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Patients with mantle cell lymphoma got new hope thanks to newly approved treatments in 2013. That's good news for the 2,800 U.S. patients with MCL, a hard-to-treat disease with a significant need for new, more effective treatment. But these new treatments aren't cheap -- which means these companies will need to overcome price objections if they want to deliver bottom line growth.
Small indication = big money
Johnson and Johnson's (NYSE: JNJ) and Pharmcyclics' (Nasdaq; PCYC) Imbruvica won approval from the FDA in November. And Celgene's (NASDAQ: CELG) Revlimid got the nod as a third line treatment from the agency in June. Doctors and patients are likely happy to have more choices, but insurers are likely less thrilled at the prospect of paying six-figure invoices for them.
After Johnson and Pharmacyclics won approval for Imbruvica, the two companies priced the drug at $130,000 per year, or roughly $90 per pill. That makes it one of the most expensive cancer drugs, eclipsing the $120,000 annual bill for Bristol-Myers' (NYSE: BMY ) Yervoy.
Bristol had to offer price cuts to European regulators in order to win backing for Yervoy in Europe, and Johnson and Pharmacyclics will likely have to negotiate with them, too. Johnson filed for European approval of Imbruvica for chronic lymphocytic leukemia, small lymphocytic leukemia, and MCL at the end of October.
Meanwhile, Celgene's Revlimid label expansion to include MCL comes with a steep price, too. Revlimid carries a wholesale price of more than $12,000 for a 28-count package, or roughly $440 per pill.
Money well spent
Johnson and Pharmacyclics' Imbruvica, which inhibits BTK -- a signaling molecule key to cancer cell survival -- showed encouraging results in trials for previously treated MCL patients. While data hasn't confirmed Imbruvica's ability to improve overall survival, the response rate of patients treated reached nearly 66% in phase 3 tests, with 17% patients seeing a complete response. That impressed the FDA enough to grant the drug breakthrough status, which sped up the Imbruvica's approval process as a second line MCL treatment.
Celgene's Revlimid approval for MCL offers new hope to some of the toughest-to-treat patients, too. In a phase 2 study of Revlimid in patients who had previously tried and failed at least two prior treatments, 26% of patients treated with Revlimid responded, and 7% saw complete responses.
Foolish final thoughts
Americans already spend $12 billion a year treating lymphoma, and the addition of these two expensive drugs is likely to push that higher. The National Cancer Institute is already projecting that the cost to treat lymphoma will jump to as much as $20 billion in 2020. That jump will present challenges for payers. But it will also offer opportunities for investors in Johnson, Pharmacyclics, and Celgene.