Medicare Proposes Boosting Payments for CAR-T Cancer Therapy

(Bloomberg) -- The U.S. government is proposing to increase payments for innovative CAR-T cancer therapies, the administrator of the Centers for Medicare and Medicaid Services said.

The proposal Tuesday is part of a broader effort to speed government reimbursement for new medical technologies, CMS Administrator Seema Verma said in a call with reporters.

CAR-T treatments are considered an important new option for leukemia and lymphoma that don’t respond to standard drugs. But low reimbursement have held back sales, frustrating Gilead Sciences Inc. and Novartis AG, which were the first drugmakers to bring the therapies to market.

“CAR-T is a great example around how government policy has really thwarted innovation,” Verma said. After receiving approval from the Food and Drug Administration, new therapies have to go through a separate payment vetting process by CMS that can take years.

Novartis and Gilead have struggled to get widespread use of the therapies, which are approved for the treatment of advanced diffuse large B cell lymphoma and children with acute lymphoblastic leukemia that hasn’t responded to traditional care. Novartis priced Kymriah at $475,000 for those with leukemia, a small patient population, and both Kymriah and Gilead’s Yescarta sell for $373,000 for lymphoma.

Kymriah generated $28 million for Novartis in the fourth quarter of 2018, and the company has said it expects 2019 revenue to hit $200 million. Yescarta did better for Gilead, with $264 million in 2018 sales, $81 million in the fourth quarter.

Shares of Gilead and Novartis were little changed in late trading.

Other companies have CAR-T products in the works, including Celgene Corp., which is being bought by Bristol-Myers Squibb Co., and Johnson & Johnson.

CAR-T drugs are made personally for each patient. Doctors remove the patient’s own infection-fighting immune-system cells, engineer them in a manufacturing facility to detect and attack malignant cells, then reinfuse them back into the body. The process can cause severe side effects and often requires patients to remain in the hospital for several days or weeks to ensure their safety.

The proposed Medicare payment change is included in an annual update to CMS’s rule on how hospitals are paid. Verma said the agency is considering similar reimbursement changes for other new breakthrough medical technologies and would invite public comments on the idea.

“It’s clear that technology is moving faster than government policies,” she said.

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