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Politics

Novartis wants Japan to link drug price to patient outcomes

Swiss pharma's effort on cancer treatment could spark change in nation's pricing system

Swiss drugmaker Novartis hopes to price a new cancer drug in Japan based on a patient's outcome.   © Reuters

TOKYO -- Swiss drugmaker Novartis seeks to bring a cutting-edge cancer treatment to Japan under a pricing model linked to patient outcomes, asking for payments from only those who benefit from the therapy.

Charging based on results could aid patients in gaining access to the treatments they want and need, said Vasant Narasimhan, global head of drug development and incoming CEO of the world's No. 2 pharmaceutical company, to The Nikkei in a recent interview. Japan has never implemented such a payment scheme.

At issue is Kymriah, a new treatment for acute lymphoblastic leukemia in children and young adults. Kymriah in August became the first CAR-T cell therapy -- one that uses the patient's own genetically altered immune cells to treat cancer -- to obtain approval from the U.S. Food and Drug Administration. Only one round of treatment is needed, and the therapy is shown to be effective in 80% of patients.

Vasant Narasimhan, Novartis' global head of drug development and next CEO.

This high performance comes at a cost of $475,000 for each round of treatment. Novartis has therefore implemented an outcomes-based payment model for certain patients, charging the full amount only if no tumor cells are detectable a month after treatment.

Breaking new ground

Novartis has not yet begun discussing just how efficacy will be determined in Japan or how payment will occur, Narasimhan said. The Ministry of Health, Labor and Welfare will weigh in on these decisions going forward.

Advances in such fields as biopharmaceuticals and gene therapies have yielded a number of groundbreaking treatments for previously intractable conditions. But how Japan prices drugs under the national health insurance system has not kept up. The cost of a treatment still depends on prices of similar drugs, for example.

"The time has come to rethink Japan's drug-pricing system," said Ataru Igarashi, associate professor at the University of Tokyo's Graduate School of Pharmaceutical Sciences.

Novartis looks to apply in the first half of 2018 to have national insurance pay for Kymriah. Many drugs treating rare diseases take between seven and nine months to receive approval from the health ministry and are priced two months after that. The final price will likely depend on whether Novartis can apply outcomes-based pricing. If all goes smoothly, Kymriah could hit the Japanese market as early as next year.

Up to date

Though outcomes-based pricing has no precedent in Japan, the health ministry "won't reject the matter out of hand if it is brought up -- we will discuss it internally first," an official there said. A "national conversation" would be needed on whether such an arrangement is compatible with the existing system, among other questions, the source said.

Such a discussion is urgently needed. Medical costs in Japan came to 42.4 trillion yen ($375 billion) in fiscal 2015. Drug costs accounted for more than 20% of this and are rising faster than overall expenses, partly on the emergence of more high-price treatments. Putting outcomes-based pricing in place could spark a broader conversation about how to manage medical care as medical science marches on.

(Nikkei)

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