"As several pioneering companies have shown us, immunotherapy – once science fiction reserved for Hollywood directors in disaster movies and to fight alien attacks – works. Numerous drugs successful in clinical phase have proven this technology to be tangible, effective, and safe.
Now, the scientific community is exploring yet another baffling question: how can the drug developers make anticancer immunotherapy cost-effective? How can companies work with manufacturers and develop logistics to bring Cost of Goods Sold down? How can companies work with reimbursement agents and physicians to properly forecast sales? How can the healthcare complex make this groundbreaking therapy cost-effective for patients?
Dendreon Corporation (NASDAQ: DNDN) is perhaps the best example of the consequences of prohibitive logistics related to the production of such a complex therapy. Its Provenge line (Sipuleucel-T) became the first cancer therapy to reach the domestic market – approved by the FDA in April 2010.
The median life extension benefit for Provenge is 4.1 months. The company has reported a 38 percent improvement in 3-year survival (this claim has been challenged, as data may not have been collected at 34 months but rather 20 months), and a 22.5 percent improvement in risk of dying.
Provenge, like other leading immunotherapies (of which our readers point out big pharma’s main projects — more on this below — have not yet displayed the promise of Provenge, yet boast similar pricing), is very costly.
This is due to the labor and time sensitivity – the therapy carries a one-time cost of $93,000 for three courses of treatment. On August 4, 2011, Dendreon shares plummeted 67 percent upon the company’s announcement of a over-estimated projected sales, sparked by issues of cost that had frozen a large percentage of the physician population.
Dendreon announced doctors were not confident enough about getting reimbursement – in which physicians would be required to keep a prohibitive line of credit; analysts subsequently cut sales predictions by as much as 50 percent.
Insurance companies will not reimburse on a therapy that has too high of a cost, and cost control with no precedent is one of the most difficult aspects of marketization to predict."