Innovation Wins Though Novartis CAR-T Drug Loses Medicare Demo

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By Jeannie Baumann

The pipeline of cutting-edge, potentially pricey cancer treatments shouldn’t be affected by the Medicare agency’s decision to cancel a value-based payment test for Novartis’ CAR-T drug Kymriah.

Pharmaceutical industry analysts and other drug development observers spoke to Bloomberg Law one day after Seema Verma, administrator for the Centers for Medicare & Medicaid Services, said the demonstration project to pay for Novartis’ one-time, $475,000 CAR-T drug based on how well it works didn’t meet the agency’s needs. “We didn’t think that it would be successful as proposed. So we’re moving in a different direction,” she said at a July 12 press briefing.

CAR-T is an approach to immunotherapy, which trains the immune system to attack cancer cells and in recent years has become a new hope in treatments for some cancers in addition to chemotherapy and other traditional treatments. While the Food and Drug Administration has cleared two CAR-T therapies so far—Kymriah (tisagenlecleucel) and Kite Pharma Inc.'s Yescarta (axicabtagene ciloleucel)—more treatments are in the pipeline as companies from Johnson & Johnson to AbbVie pursue immunotherapy.

“There will continue to be both great interest by both scientists and companies and physicians and insurers in bringing these products to market,” Rachel E. Sachs, a law professor at the Washington University School of Law in St. Louis who specializes in innovation and access issues, said in a July 13 interview.

300-Plus Clinical Trials

More than 300 clinical trials turn up under a search on ClinicalTrials.gov of studies involving CAR-T-related therapies that are either recruiting volunteers or are gearing up to do so; 118 are listed as industry-sponsored.

Amanda Micklus, a principal analyst, Datamonitor Healthcare, part of anayltics firm Pharma Intellgence, also said the CMS’s decision won’t have a major effect on other CAR-T therapy companies aiming for outcomes-based reimbursement. This particular decision had to do with a potential pilot program on the indication-specific pricing that Novartis was proposing for its second approval in diffuse large B-cell lymphoma, which is the most common type of non-Hodgkin’s lymphoma.

Kymriah has been approved to treat two cancers: the adult lymphoma known as DLBCL and acute lymphoblastic leukemia, or ALL, for patients up to 25 years old. Novartis set what it called the “wholesale acquisition cost” at $475,000 for pediatric ALL and at $373,000 for DLBCL.

“We believe these prices support sustainability of the healthcare system and enable patient access while allowing a return for Novartis on our investment,” Novartis spokeswoman Julie Masow said.

Demonstration Program

The demonstration program that the CMS ended—Politico first reported the decision—could have reimbursed treatment centers for CAR-T therapies based on the use and the indication-based price, Masow told Bloomberg Law in a July 13 email.

“While CMS is not implementing this program, it is apparent, based on the HHS Blueprint [request for information to lower drug prices], that CMS continues to be interested in this approach,” she said, referring to the Department of Health and Human Services.

Both Micklus and Masow noted treatment centers that are certified to administer CAR-T therapy are still working with Novartis.

“Those hospitals or treatment centers are ones that are buying Kymriah,” Micklus told Bloomberg Law in a July 13 interview. “Whether or not the treatment center is treating a Medicare patient or a Medicaid patient, or a patient who has another insurance carrier, that outcomes-based deal is still in effect.”

A voluntary agreement between Novartis and certified treatment centers that offer Kymriah only allows for payment when pediatric and young adult ALL patients respond to Kymriah by the end of the first month, Masow said. “Novartis provides Kymriah at no charge if the patient doesn’t respond in this timeframe,” she wrote.

More Agency Guidance Needed

More drugmakers are exploring new pricing models, such as one Spark Therapeutics proposed in January that’s also based on outcomes. So, Patricia Reilly, head of intelligence alliances and unification at Informa Pharma Intelligence, said the CMS needs to issue more guidance.

“There’s going to have to be some major changes in the way payments are made because our health system is set up to pay for chronic illnesses and their treatments, and not a curative treatment that’s going to be a one-time [treatment] and that’s it,” Reilly said in a July 13 interview.

In dismissing the demonstration project, the CMS missed an opportunity to lead, Sachs of Washington University said in a blog.

Lessons learned from different value-based payment models tested by the CMS can allow the private sector to take up these different kinds of payment agreements more easily, Sachs told Bloomberg Law. “That is a serious challenge, but it’s one that CMS can and should be involved in solving,” Sachs said.

Reilly said drug companies also need to work with the FDA as early as possible in development to find payment models that work for the company, the FDA, and the payers.

“This is something that the FDA has been working very hard on and their input is essential on how this is going to work,” she said.

—With assistance from Sara Hansard.

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