What is the average cost for CAR-T therapy and what does this include?

Frederick: This is a complex question because the cost of CAR-T therapy varies depending on the patient, the healthcare system, and the way healthcare is organised in different countries and regions. CAR-T is not a single therapy but a broad category of treatments, with different CAR-T products designed for different diseases. One of the first CAR-T therapies was developed to treat acute lymphoblastic leukaemia (ALL) in children, a group that requires significant supportive and informal care compared to adults.

When we look at costs, we can broadly divide them into two categories: healthcare costs and other costs. Healthcare costs include the cost of the therapy itself, the hospital stay, pre-treatment procedures (such as chemotherapy to prepare the body for CAR-T), management of side effects (which can be severe), and any additional treatments needed, such as a stem cell transplant.

Then, there are costs that affect patients and their families directly. These include travel expenses to specialised hospitals, time off from work for caregivers, and the emotional and financial burden of long-term care. For example, in the case of CAR-T for children, parents may need to take extended leave from work, leading to productivity losses.

A study we conducted in 2020 estimated the total cost of CAR-T therapy to be around €550,000 per patient, covering approximately:

• Pre-treatment: €6,800
• CAR-T therapy itself: €338,000
• Managing side effects: €25,700
• Follow-up care: €3,800
• Potential additional stem cell transplant: €36,000
• Costs to patients and families (travel, informal care): €14,200
• Lost productivity (e.g., parents caring for a sick child): €28,300
• Future healthcare costs (due to extended survival): €100,500

However, when we account for the fact that CAR-T therapy replaces other treatments the patient would have needed (such as chemotherapy, radiation, or a bone marrow transplant), the additional cost of CAR-T therapy compared to standard treatments is closer to €285,000 per patient, in this case for children.

How are prices established for CAR-T products currently and what are the drawbacks of these approaches?

Frederick: The exact pricing mechanisms used by pharmaceutical companies remain one of the best-kept secrets in the industry. While I coordinate a master’s course on Pharmaceutical Pricing and Market Access at Erasmus University with my colleague Prof. Maureen Rutten-van Mölken, I often feel that we are only uncovering parts of the mystery.

For decades, pharmaceutical companies have justified high drug prices by pointing to the costs of research and development (R&D). This argument is partly valid—drug development is expensive, and companies take significant financial risks. Out of thousands of compounds tested in early research, only a few make it to market. The process from discovery to approval can take over a decade and cost billions. Many projects fail along the way, and those losses must be accounted for.

However, what is less clear is exactly how much of a drug’s price is truly driven by R&D costs. The pharmaceutical industry does not disclose these costs transparently, nor their profit margin.

In the case of CAR-T, we also need to acknowledge that production is more complex than traditional pharmaceuticals. The process is labour-intensive, often personalised, and scaling up production to meet demand is not straightforward. These challenges also contribute to price setting by the industry of course.

Last but not least, the size of the patient population also plays an important role. With relatively few eligible patients for CAR-T therapies, companies often justify higher prices as necessary to recoup their investments, particularly R&D expenses.

My colleagues and I have studied several expensive medicines, trying to determine what their price would be if it were based purely on R&D costs, production expenses, the number of patients eligible to receive these treatments, a profit margin of 20%, as well as sales and marketing. We based our calculations on the model suggested by Prof. Carin Uyl-de Groot who is also the prinicipal inverstigator of ASCERTAIN, and with this project we want to further refine this model. There was quite some discussion on the profit margin we used. While 20% might seem like a generous profit, studies examining the actual profit margins of the pharmaceutical industry have found that they are often much higher – ranging from 40% to even 80% in some cases.

Our results suggested that the prices set by the industry often go well beyond what would be necessary to cover costs and ensure profitability. While pharmaceutical companies argue that high profits are needed to sustain future innovation, the lack of transparency makes it difficult to assess whether these prices are truly justified. One of the key problems with the current pricing system is that patients, hospitals, and governments have little insight into how prices are set, making it difficult to negotiate prices or explore alternative models that better reflect the real costs of the therapy.

What would innovative approaches to CAR-T pricing, that seek to decrease prices for the therapy, need to consider?

Frederick: Several alternative pricing strategies could help make CAR-T therapies more affordable while maintaining incentives for innovation. One promising idea is outcome-based pricing, where the price of the therapy is linked to how well it works in a given patient. This means that if the treatment does not deliver the expected benefits, the company does not receive full payment.

However, the problem is that it is often very difficult to determine when a drug does not work.

This is the challenge with outcome-based reimbursement models. Although they are already used in several European countries, we have also started seeing legal disputes where companies and payers argue over whether a drug has delivered its promised benefits. These cases raise highly complex medical and ethical questions: if a treatment extends a patient’s life by a few months but not as long as initially expected, should the pharmaceutical company receive full payment? Should partial refunds be given? And who gets to decide?

This is a highly undesirable situation because we do not want courts to determine medical outcomes. The risk of litigation could discourage companies from offering outcome-based agreements in the first place. Instead, we need clear, well-defined criteria for measuring treatment success and failure, agreed upon by all parties before the therapy is reimbursed. Otherwise, the potential benefits of outcome-based pricing could be overshadowed by legal and administrative challenges.

Another approach is cost-plus pricing, where the price of CAR-T therapy is based on the actual costs of R&D, production, and a reasonable profit margin. This model would provide greater transparency and potentially lower prices. However, pharmaceutical companies are unlikely to accept it voluntarily, as it would reduce their ability to charge premium prices based on perceived value rather than actual costs.

Ultimately, any pricing model for CAR-T therapy must balance affordability for healthcare systems with incentives for innovation. The challenge is to find a fairer system that allows companies to recoup their investments without making the therapy inaccessible to patients who need it.

Can patients expect prices for CAR-T to decrease in the near-future and thus hopefully be reimbursed by more countries in Europe?

Frederick: Yes, I believe so, but significant price reductions may take time. One of the most promising developments is that many hospitals and academic centres are exploring ways to produce CAR-T therapies themselves, at a much lower cost than commercial versions.

The main obstacle is that manufacturing CAR-T therapy requires highly specialised laboratories and trained personnel. While well-funded hospitals in high-income countries may be able to develop their own production facilities, this is not a solution for every country, especially those struggling to reimburse CAR-T therapy in the first place.

Another factor that could lower costs is increased competition. As more CAR-T therapies enter the market, companies may be pressured to reduce prices. However, this will not happen as long as these therapies remain under patent protection. Patent protection for an invention means that the owner of the patent has exclusive rights to sell the invention for a determined period including commercial production, distribution, import or selling. Unlike simpler pharmaceuticals, where a single drug compound is patented, complex therapies like CAR-T can involve multiple layers of patents, covering not just the core treatment but also manufacturing techniques, cell modification processes, and even certain steps in the supply chain.

Additionally, pharmaceutical companies often use strategies like patent extensions or secondary patents to extend their market exclusivity. This means that even when the main patent expires, companies can still control the market for an extended period, delaying the introduction of more affordable alternatives.

As a result, while prices may decrease in the long term, particularly once patents expire and more hospitals or manufacturers enter the market, it could take quite some time before we see a meaningful impact on affordability and reimbursement. In the meantime, pricing agreements, outcome-based payment models, and government negotiations will play a crucial role in improving access to CAR-T therapies across Europe.