Gilead, Novartis CAR-Ts face DLBCL launch challenges due to inadequate Medicare billing system – experts
• Existing MS-DRG system unable to handle potential USD 300k-USD 1m support costs
• Risk of financial losses may prompt hospitals not to offer CAR-T therapies
• Therapies may be steered to PPS-exempt hospitals, but limited number in US
Gilead Sciences’ (NASDAQ:GILD) Yescarta (axicabtagene ciloleucel) and Novartis’ (VTX:NOVN) Kymriah (tisagenlecleucel) face a bumpier-than-anticipated diffuse large B-cell lymphoma (DLBC) rollout due to limitations in the Medicare severity-diagnosis related group (MS-DRG) system, with some hospitals potentially discouraged from offering the CAR-Ts due to financial losses.
Existing MS-DRGs, to which CAR-T recipients are mapped, do not come close to covering the full cost of supportive care services, experts said, with one adding those services may equal or exceed the therapies’ list prices. Consequently, the costs to hospitals may not be sustainable, forcing them to decline CAR-T treatment as an offering or refer patients to centers that offer it. Additionally, a payment policy expert noted, Medicaid coverage could be a problem for patients who do not live in states where the CAR-Ts are available, as hospitals will not usually take out-of-state patients on the program.
In Gilead’s 3Q earnings call, COO John Milligan told analysts that Medicare’s MS-DRG segments will probably grow up to one-third of Yescarta’s payer mix, and hospitals are adept at using existing MS-DRGs for CAR-Ts until more specific ones are created. Most of the 16 cancer hospitals chosen for the CAR-T’s initial rollout are exempt from Medicare’s prospective payment system (PPS) and therefore not reimbursed based on MS-DRGs, Milligan said, adding the company plans to include 70-90 centers nationwide. Furthermore, he added, most new therapies have been introduced without MS-DRGs, so the issue of MS-DRGs lagging new therapies is not new.
Analysts expect Yescarta’s sales to exceed USD 2bn at YE23, with Kymriah’s peaking at USD 944m the same year, according to BioPharm Insight data.
This news service reported 16 November that Kymriah for DLBCL would likely get a similar price tag to Yescarta’s USD 373,000 list price, but both therapies face reimbursement conundrums. Previous coverage in December 2015 noted that successful reimbursement would depend on proper MS-DRG and other coding due to the high cost, complexity and need for inpatient care.
A Novartis spokesperson noted that hospitals independently seek reimbursement for products, services and procedures related to patient care, and a temporary Q code for Kymriah will become effective 1 January 2018, and the company’s New Technology Add-On Payment (NTAP) application for the product is under CMS review. Gilead did not respond to requests for comment.