As with all things, we should be concerned with value, not price. Novartis’ pricing scheme easily passes the value test.
There is no objective value that can be put on saving a life, of course. But we can still make estimates. Britain’s National Institute on Cost Effectiveness (NICE) evaluates treatments with respect to their value. Their threshold – which is a guideline, not a cutoff – for a cost-effective drug is one that provides a quality year of life (ie., not one spent suffering) for $40K USD or less.
Many of the new targeted therapies for cancers – which typically treat old people – provide a few months of additional survival at costs of $100K or more. Their cost per QALY is excessive, leading NICE to recommend that Britain’s National Health Service decline to pay for some of them. This is entirely reasonable.
Kymriah, the first approved CAR-T therapy, has an 83% remission rate in children and young adults for an otherwise uniformly fatal cancer. Curing cancer in young people is enormously beneficial because of the number of years of life saved. If we assume an average of 40 years of quality life gained per patient, then the value of the treatment per NICE guidelines is 40 x $40K = $1.6M.
A price of $475K per treatment is thus a bargain, one that insurers and taxpayers should be expected to pay. In fact, we should be happy to pay for this treatment.