It’s not unusual for critics to challenge top drugmakers for price hikes on old drugs, but Novartis is contending with a different kind of pricing pressure from a Swiss shareholder activist group.
In this case, it’s the company’s move into ultra-expensive, one-time treatments that has critics riled. At the Swiss drugmakers’ annual meeting Thursday, the investment firm Actares questioned Novartis’ rollout prices on cell and gene therapies and whether they’re sustainable for payers.
The investors say they’ve been questioning drug prices for years, especially in cancer, but Novartis has taken the issue a step further by deciding to specialize in the new wave of treatments, starting with the cell therapy Kymriah it launched in 2017. Novartis believes six- and seven- digit prices for such drugs are “justified,” Actares said in a statement, according to a translation.
Novartis rolled out Kymriah at a list price of $475,000, and the company has said its forthcoming spinal muscular atrophy gene therapy, Zolgensma, would be cost-effective at a price of $4 million to $5 million. The company hasn’t announced a launch price for Zolgensma.
Novartis CEO Vas Narasimhan said at Thursday’s meeting that the company prices drugs based on value and seeks a fair return for more R&D, according to Reuters.
“With respect to pricing in cell and gene therapies, I think what’s often lost in the discussion is the remarkable impact of these medicines,” Narasimhan said at the meeting, as quoted by the news service. “These are true breakthroughs that come from a single infusion of a medicine that don’t require lifelong therapy.”
Narasimhan has made no secret of his enthusiasm for the up-and-coming category. At the J.P. Morgan Healthcare Conference in January, he said Novartis is building out a “game board” of treatments in cell and gene therapy, plus radio-drug conjugates. He said the company’s efforts in the field now will pay off in the long run as the new drug classes, now targeted at rare diseases, expand into broader markets.
For example, Novartis launched Kymriah at $475,000 to treat young adults with acute lymphoblastic leukemia. When the drug won a follow-up approval in diffuse large B-cell lymphoma—which is more common—the company matched Gilead Science’s $373,000 sticker price for Yescarta in that indication.
Ahead of Kymriah’s approval, drug cost activists such as David Mitchell, founder of Patients For Affordable Drugs, raised red flags about their potential prices. Mitchell met with Novartis executives ahead of the approval, but afterward said he was still worried Kymriah would be too expensive. After the pricing decision, he called the cost “excessive.”
Recently, U.S. cost watchdog ICER said Zolgensma should be priced far lower than the $4 million to $5 million Novartis has quoted. The group suggested a max price of $900,000, or $1.5 million using an alternative calculation method. Some analysts say they believe Novartis will set Zolgensma’s price at around $2 million.
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