Pfizer, Merck KGaA's $13,000-a-Month Cancer Drug Wins Approval

Updated on
  • FDA approves immune-based therapy for rare form of skin cancer
  • Price for average patient is in line with others in its class

Pfizer and Merck KGaA’s cancer immunotherapy won approval from U.S. regulators for patients with a rare form of skin cancer, and the companies plan to sell the drug for $13,000 a month. Merck KgaA CEO Stefan Oschmann speaks on 'Bloomberg Daybreak Europe.' (Source: Bloomberg)

Pfizer Inc. and Merck KGaA’s immunotherapy, priced at $13,000 a month, won the backing of U.S. regulators for patients with a rare and deadly form of skin cancer, giving the companies a foothold in one of the most promising new fields of medicine.

The treatment, called Bavencio, is the first to be approved by the U.S. Food and Drug Administration for patients with Merkel cell carcinoma that has spread to other parts of the body. The aggressive form of cancer affects 1,600 people a year in the U.S., according to the National Cancer Institute, with less than half of the patients surviving more than a year.

The drug’s cost, at about $156,000 for a year of treatment before discounts, is in line with that of other such therapies, which harness the body’s immune system to fight tumors. The approval will help Pfizer and Darmstadt, Germany-based Merck narrow the gap with Roche Holding AG, Merck & Co. and Bristol-Myers Squibb Co., which have thus far dominated this new class of medicines.

“The approval is a very important milestone for our company,” Merck’s Chief Executive Officer Stefan Oschmann said in an interview with Bloomberg Television’s Anna Edwards and Matthew Miller on Friday. “This price reflects the value of the product.”

Shares of Merck, which hadn’t until now brought a major new treatment to market in over a decade, rose 2.9 percent to 105.10 euros at 10:51 a.m. in Frankfurt trading. The stock has climbed about 42 percent in the past year.

The German company, which discovered the compound, in 2014 entered into a partnership with the U.S. pharmaceutical giant to jointly develop the drug, in return for an upfront payment of $850 million and the promise of as much as $2 billion more if the medicine met certain targets. The FDA approval will trigger a “small” payment to Merck, which will also get an equal share of the profits, according to Gangolf Schrimpf, a spokesman for the drugmaker.

Bavencio, whose chemical name is avelumab, will generate about $579 million in sales for Pfizer in 2020, according to the average of analysts’ estimates. The two companies hope to use the drug in treating other cancer types as well.

Immunotherapies represent significant advances in care for some patients and have become big moneymakers for pharmaceutical companies.

— With assistance by Johannes Koch

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