, or ALL, who don’t respond to traditional treatment or who are suffering from a second relapse.
About 3,100 Americans age 20 and younger are diagnosed with ALL each year, according to the National Cancer Institute. Of those, about 600 patients whose disease relapses or doesn’t respond will be eligible for the Novartis treatment, according to the company. The Basel-based drugmaker will work to expand its use to more patients.
“We’ve never seen anything like this before,” said Stephan Grupp, director of the cancer immunotherapy frontier program at Children’s Hospital of Philadelphia, the first medical center to study Kymriah in children. “This therapy may become the new standard of care for this patient population.”