Amgen says cancer drug prices under scrutiny

NEW YORK (Reuters) - Amgen Inc. (AMGN.O: Quote, Profile, Research, Stock Buzz), which last month launched its new cancer drug Vectibix at a 20 percent discount to rival product Erbitux, said on Monday cancer companies were under mounting pressure to prove the value of their medicines.

Cancer care has recently seen real advances with the approval of targeted therapies that extend lives with far fewer toxic side effects than standard chemotherapy, but price tags running into tens of thousands of dollars a years means a spiraling bill for payers.

"There is a lot of scrutiny on the cost of cancer therapeutics right now," Cynthia Schwalm, vice president and general manager of oncology, told the Reuters Health Summit in New York.

"If you look at all the oncology research going forward, companies are going to have to show more value, they are going to show how they work well with other products or they don't, and there will be more choice for oncologists and payers. That's just a natural occurrence."

She drew a parallel between the intense competition between Amgen and Johnson & Johnson (JNJ.N: Quote, Profile, Research, Stock Buzz) in the market for blood-boosting EPO drugs, which had driven down prices by more than 30 percent.

Vectibix, a drug for colorectal cancer, costs around $8,000 for a month's worth of treatment and Schwalm said early sales had exceeded expectations. The medicine competes with Erbitux from ImClone Systems Inc. (IMCL.O: Quote, Profile, Research, Stock Buzz) and Bristol-Myers Squibb Co. (BMY.N: Quote, Profile, Research, Stock Buzz).

While doctors, governments and insurers are all weighing the budget impact of modern cancer drugs, some investors have also questioned if high prices underpinning shares in drug companies are sustainable.

Schwalm said multiple targeted therapies entering the market would encourage oncologists to develop new and more sophisticated "cocktails" of treatments. Deciding how a new medicine fits into the mix will be pivotal.

"We really need to move away from the discrete cost of a product and think about cost of care over a period of time. If you think in isolation of one product, you're not going to get the full picture," she said.