U.S. regulators on Thursday granted accelerated approval to Merck for its Keytruda drug, a new type of cancer treatment for patients with advanced melanoma.
The drug could generate billions of dollars in revenue and is expected to cost $12,500 per patient for one month's supply, or $150,000 annually, according to a Dow Jones report.
Keytruda—the first drug of its kind to receive Food and Drug Administration approval—works by blocking a cellular pathway known as PD-1, which restricts the body's immune system from attacking melanoma cells.
"Keytruda is the sixth new melanoma treatment approved since 2011, a result of promising advances in melanoma research," said Richard Pazdur, director of the Office of Hematology and Oncology Products. "Many of these treatments have different mechanisms of action and bring new options to patients with melanoma."
In 2011, about 960,231 Americans were diagnosed with melanoma—the deadliest form of skin cancer. The disease is responsible for some 10,000 deaths per year in the U.S., according to the National Cancer Institute.
"Our new ability to target the PD-1 pathway with Keytruda is a very exciting step in the immunotherapy field," said Omid Hamid, director of the Melanoma Center at The Angeles Clinic and Research Institute.
In clinical trials, the drug showed that it shrank tumors in approximately 24 percent of patients who received the recommended dosage, with the effect lasting at least 1.4 to 8.5 months, according to the FDA.
—By CNBC's Karma Allen