Featured in Health Business Daily, Oct. 24, 2017

New CAR-T Therapy Offers Notable Results, Potential Payer Challenges

Reprinted from SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, specialty pharmacies, pharma companies, providers and employers contain costs and improve outcomes related to high-cost specialty products. Subscribe today!

September 2017Volume 14Issue 9

Barely three months after the FDA approved Keytruda (pembrolizumab) as the first tissue- and site-agnostic cancer drug (SPN 6/17, p. 7), the agency hit another milestone with the approval of the first chimeric antigen receptor T cell (CAR-T) therapy. Novartis Pharmaceuticals Corp.’s Kymriah (tisagenlecleucel) has shown impressive results in clinical trials, but payers will face a variety of challenges with the immunotherapy — not the least of which is its $475,000 cost.

On Aug. 30, the FDA approved the drug for the treatment of people up to 25 years old with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or has relapsed at least twice. “There has been an urgent need for novel treatment options that improve outcomes for patients with relapsed or refractory (r/r) B-cell precursor ALL, whose prognosis is poor,” said Novartis in a statement on the approval. “Patients often undergo multiple treatments including chemotherapy, radiation, targeted therapy or stem cell transplant, yet less than 10% of patients survive five years.”

However, the clinical trial upon which Kymriah’s approval is based showed 83% of people treated with the therapy achieved complete remission or complete remission with incomplete blood count recovery within three months. Not surprisingly, the product has breakthrough therapy designation.

Novartis says it anticipates about 600 people in the U.S. would be appropriate candidates for the treatment.

Specialty Pharmacy News

The product is a one-time therapy that modifies each patient’s own T cells so they contain a new gene that targets and kills certain leukemia cells. The treatment consists of a complex process: T cells are extracted from the patient’s blood through leukapheresis and then sent to a Novartis manufacturing facility in New Jersey, where they are genetically reprogrammed. Then the product is sent to a Kymriah Treatment Center, where it is infused back into the patient. Novartis lists 30 treatment centers across the country on Kymriah’s website. Some of them, it says, are ready to administer the drug now, “while others will be ready soon.”

But before that can happen, the patient must undergo fludarabine and cyclophosphamide lymphodepleting chemotherapy. The fludarabine is given intravenously daily for four days, and the cyclophosphamide is given intravenously daily for two days, starting with the first dose of fludarabine. Two to 14 days after the chemotherapy is completed, Kymriah can be infused.

The product also has potentially fatal side effects, including cytokine release syndrome (CRS). Treatment of CRS differs depending on its severity, and in severe or life-threatening cases, the administration of Actemra/RoActemra (tocilizumab) is recommended (see brief, p. 10).

“The significance of the FDA approval of Kymriah is two-fold,” says Winston Wong, Pharm.D., president of W-Squared Group. “First, and most important, we now have a treatment option for children and young adults with B-cell acute lymphoblastic leukemia who are refractory or relapsed with standard treatment. Secondly, the approval of Kymriah represents the first approval of the CAR-T immunotherapy, which has been gaining momentum as the second-generation immunotherapy.”

Bill Sullivan, principal consultant for Specialty Pharmacy Solutions LLC, tells AIS Health that the drug is the “real definition of ‘breakthrough.’” In a recent client alert, he writes that “As the first gene-altering therapy it opens the door to a whole new chapter of pharmaceutical disease management. One may even ask if it qualifies as a ‘medicine.’”

Is Price Too High or Too Low?

Before the drug gained approval, estimates for its price were in the $600,000 to $750,000 range. So although $475,000 is certainly not inexpensive for a one-time treatment, that price tag prompted a range of responses as far as whether it actually was too high or too low.

In a guest post on Forbes’ website, Novartis CEO Joseph Jimenez addressed the price, noting that the company has “invested substantial amounts of money into this technology” and that the treatment process is time-sensitive, requiring “a significant amount of human oversight.” Novartis, he said, considered a range of factors in setting the price and consulted with health economic experts.

Writing in a STAT editorial, Anna Kaltenboeck, a senior health economist and program director at Memorial Sloan Kettering Cancer Center, and Peter Bach, M.D., director of MSKCC’s Drug Pricing Lab, say that the cost “is both so large and so lacking in context that it is difficult to determine if it is too high by fivefold or too low by half.…Common sense is a poor guide after the decades-long run-up in cancer drug prices that has moved us from mouths agape in response to a price of $1,000 a month to meh in response to a price of $20,000 a month. Our plan is to wait for the Institute for Clinical and Economic Review’s independent assessment of CAR-T therapy pricing, due out on March 16, 2018.”

Price Is ‘Not Surprising’

The price, says Sullivan, is “not surprising, especially if it is highly effective.”

While the “science behind Kymriah is revolutionary, the business decision to price it at nearly half of a million dollars per treatment is not,” maintained the Campaign for Sustainable Rx Pricing’s spokesperson Will Holley in a statement. “Kymriah’s price tag is simply a continuation of the pattern of sky-high launch prices that spins further out of control each year. While we are very excited about the potential for CAR-T therapies to save lives, Novartis’ pricing decision disappointingly pushes an unsustainable trend even closer to the breaking point.”

The drug’s price is “huge,” says Wong. “Some have commented that the cost was lower than expected, however comparable to a stem cell transplant, which is a treatment alternative for the same population. Because it is at parity to a stem cell transplant, some would say the price is fair; however, isn’t that what has contributed to the rising cost of oncology care? I think we are still too much in the mode of charging what the market will bear, and what the market will bear is not always reasonable.”

Jimenez also disclosed that Novartis has entered into “a novel collaboration” with CMS by which it “will offer a unique outcomes-based approach that would allow for payment only when pediatric and young ALL patients respond to this therapy by the end of the first month,” he wrote. “Ultimately, value-based pricing approaches like this one could help the US adopt new technologies in the fight against cancer in a way that lowers total costs for the US healthcare system. To ensure that patients receive the treatment in a safe and timely manner, Novartis is also providing traditional support to patients by helping them navigate insurance coverage and by providing financial assistance for those who are uninsured or underinsured.”

“If Novartis can figure out the process to make this work, it will be the first contract put into place for a drug with this high of a cost,” says Wong. “Thus, kudos to Novartis for this contract model consideration.…Key to this deal is to agree upon how to determine a treatment success vs. failure. The refund process is also key because payers, including Medicaid, are geared toward paying for services. They do not always have the processes in place to take in refunds. The refund timing is also key.”

Commercial health plans, says Wong, likely will “demand the same contract model.” Refunds will be an issue in this space as well. “In the self-insured market, the refund will be processed back to the employer. Also, in both the fully insured and self-insured markets, the payer will need to process a refund back to the patient for their share of the cost represented by the co-insurance. In most cases, patients would have already been required to pay the required co-insurance portion of the cost before receiving services. In short, Novartis is on the cutting edge of this type of contract model, but the payers are not really ready for it, in that they do not have the infrastructure in place to handle these refunds. Refund contracts exist in the prescription benefit world only because the refunds are of a lower dollar amount, and they are treated as a rebate model.”

Plans Need to Predict, Budget for Kymriah’s Use

Health plans’ “biggest challenge will be to predict and budget for the utilization” of the drug, says Wong. “A secondary challenge is that Kymriah will only be administered in designated centers of excellence, where the use of this therapy is well understood and known. The center of excellence may or may not be in the provider network, thus possibly requiring out-of-network negotiations to take place timely and efficiently. The impact upon the patient, in terms of patient co-insurance, must be realized as well. Most plans require a higher co-insurance for out-of-network services.” In addition, he tells AIS Health, patients will be on the hook for the cost of their travel to one of the treatment centers, as that “will not be covered as a benefit expense.”

The cost for the lymphodepleting chemotherapy that must be pre-administered is “pennies compared to Kymriah,” says Wong. “Nevertheless, additional cost will be incurred with the four-day chemotherapy regimen.”

“The adverse effects, most notably the cytokine releasing syndrome, are costs that cannot be ignored,” he adds. “However, they become part of the therapy costs. It is no different from any other chemotherapy treatment where adverse effects occur. CAR-T therapy is a power therapy because it uses the body’s own immune system. However, if not controlled, major reactions will occur, which is really just an intensification of the normal body processes. As with other adverse effects, the cost of treatment is a covered benefit. In this case, cost will consist of tocilizumab, the rescue medication, as well as the hospitalization to treat this potentially fatal adverse effect.”

According to Lynn Nishida, area vice president of pharmacy at Solid Benefit Guidance, “Most payers may find it challenging in managing the utilization of Kymriah through traditional utilization management strategies that would typically be applied to medications covered under the prescription benefit or those covered under the medical benefit and administered in outpatient clinics or physician offices. Traditional utilization management strategies (such as prior authorization and/or site of service optimization) are not feasible and/or practical for services provided in the hospital facilities.

“As such,” she tells AIS Health, “payers will need to rely on the relationships with their contracted medical facility providers (who are or become certified Kymriah sites) for collaborative work efforts to ensure the most cost-effective use of Kymriah.” Topics for discussion should include “approaches and steps in managing this medication, including opportunities that will mirror outcomes payment approaches that Novartis plans to develop in their collaborative efforts with CMS.”

Asked about other possible payer approaches to covering Kymriah, Wong responds, “Payers will be moving more into value-based contracting, and contract proposals such as what is being presented by Novartis is a good start. As noted, one of the barriers to value-based proposals is the lack of the infrastructure to administer these contracts. Until the infrastructure is developed, value-based proposals will be more of a concept as opposed to reality. Until then, we are stuck with the negotiated discount off list price.”


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