As CAR-T launch ramps up in U.S., Novartis eyes markets new to performance-based pricing

Novartis CEO-to-be Vas Narasimhan touted performance-based pricing for Japan in a Nikkei interview.

Novartis is in the very early days of its Kymriah rollout in the U.S., where it will incorporate pay-for-performance pricing on a costly yet promising therapy. But as the drugmaker looks ahead to global approvals, CEO-to-be Vas Narasimhan has to decide how the company will approach markets with no experience in that payment realm, such as Japan.

In an interview with Nikkei, Narasimhan touted performance-based pricing as a way to help with patient access to expensive meds. Japan has never tried such an approach, but one health official told the publication the country wouldn't immediately turn away the idea and would hold a "national conversation" on its merits. Novartis has been a leader in pushing the pricing model in the U.S. 

The Swiss drugmaker won FDA approval for its groundbreaking CAR-T med Kymriah back in August, announcing a $475,000 price for the one-time treatment and a money-back guarantee for certain patients if they don't respond in the first month. The drug is approved to treat a rare form of acute lymphoblastic leukemia, and the company has said it could price its drug differently for add-on indications. 

Even though Kymriah's price came in below some analyst expectations, payers and industry watchers have expressed concern about high costs. Steve Miller, M.D., chief medical officer of Express Scripts, has been a prominent voice in the drug pricing debate for years and wrote in a blog post that Kymriah's $475,000 list price is "dramatically higher than other specialty drugs" even though it came in lower than some projections. He's worried that the coming wave of new cell and gene therapies with similar prices will wreak havoc on PBMs, payers and the healthcare system. 

Different groups in the drug industry need to work on new payment models, he wrote, adding that Express Scripts is interacting with pharma and policymakers toward that goal. 

“Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments,” he wrote in the blog post. “A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.” 

Novartis plans to apply for Kymriah coverage under Japan's national insurance next year, according to Nikkei. That review should take seven to nine months, the publication reports, with a price determination coming two months after. Final pricing would hinge on the performance-based payment discussions. A Novartis spokesperson told FiercePharma it's too early to comment on CAR-T pricing in Japan.

Adding a layer to the issue is the high cost of manufacturing and logistics, as CAR-T drugs consist of T cells collected from each patient that are re-engineered and then infused back into the patient to attack cancer. Other factors such as travel and hospital expenses add to the price of treating a patient with the groundbreaking therapies. 

Currently Novartis' top drug development executive, Narasimhan is slated to take the Big Pharma's CEO role in February after current helmsman Joseph Jimenez steps down. Kite Pharma—which was recently scooped up by Gilead for $11.9 billion—is potentially next in line for an FDA nod with its own CAR-T med, Axi-Cel. 

Editor's note: This story was updated to reflect that Novartis cannot yet comment on pricing in Japan.