At $475,000, is Novartis' Kymriah a bargain—or another example of skyrocketing prices?

Novartis' future pricing on its groundbreaking CAR-T drug Kymriah could depend on the new indications it wins from the FDA. (Novartis)

Novartis completed the long journey to FDA approval with its CAR-T drug Kymriah on Wednesday, but questions about pricing, access and more are just starting to ramp up. The company priced its groundbreaking cancer treatment at $475,000, a number short of some market expectations but out of control for others pushing for lower drug costs.

Novartis’ price is only for the approved indication, to treat b-cell acute lymphoblastic leukemia in children and young adults whose cancer has come back after previous treatment or resisted treatment altogether, executives stressed on a conference call after Wednesday’s approval. That's about 600 eligible patients in the U.S. per year, Novartis says.

The $475,000 price tag itself tells only part of the story. Novartis introduced a pay-for-performance deal with the federal government, and others are expected along the way. Plus, future pricing could depend on the new approvals Novartis might win, including a potential lymphoma nod. Indication-specific pricing is an approach pharmacy benefits manager Express Scripts has been pushing for other cancer drugs.

On the flip side, that sticker doesn't include the hospital expenses required when Novartis collects each patient's T-cells for re-engineering, and later, when the personalized Kymriah is administered.

RELATED: Novartis crosses FDA finish line with monumental CAR-T leukemia approval

The approval and pricing announcement triggered a wave of commentary from market-watchers, with many wondering how the news will play at Gilead Sciences. That company picked up CAR-T technology in its Monday acquisition of Kite Pharma for $11.9 billion.

Writing in a Stat editorial, drug policy expert Peter Bach said the Novartis number is “both so large and so lacking in context that it is difficult to determine if it is too high by fivefold or too low by half.” His team plans to wait for a review on the drug class from the Institute for Clinical and Economic Review, due in March.

No one will argue Novartis' price isn't high, but it came short of some of pharma's recent launches and other chart-topping meds, including spinal muscular atrophy treatment Spinraza from Biogen. That drug costs $750,000 for the first year and $375,000 each year after.

Soliris from Alexion runs at $542,000 each year to treat paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. BioMarin's new Brineura costs $702,000 per year before discounts to treat the ultrarare CLN2 disease.

Kymriah, on the other hand, is a one-time treatment intended to cure a patient's cancer. The Swiss drugmaker intends to apply for approval in diffuse large b-cell lymphoma later this year, a larger patient population, and will price Kymriah differently depending on the indication.

Wednesday’s approval announcement included news of a pay-for-performance deal with the governmental payer Centers for Medicare and Medicaid Services. Under the deal, Novartis won’t collect payment if patients don’t respond within a month. Novartis execs pointed out that, with the guarantee, the company is making the complex and expensive drug at risk for those patients.

In his editorial, Bach said the one-month response may be short for the money-back guarantee. In a pivotal trial, one-quarter of patients who responded initially later saw their disease progress. But because the pay-for-performance deal is with a government payer, this arrangement will mark a step forward for the model as it can be publicly tracked, he added.

In a note to clients, Bernstein analyst Tim Anderson said that while Novartis set up a pay-for-performance deal with CMS first, his team expects similar terms with private insurers.

When asked about the price and potential pay-for-performance deals, a CVS Health spokesperson said the company expects “CAR-T therapy will be covered under the medical benefit as opposed to the pharmacy benefit, which will mean that the medical carrier and not the PBM will need to determine coverage for the therapy.”

RELATED: How will Gilead price CAR-T? With Kite buy, the top biotech joins Novartis in spotlight

Anderson noted that, if Novartis treated 100% of the 600-per-year patient population successfully, that would amount to about $300 million in annual sales—far from blockbuster status, and for a drug that's very expensive to make. Other revenue would come with additional indications, however.

Though high, the $475,000 price tag is still short of some analyst expectations, with some ranging up to $750,000 before approval. On Wednesday’s call, Novartis execs said a cost-effectiveness assessment found a price of $600,000 to $750,000 would have been warranted.

Those arguments didn’t assuage David Mitchell, founder of Patients for Affordable Drugs, and Jamie Love, director nonprofit Knowledge Ecology International, who believe the drug should be more affordable given that taxpayers funded early research. Mitchell met with Novartis management the day before the drug won approval but came away “disappointed” in the company’s view on pricing.

RELATED: Novartis CEO opens door to cancer patient demanding ‘fair’ CAR-T pricing

“While Novartis’ decision to set a price at $475,000 per treatment may be seen by some as restraint, we believe it is excessive,” Mitchell said in a statement Wednesday. “Novartis should not get credit for bringing a $475,000 drug to market and claiming they could have charged people a lot more.”

Love, who has criticized Sanofi’s Zika vaccine deal and pharma’s costs on a host of other drugs, also wasn’t happy with the announcement.

Another group, the Campaign for Sustainable Rx Pricing said in a statement that while the “science behind Kymriah is revolutionary, the business decision to price it at nearly half of a million dollars per treatment is not.”

“Kymriah’s price tag is simply a continuation of the pattern of sky-high launch prices that spins further out of control each year,” the group said.

RELATED: After Novartis meeting, cancer patient convinced CAR-T will be among ‘most expensive’ drugs ever

Another important issue is how Novartis’ decision might affect Gilead’s approach to pricing its CAR-T drug, Axi-Cel, acquired in the company’s Monday purchase of Kite Pharma. Kite’s decision date at the FDA in refractory aggressive non-Hodgkin lymphoma is set for November.

Of course, it remains to be seen how Gilead chooses to approach the cost issue, as it needs to make an $11.9 billion acquisition worth the price. The company gained notoriety during its launch of superpricey hep C meds Sovaldi and Harvoni back in 2014 and 2015.