Payers beware: Bristol-Myers prices PD-1 cancer med at $143,000 in Japan

In cancer drug development, immunotherapies are hot, with none more closely watched than Bristol-Myers Squibb's ($BMY) nivolumab. Now, we have a window into the drug's future. What that glimpse tells us is that outsize cancer drug prices are about to rise even higher.

As The Wall Street Journal reports, Bristol-Myers and its marketing partner Ono Pharmaceutical have rolled out nivolumab in Japan, the first and only country where it's approved by regulators. Name: Opdivo. Price: $143,000.

That tops any debut price tag we've seen on a cancer drug, particularly in Japan, where, as the Journal notes, prices tend to be a bit lower than in the U.S. Analysts were figuring on a price of at least $110,000 in the States.

Several other cancer meds come somewhat close, including Bristol-Myers' own melanoma drug Yervoy, another immunotherapy; its list price was $120,000 at launch. Pfizer's ($PFE) targeted lung cancer drug Xalkori carried a $9,600-per-month tag when it rolled out, or $115,000 for a year's worth. (It's now $11,500 per year, according to recent reports, but it should be noted that many patients aren't using Xalkori for a full year; in clinical trials, the average treatment duration was 22 to 32 weeks.)

If you want to get into combination treatments, consider Roche's ($RHHBY) new generation of breast cancer therapies. Designed to be used in tandem, Perjeta and Kadcyla together run $15,800 per month, at $6,000 and $9,800, respectively. Roche figures on a 9-month or so treatment course--so that's $148,000.

The upshot of all this? We're looking at yet another super-expensive therapy for a life-threatening disease. As the first in a group of PD-1 immunotherapies, Opdivo and its price are setting a precedent that rival drugmakers are only too willing to follow.

And this when, for the first time, U.S. payers are balking at drug prices in a very loud and very determined way. In countries that exercise their negotiating power, drugmakers are accustomed to being stiff-armed by cost watchdogs--and offering discount plans to win favor. The U.S. government has little power there, and payers are obliged to cover new treatments in some form or fashion. But pharmacy benefits managers and Medicaid programs are trying to raise barriers to pricey treatments, to at least limit the pain of extreme drug costs.

Cancer is far from their only worry. They're looking at prices for forthcoming cholesterol fighters known as PCSK9 drugs and new diabetes treatments in the SGLT2 class, among others. The biggest example, of course, is Gilead Sciences' ($GILD) Sovaldi, the $84,000-per-patient hepatitis C treatment, not to mention combo hep C treatments coming down the pike.

Even doctors are getting into the act: Sloan-Kettering Memorial Cancer Center docs barred Sanofi's ($SNY) pricey Zaltrap there. And the American Society of Clinical Oncology is working on a "scorecard" for physicians to use in determining which meds to use; the group's CMO recently said cancer drug prices are becoming unsustainable.

There's the bigger question of the cost burden to society, too. Payers are likely to pass along their costs to their customers in the form of higher premiums. Obviously, additional spending by Medicare and Medicaid costs taxpayers. So far, the U.S. citizenry has been remarkably sanguine about higher prices--unless they're hit themselves by huge coinsurance payments--but that could change when their pocketbooks are affected.

Soon, we'll see exactly how much Big Pharma intends to reap from the PD-1 class. Merck's ($MRK) PD-1 treatment, pembrolizumab, is up for FDA approval by Oct. 28. Bristol-Myers is expected to file nivolumab in the U.S. for melanoma by the end of this month, and for lung cancer by year's end.

At least one major PBM isn't worried about the immediate cost of these meds. Until multiple PD-1s hit the market, and they're approved for a variety of types of cancer, the hit from these expensive meds will be limited, CVS Health's CMO, Troyen Brennan, told the WSJ. Expect some cost-limiting strategies by then, though. CVS--and its biggest competitor, Express Scripts ($ESRX)--won't be writing PD-1 checks willy-nilly.

- read the WSJ piece (sub. req.)

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