Novartis: how to price a groundbreaking new treatment?
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Novartis: how to price a groundbreaking new treatment?

Pharmaceutical giant Novartis is about to pioneer a new type of therapy that the sector has spent the last few years racing towards. CAR-T therapy (Chimeric Antigen Receptor T-cell therapy – catchy, I know) is a one-time therapy that could be used to treat “pediatric and young adult relapsed and refractory B-cell acute lymphoblastic leukemia” – a particularly pernicious form of cancer. If Novartis can get FDA approval in a favourable timeframe (early October has been mentioned), it could be the first company to make this treatment available – and that is genuinely groundbreaking.

Novartis’ share price is up 16% year-to-date

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SOURCE: Yahoo Finance

Novartis’ Research and Development chief, Vas Narasimhan, told Bloomberg that the company was hoping to make the medication accessible for patients and payers alike – no small feat when the groundbreaking nature of the treatment and its concurrent lack of a precedent in the healthcare market are taken into account. As a result, he said, the company is using stem cell transplants as a pricing benchmark and considering pay-for-performance deals.

A CAR-T treatment is really a bespoke medical solution – the therapy is manufactured from the patient’s own T cells. It’s a one time treatment that has shown unprecedented levels of success in clinical trials, and as a result, it is expected to be costly. Novartis is in a race with Kite Pharma to get it to market first, and there are other providers lined up behind them.

A Novartis spokesperson said that it is “too early to comment on pricing,” but promised that “we will at the time of approval”. Whatever the eventual price the company sets is, it will be big: stem cell treatments can cost upwards of $800,000, and England’s cost watchdog NICE estimates that CAR-T medications could cost up to $649,000.

Disclosure

Dominion holds Novartis in its Global Trends Managed Fund.  


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