Dive Brief:
  • The Centers for Medicare and Medicaid Services has agreed to reimburse hundreds of thousands of dollars to hospitals for treating select cancer patients with recently approved — and exceptionally expensive — CAR-T therapies.
  • Through Medicare Part B, CMS will reimburse hospitals about $400,000 for Gilead Sciences Inc.’s Yescarta and $500,000 for Novartis AG’s Kymriah, according to a spokesperson for the government payer agency. Medicare Part B covers outpatient medical needs for people with certain disabilities, with end-stage renal cancer or who are 65 years and older.
  • Kymriah and Yescarta gained U.S. approvals last year, and each carries a large price tag: $475,000 and $373,000, respectively. Outpatients typically have a 20% copay on Medicare B services, which would still leave them with an expensive bill to foot for CAR-T therapies. However, federal regulations make it so that outpatients copays are capped at the deductible for inpatients, which sits at $1,340 per benefit period, according to CMS
Dive Insight:

CAR-T therapies work by taking a patient’s T-cells, engineering them to better combat cancer, and infusing them back into the body. The process is highly complex, highly expensive and, as seen in clinical investigations, highly effective. The approval of Kymriah (tisagenlecleucel), for instance, hinged on a pivotal Phase 2 study wherein 83% of patients treated with it experienced complete remission within three months of infusion.

Kymriah is indicated for patients 25 and younger with refractory B-cell precursors acute lymphoblastic leukemia that has relapsed at least twice. Yescarta (axicabtagene ciloleucel), meanwhile, is indicated for adults with relapsed or refractory large B-cell lymphoma who already received two or more lines of systemic treatment.

Novartis’ drug holds the distinction of being the first CAR-T therapy to win a nod from the Food and Drug Administration, which happened in August. Gilead’s offering got a thumbs up two months later. But even before their approvals, the treatments were causing waves throughout the payer sector.

Insurers and pharmacy benefit managers (PBMs) expected the cost for CAR-T therapies would be high. Though not as large some thought they would be, the list prices and for Kymriah and Yescarta still made them two of the most expensive treatments in the world. The way the therapies worked also poked holes in the drug pricing paradigm.

“These therapies are administered once, unlike nearly all other medications that are repeatedly taken over time. And therein lies the challenge,” Steve Miller, chief medical officer at Express Scripts Holding Co., one of the nation’s largest PBMs, wrote in a September blog post.

As the largest insurer in the U.S., CMS has surely weighed the challenges of CAR-T coverage.

Medicare usually pays the net price of a drug, which accounts for the discounts and rebates given to payers, for Part B–covered treatments, plus 6%. When the drug is new, however, Medicare doesn’t have information on net pricing, and therefore shells out the full wholesale acquisition cost plus 6% for a short time. The outpatient reimbursement rates that CMS set for Kymriah and Yescarta administration appear to fall roughly in line with that dynamic.

As for inpatient care, payments for the CAR-T patients are packaged into the overall hospital stay. The CMS spokesperson confirmed the agency has received applications for new technology add-on payments — which allows a drug or medical service receive special payment — for Kymriah and Yescarta, and will “seek public comment on these applications in the FY 2019.”

A Novartis statement underscored that private payers “quite often” decide payment and reimbursement on a case by case basis due to the relatively small patient pool. It also touted outcomes-based contracts it offers, whereby treatment centers don’t pay if a patient doesn’t respond by the end of the first month of treatment.