Kite CEO plans to learn from Gilead's pricing playbook

(Reuters) - Kite Pharma Inc plans to open conversations with insurers this year to lay the groundwork for an experimental cancer treatment that could cost hundreds of thousands of dollars if it works and is approved by regulators, top executives said this week.

The possible treatment has yet to start a broad clinical trial, but the urgency comes as biotech and pharma companies consider how to navigate pushback by health insurers against Gilead Sciences Inc on the price of its hepatitis C treatment.

“We learn from mistakes,” Kite Chief Executive Officer Arie Belldegrun said in an interview at the J.P. Morgan Healthcare Conference when asked how it would garner support for an immunotherapy cancer treatment that may cost hundreds of thousands of dollars.

Such treatments are in early development but are being closely watched as they could offer substantially higher cure rates than current cancer regimens.

Insurer pushback on drug prices hit its stride in December when AbbVie Inc. introduced a competitor to Gilead and the nation’s largest benefit manager Express Scripts dropped coverage of Gilead’s drug on its largest pharmacy plan covering 25 million people.

Gilead, which charges less for the treatment outside of the United States, has since been dropping its price, according to Wall Street analysts. When asked at the conference about analyst reports that it had cut its price by 30 percent, Gilead did not comment.

Kite will soon begin a broad clinical trial on the immunotherapy cancer treatment in which cells are drawn from a person, sent to the lab to be treated, and then reintroduced into the individual’s bloodstream. The trial is due to be completed by the second half of 2016.

Kite Chief Financial Officer Cynthia Butitta said that its financial models set a base case price at $150,000 per treatment, but that the actual price will depend more on survival rates and the drug’s efficacy. Analysts have estimated the costs at up to $300,000 per treatment. The company’s new marketing head starts next month and will begin conversations with insurers about the trials and the treatment’s possible benefits.

“We’re starting that effort this year,” Butitta said.

Kite, which recently signed a collaboration deal with Amgen Inc is one of several companies developing this type of immunotherapy cancer treatment along with Novartis AG, BlueBird Bio Inc and Juno Therapeutics Inc.

Reporting by Caroline Humer in San Francisco; Editing by Christian Plumb