When is a drug overpriced? The issue has come up repeatedly as various biologics treating cancer and assorted chronic conditions carry price tags in the tens of thousands of dollars. The debate was particularly vociferous last year when the Provenge prostate cancer vaccine was priced at $93,000 (read here). Now, a new entrant may become the focal point of controversy.

This morning, Seattle Genetics disclosed that the annual cost for Adcetris, which the FDA approved late last week to combat Hodgkin’s disease and another rare lymphoma, will cost $13,500 per dose. In clinical trials, patients received an average of eight infusions, which works out to $108,000 a year, which Xconomy reports was in line with several Wall Street estimates.

There is reason, however, to argue the cost is justified. For one, chemotherapy is also expensive. More to the point, the data for Adcetris is impressive - 73 percent of Hodgkin’s patients had significant tumor shrinkage, including 32 percent showing complete remissions. And 86 percent of anaplastic large cell lymphoma patients also had significant tumor shrinkage.

And not only is Adcetris the first new Hodgkin’s treatment since 1977, but the medication may be a life-saving salve to relapsed patients, who are often young or in mid-life and facing uncertain life expectancy. The FDA approved the drug for patients whose cancer has progressed after autologous stem cell transplant or after two prior chemo treatments for those who cannot receive a transplant (here are the press releases from the biotech and the FDA).

On the other hand, there is no survival data yet. And of course, insurers and patient advocates are likely to complain about the cost. Yet a price that fails to provide a return on investment will anger investors. This is a common conundrum now facing biotechs as they seek to balance R&D costs, profit targets and patient needs, which is the reason for their efforts in the first place.

“We want to make sure we price this drug so that we can maximize the impact on patients, and maximize the effect for the company as well,” Seattle Genetics ceo Cory Siegall tells Xconomy while insisting months were spent chatting with insurers and doctors. “What we are excited about doing is making sure we can treat as many patients as possible, and also do well for our shareholders.”

Working in his favor are a couple of other points - there do not appear to be any out-of-the-ordinary side effects and a lab test can determine when a tumor expresses enough of the targets that Adcetris is designed to combat. And judging by the trial results, the med can hit anywhere from 73 percent to 85 percent, which are rather decent odds. What do you think? Do the odds justify the price?

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benjamins pic thx to amagill on flickr