Bristol-Myers Squibb (BMY) is pricing blockbuster cancer drug Opdivo in China at little more than half the cost it goes for in the U.S., it was reported Tuesday.
Chinese regulators approved Opdivo to treat patients with non-small-cell lung cancer in June. A report from the news site Stat says Opdivo will cost $84,000 per year in China, as opposed to roughly $150,000 in the U.S.
The pharmaceutical company told Investor’s Business Daily that it’s still working with the government in China to iron out pricing. Bristol wouldn’t comment on the price put out in Stat’s news report.
“We are not commenting on pricing further until we’ve completed the process with the government and Opdivo is commercially launched, which is anticipated in the third quarter of the year,” a Bristol spokeswoman said in an email to IBD.
Pricing Opdivo In China
There’s a lot of guesswork surrounding Opdivo pricing in China, portfolio manager Brad Loncar told IBD in an interview. Loncar runs several biotech stock indexes including the Cancer Immunotherapy Sector Index and the Loncar China BioPharma Index.
It’s likely that the $84,000 price tag refers to the out-of-pocket cost, he said. A Chinese article also recently outlined the likelihood for a payer assistance program for Opdivo. In this, patients would pay for several months in order to receive several months of medicine for free.
“If that’s true, you have to take that $84,000 and do the math on that,” he said. “That $84,000 is likely the equivalent to what we have here as the list price. No one actually pays that price; there’s a hidden discount.”
Loncar also noted that China is working to provide universal health care to its residents. But getting a new drug added to that list is tricky and can take months to years, Loncar said. Usually companies have to provide a hefty discount to the government.
Opdivo is one of Bristol’s top two moneymakers. It’s an immuno-oncology drug competing against Keytruda from Dow Jones component Merck (MRK).
In the second quarter, Opdivo sales grew 36% year over year to about $1.63 billion globally. In the first six months of 2018, it generated about $3.14 billion.
Both Opdivo and Keytruda work to block an interaction in the immune system involving the PD-1 protein. Opdivo can treat eight types of cancer in the U.S. Last week it became the first new medicine in nearly 20 years to gain approval to treat a subset of lung cancer patients.
Expanding approvals is key for both Opdivo and Keytruda. Physicians can use Keytruda to treat nine types of cancer. On Monday, the FDA approved Keytruda as a first treatment with Eli Lilly‘s (LLY) drug Alimta and chemotherapy in some lung cancer patients.
Bristol Is First To China Approval
Opdivo was the first immuno-oncology drug to gain approval in China. Physicians can prescribe it to some patients who’ve already undergone chemotherapy.
But Keytruda followed in late July when Chinese regulators approved it as a second treatment for some melanoma patients.
“Lung cancer is a major public health issue in China, representing the highest incidence and mortality among all cancers in the country,” Yi-Long Wu, chair of the Chinese Thoracic Oncology Group, said in a written statement after Opdivo’s lung cancer approval.
Most patients are diagnosed after they’ve already reached an advanced stage of cancer, he said, so “prolonging survival is an important goal.”
Burgeoning Biotech In China
Loncar noted that the Chinese government is making a big push to add cutting edge therapies to its repertoire. On Monday, officials approved Roche‘s (RHHBY) drug Alecensa to treat some lung cancer patients. The approval came nine months after the FDA’s.
“It’s historic how quickly it was approved,” he said. “It’s an important sign of the times. China’s government and regulators have been aggressive about trying to encourage companies to submit Western drugs for approval and they’re approving them quickly.”
On the stock market today, Bristol stock dipped 0.4%, to 60.08. Shares of Merck slid 1.4%, to 69.17.
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