Bristol-Myers Squibb's ($BMS) newly approved melanoma drug illustrates a few things about today's pharma industry. For instance, that Big Pharma can still manage to develop breakthrough new drugs, despite all the naysayers and the wealth of abandoned R&D projects. Yervoy definitely qualifies: It's the first new treatment for melanoma in decades, and the only drug to ever extend survival in patients with advanced forms of the disease.
Then there's the rise of biotech drugs: Yervoy is a monoclonal antibody, designed to block a protein that inhibits the action of immune system cells. By lifting the brakes on those cells, Yervoy boosts the immune system's ability to fight tumors. Though biotech drugs are costly to develop, they're also more difficult to copy--at least theoretically--giving drugmakers some protection against generic competition.
Finally, there's the price tag. Bristol will sell Yervoy at $30,000 per infusion, making the four-dose treatment course cost $120,000. That's a lot of money, but as the company tells the New York Times, some other melanoma meds cost almost as much, without showing that they prolong survival. The high price tag cheered analysts, who predicted that Yervoy will be well on its way to blockbuster status by 2015.
But government types worried about spiraling healthcare costs might have a different reaction: As U.S. regulators have discovered with the brouhaha over Avastin as a breast cancer treatment, limiting use of a costly cancer drug--even one that, unlike Yervoy, has little evidence on its side for a particular indication--can be very, very tricky.