SoCal's Kite Pharma, Inc. Talks With Insurers to Avoid Gilead Sciences, Inc. Price War

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January 16, 2015
By Riley McDermid, Breaking News Sr. Editor

Kite Pharma Inc is attempting to avoid the current pricing pitfalls being experienced by Gilead Sciences , telling Reuters in an interview that while its experimental cancer drugs may cost at least $150,000 per case, it is already having conversations with insurers, despite the chief executive of Express Scripts Inc. vowing this week to take on cancer drug pricing next.

"We learn from mistakes," Kite Chief Executive Officer Arie Belldegrun told Reuters at the J.P. Morgan Healthcare Conference, referring to the currently ongoing war between Gilead and massive benefits provider Express Scripts. Express Scripts started the price war between dueling hepatitis C drugs in October when it said it would change its standard formula to a new, cheaper AbbVie treatment instead of choosing Gilead Science’s pricey Harvoni or Sovaldi treatments.

Still, Kite may have a tough case to make. Kite Chief Financial Officer Cynthia Butitta has estimated that its immunotherapy cancer treatment (as yet unnamed) could start at $150,000, but analysts have put the average cost at nearly twice that—making it very unlikely payers like Express Scripts, who balked at a $94,000 price tag for near-cure hepatitis C drugs, will splash out anywhere close to that amount.

Nonetheless, Kite will attempt to dissuade insurers from judging the therapy on price alone. "We're starting that effort this year," Butitta said.

But those negotiations could be complicated even further by the fact that Express Scripts Chief Executive George Paz told the audience of a panel at J.P. Morgan this week that what worked for bringing down prices for liver disease might also work to rein in the cost of cancer drugs.

"The big opportunity out there is really in cancer," Paz said. "If we can get out in front of that, that is a huge opportunity."

Paz also took aim at companies that charge sky-high rates for drugs that are essentially a cure, such as Gilead’s hepatitis drugs Harvoni and Sovaldi. Express Scripts has pointed out that many public health programs like Medicaid and state prison systems currently foot the bill for the $94,500 price tag of Sovaldi, which has a cure rate of around 90 percent.

"Everyone's got to make money, but how much?" said Paz.

Paz also said he was looking closely at new cholesterol drugs that target protein PCSK9, which competitors Regeneron and Amgen are already rolling out.

"They are pretty astonishing, but they are also very expensive," Paz said, adding Express Scripts would likely wait to make a decision so that they didn’t get caught in the trap of "me too" drugs, or paying for things that are fashionable but not cost-effective.

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