Powerful New Cancer Drugs Offer Hope—at Steep Cost

Posted by Samantha Powell on September 3rd, 2014 |

The first of a promising new class of cancer drugs went on sale in Japan this week at an average annual cost of $143,000 a patient, a harbinger of hefty prices the new drugs are expected to command in the U.S. and Europe in coming months.

The drug Opdivo, from Ono Pharmaceutical Co. 4528.TO -2.06% and Bristol-Myers Squibb Co. BMY +0.18% , is a so-called PD-1 inhibitor, a new type of drug that harnesses the body’s immune system to fight tumors, including melanoma. Several other pharmaceutical companies are also developing PD-1 targeting drugs.

High prices for the treatments come as concerns mount about the affordability of new drugs. Debate about pricing reached a peak this year with the launch of an expensive new drug for hepatitis C.

Government health officials, private insurers and some members of Congress expressed concern that the $84,000-per-patient drug—Sovaldi from Gilead SciencesInc. GILD -1.02% —was straining health budgets. Some prisons and state Medicaid programs said they couldn’t afford to give the drug to every patient who qualified for it medically. Gilead said the drug has a high cure rate and can stave off more costly health interventions if the disease is left untreated.

More new drugs with the potential to carry high prices are on the horizon. The U.S. Food and Drug Administration is expected to decide soon whether to clear Merck MRK +0.01% & Co.’s PD-1 inhibitor, pembrolizumab, for sale to treat melanoma, while newer hepatitis-C drugs from Gilead and AbbVie Inc. ABBV -0.08% may hit the U.S. market by the end of this year.

Some of the new drugs have brought real medical advances for diseases that long confounded researchers. Sovaldi and the newer hepatitis-C treatments can cure many patients of infection in 12 weeks, studies have shown, preventing it from worsening to diseases like liver cancer. Doctors say metastatic melanoma is being transformed from a disease with a dismal outlook for most patients to one where many may live longer because of the new drugs.

J. Leonard Lichtenfeld, deputy chief medical officer for the American Cancer Society, said higher prices for new cancer drugs have become an increasing concern for patients and their families, who often shoulder high copayments. At the same time, the PD-1 drugs “have the potential to be game-changers for a lot of people” because patients in studies have had “meaningful, long-term responses” to the drugs. PD-1 targeting drugs have shown strong cancer-fighting results in clinical trials.

Ono is marketing Opdivo—whose generic name is nivolumab—in Japan as a treatment for unresectable melanoma, a deadly form of skin cancer.

Bristol-Myers, which plans to market nivolumab in the U.S. if the FDA clears it for sale, declined to say how much it will charge. A spokeswoman said the company prices its medicines based on “the value they deliver to patients and society, the scientific innovation they represent and the investment required to support” drug research-and-development.

Prices for patented, brand-name drugs in Japan are typically at least 18% lower than in the U.S., according to the U.S. Department of Commerce. Japan imposes price cuts every two years, while manufacturers are free to raise prices in the U.S.

Osaka-based Ono Pharmaceutical received Japanese regulatory approval in July. The company disclosed the Japanese price for the drug on Tuesday, when it formally went on sale.

New York-based Bristol-Myers plans to apply by Sept. 30 for U.S. regulatory approval to market nivolumab as a treatment for melanoma, and expects to complete by year-end an application for U.S. clearance to market the drug to treat a form of lung cancer.

Bristol-Myers has been marketing another kind of cancer immunotherapy, Yervoy, as a melanoma treatment in the U.S. since 2011 at a cost of $120,000 a patient for a standard, complete course of treatment.

Doctors and drug makers say PD-1 inhibitors represent a significant advance in cancer treatment—particularly in melanoma—because they have produced relatively high rates of tumor shrinkage and patient survival in clinical studies.

Melanoma patients who received nivolumab in one clinical trial had a median overall survival of nearly 17 months. About 62% of patients receiving the drug were still alive one year after starting treatment, while 43% were still alive at two years.

Although the study didn’t directly compare nivolumab-treated patients with those who didn’t receive nivolumab, the survival rates compare favorably with historical norms for older treatments. Until a few years ago, patients with melanoma that had spread to other parts of the body could be expected to live for less than a year, on average.

PD-1 inhibitors have shown potential to improve treatment for other types of tumors, including lung and bladder cancers. Bristol also has reported relatively high rates of tumor shrinkage and survival for a combination of Yervoy and nivolumab in clinical testing.

The Japanese price tag stems from Ono’s negotiations with that country’s National Health Insurance system, which sets introductory prices for new drugs.

Ono said the price negotiated with Japan’s national health insurance program is ¥729,849 for a 100-milligram vial of nivolumab. The drug is infused intravenously every three weeks at a dose that is based on a patient’s weight. Using the average Japanese patient weight of 132 pounds, the annual cost would come to ¥15 million, Ono said. That translates into about $143,000 a year at recent exchange rates.

Some U.S. pharmaceutical analysts have estimated the anti-PD-1 drugs would cost more than $100,000 a patient a year. A standard duration of treatment hasn’t yet been established, but some patients in clinical studies have received them indefinitely as long as they were doing well.

Merck has declined to say how much it plans to charge for its PD-1 inhibitor drug, pembrolizumab. A U.S. FDA decision on pembrolizumab for melanoma is due by Oct. 28, but could come sooner, possibly within days, according to people familiar with the matter.

Troyen Brennan, chief medical officer of pharmacy-services provider CVS Health,CVS -0.10% said the company is unlikely to see a big cost impact from the PD-1-targeting drugs until 2015 or 2016, as more hit the market and their use widens to multiple cancer types. CVS typically plans ahead to try to ensure new drugs are used in a “cost-effective manner,” he said.

Date: 9/3/14
Outlet Full Name: Wall Street Journal
Author: Peter Loftus


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