Provenge Poised for Broad Insurance Coverage
Provenge Poised for Broad Insurance Coverage, Despite Grumbles on Price
The Pink Sheet Daily. 2010 May 24, E Hayes
After a strong endorsement in the National Comprehensive Cancer Network guidelines, Dendreon's first-of-its-kind prostate cancer vaccine Provenge appears well positioned for broad insurance coverage and take-up with physicians.
Commercial carriers that had been left gasping at the autologous cellular immunotherapy's $93,000 annual price tag may now feel obliged to provide coverage after a May 12 update to the NCCN practice guidelines.
According to the update, Provenge (sipuleucel-T) is recommended as a salvage therapy for patients with castrate recurrent prostate cancer. Furthermore, Provenge received the NCCN's highest endorsement - a "Category 1" rating, which signifies uniform agreement of experts based on a high level of evidence.
The treatment had only just been approved April 29 for treating asymptomatic or minimally symptomatic prostate cancer that is metastatic and resistant to standard hormone treatment.
The recommendation applies to patients who have an ECOG performance status of 0 to 1, which means patients are either fully active and able to carry on all pre-disease performance without restriction or restricted in physically strenuous activity, but ambulatory and able to carry out work of a light or sedentary nature.
Provenge is not recommended for patients with visceral disease and a life expectancy less than six months, the guidelines advise.
A "Category 1" rating is highly significant, said Lee Blansett, senior vice president-oncology market access at the global consulting company Kantar Health. On top of the approval, the rating will also make it very difficult for commercial carriers to refuse coverage of the drug, Blansett added. Commercial carriers that have endorsed the NCCN compendia, such as UnitedHealthcare, should automatically pay, he said.
Most Provenge use in the U.S. will likely end up being covered by Medicare, since about 75 percent of the target population for Provenge receives government-sponsored health care. Dendreon had met with CMS officials as planned during the first week of May to discuss reimbursement and confirmed that it will have a specific J-code assigned in January 2012, consistent with other medications approved by the FDA after March 31, 2010. Until then, it will use a temporary J-code.
Having a temporary code has the potential to cause delays to reimbursement, but in the company's investors' call on April 29, execs said they would provide physicians with 120-day payment terms for the first several months of launch.
Dendreon has indicated its capacity will be restrained in the first year, so wide insurance coverage is unlikely to affect revenues right away, but the NCCN stamp of approval bodes very well for the future.
"Given that Provenge was approved on April 29, the speed with which these guidelines were updated is notable and attests to the product's acceptance within the medical community," wrote J.P. Morgan's Cory Kasimov in a May 20 note.
Payers Question Pricing Strategy
Dendreon's pricing of $93,000 per patient per year, unveiled soon after approval, had "dwarfed expectations," analysts said at the time (1 'The Pink Sheet,' May 3, 2010). Dendreon explained that the price was derived based on the number of months of the survival benefit offered with the treatment, a concept that was unfamiliar to payers interviewed (prior to the NCCN development).
"That statement doesn't feel right. It's the first time I have heard about putting a price on one month of life," said Eric Cannon, director of pharmacy at SelectHealth.
The $93,000 price is on the high end of oncology treatments, but payers will feel pressure to cover it, just as they do for other expensive therapies, Cannon added.
Following the NCCN endorsement, commercial carriers can "try to negotiate with Dendreon on price, but I don't know how much success they will have," Blansett said.
Getting To The Bottom Of Pricing
Provenge is a personalized therapeutic cancer vaccine, as opposed to an off-the-shelf product that could be given to any patient. Each dose is produced specifically for a particular patient using the patient's own immune cells. These cells are altered via leukapheresis to boost their ability to fight prostate cancer. Then the activated immune cells are delivered back intravenously to the patient. Treatment will be administered in three infusions over the course of one month.
The process of tailoring the product to the individual patient and the unique challenges of distribution were expected to contribute to a hefty price.
But Dendreon's price calculations also were based in their valuation of the product's benefits, which departs from the standard Quality Adjusted Life Year metric commonly used in cost effectiveness calculations; the UK's NICE, for instance, considers £50,000 ($76,700) per QALY to be acceptable for end-of-life treatments that extend life.
Data supporting the Provenge NDA suggest that patients treated with Provenge live on average four months longer than without it. Dendreon divides the total cost of $93,000 by extra life made possible with treatment, or 4.1 to 4.5 months.
"When you consider these benefits, the price for a full course of treatment equates to a cost per month of survival of just under $23,000, which compares very favorably to many other widely used oncology products in similar advanced disease settings," COO Hans Bishop maintained during an investor's call.
Dendreon has pledged to offer a patient assistance program to help patients make co-payments. In an interview, Bishop declined to give any figures for the program but asserted that no patient will be turned away from treatment due to inability to pay.
Exec Draws Parallels With Other Cancer Drugs
During an interview, Bishop also elaborated on the comparative figures for widely used cancer treatments that Dendreon considered in its pricing process.
The standard of care in late-stage prostate cancer is Sanofi's chemotherapy treatment Taxotere . Direct per patient costs for Taxotere amount to only $18,000 per patient, but when indirect costs are included, such as supportive care, the total is actually about $60,000, according to Dendreon. Yet the survival benefit is 2.4 extra months lived, so by Dendreon's calculations, the cost for each month of life equates to about $25,000.
Provenge is atypical in that there are nominal premedication and supportive care costs, meaning the overall cost is essentially its list price. On top of Provenge, patients might need only acetaminophen and an antihistamine for infusion-related reactions like chills or fever, the company points out.
Whereas Provenge has a low rate of serious side effects, Taxotere is more toxic and patients sometimes require hospitalization, an additional raft of costs.
When extra costs for adjuvant therapies and supportive care are included, Provenge's price is actually lower than oncology therapies, Dendreon argues. In front-line breast cancer, the total cost for Genentech's Avastin (bevacimumab) is about $120,000. Given with chemotherapy, that drug had a 1.7 month overall survival benefit compared to chemotherapy alone.
"You can do the math in terms of cost versus benefit." Bishop said.
In first-line metastatic colon cancer, total costs for Avastin can amount to about $110,000, Dendreon noted. Data suggest that given in combination with chemotherapy, the drug offers about five months overall survival benefit over chemotherapy alone. That equates to a cost of $22,000 per month.
Genentech disputed the figures reached by Dendreon, noting that it caps its wholesale costs for Avastin at $56,000 per year for FDA-approved uses in insured patients with less than $100,000 a year in income. Genentech also pointed out that the breast cancer indication was supported by data showing a doubling in progression-free survival, rather than on overall survival.
Dendreon also highlighted Celgene's blockbuster Revlimid (lenalidomide) in second-line multiple myeloma, which it said costs $120,000 yearly when associated treatments and services are included. Given along with dexamethasone, the drug was shown to offer a time to progression benefit of 6.5 months. That equates to a cost of about $18,000 per month of life. Direct costs for Revlimid for 12 months of therapy in the U.S. amount to $78,000, according to Celgene.
How Much Will The Market Bear?
Basing price on the amount of time lived has negative implications for society, in the view of Helen Sherman, Chief Pharmacy Officer at the Regence Group, a tech assessment specialist that provides services to Blue Cross Blue Shield carriers in the Northwest of the U.S.
"We would hope that cost would not be about how much the market will bear, because that will break the system," said Sherman.
She noted that there are other therapeutics with higher prices, including Novartis' Ilaris (canakinumab) and Regeneron's Arcalyst (rilonacept), both approved for Cryopyrin Associated Periodic Syndrome, at $120,000 and $300,000 a year respectively. But CAPS is very rare, afflicting about 300 in the U.S., which minimizes the cost to the system, she said. In contrast, some 100,000 men in the U.S. have late-stage prostate cancer and about 30,000 die from it every year. "The greatest strain will be on Medicare," Sherman said.
Regence said it has not received requests for coverage of Provenge as yet. To inform its coverage decisions, the payer plans to perform its own analysis of the data and advisory committee discussion supporting approval. Regence has also requested additional data from Dendreon beyond what has been made publicly available so far. For example, Regence wants more information about how blinding was done, drop-out rates, and how patients who discontinued therapy fared.
"We will press the manufacturer to give us the data," Sherman said.
Such reviews are routine for Regence. The goal is to determine the actual clinical benefit in practice, as opposed to accepting a treatment based on data showing a statistically significant effect.
In the past, Regence's reviews have often been at odds with FDA approval decisions, Sherman said. For example, FDA approved GlaxoSmithKline's Tykerb (lapatinib) for advanced breast cancer. But while Tykerb showed improvements of progression-free survival, its impact on overall survival and/or quality of life are unknown and the drug has not been compared to other treatment options for advanced breast cancer, Sherman observed.
Price Sounds Right To Other Sponsors
In contrast with the surprised reaction from payers and analysts, biotechs working in cancer immunotherapy said Dendreon's high price was in line with their expectations, due to the complexity of the product's manufacturing process.
"It's very labor intensive," commented Eric von Hofe, president of Antigen Express, a subsidiary of Generex. Antigen Express has developed synthetic therapeutic vaccines for HER-2/neu expressing tumors. An immunotherapeutic peptide is ready for Phase III, pending a partnership deal.
But Antigen Express' product, as well as other non-autologous active immunotherapies, can be made at a fraction of the cost of Provenge, he said. "It's much more of an off-the-shelf drug," von Hofe noted, which makes it "a much less expensive therapy."
Still, while successive entries in the space may have different price points based on their production realities, Dendreon's setting of a high price for Provenge - and the potential acceptance by payers - could have downstream effects for future drugs.
