This is a really interesting post (at least to me) from the WSJ Health Blog. It asks the provocative question "Is 'Free' the best price for Genzyme's Campath in cancer?"
Normally, pricing decisions are made with respect to considerations like revenue and profit generation, ROI, competition, etc. In this case, we also have a big question as to how Campath pricing in the cancer segment affects its pricing and revenue potential in the MS market --- and most importantly how that affects its contributions to Genzyme's overall value. Genzyme's perceived value is critical to the ultimate offer that Sanofi will put forward for the company and presumably will affect the Genzyme board's and shareholder's willingness to accept a given price (which may not be same price by the way!).
The WSJ post discusses if it might make most sense for Genzyme to give away Campath for free to patients with a rare B-cell leukemia under "compassionate use", in order to maximze its price to MS patients. The MS price is only projected to be about $7000 annually which compares very favorably with other MS treatments that cost $30,000. The compassionate use mechanism could allow Genzyme to make sure it gets its price for MS to prevent physicians from prescribe it off label as if going to a "cancer" patient to reduce price to MS patients.
Since this decision is going to affect, revenues, profits and likely the acquisition price of the company - not to mention patients, it's not trivial. I find that set of circumstances very interesting.
Posted by Bruce Lehr October 30th 2010.