FEATURE
Drug Prices
and tisagenlecleucel, which may provide
long-term value for patients but have high
prices that drive up health-care costs in
the short term.
With its reports, ICER hopes to pub-
licize these questions and develop policy
recommendations for health-care stake-
holders. In the case of CAR T-cell therapies,
the agency suggested that pharmaceutical
manufacturers, insurers, and providers meet
prior to FDA approval to discuss a drug’s
potential role in therapy and payment ar-
rangements. This partnership would “reduce
unnecessary delays in delivering care to
patients by addressing financial uncertain-
ties for insurers and providers.” 15
“Without federal government nego-
tiations over drug prices, we have to be
honest and more responsible when talking
about drug prices and how they relate to
the value of the drug because we want to
create incentives that reward companies
for creating drugs that help patients,”
Dr. Pearson said. “Yet we can’t continue
to have increasing drug prices and just
assume that the system can absorb them.
That is not going to work.”
Innovative Drug-Pricing
Schemes
When Novartis first launched tisagenle-
cleucel for pediatric ALL with a $475,000
price tag, the drug company also an-
nounced an “outcomes-based” payment
model: CMS would not pay for tisagenle-
cleucel unless the patient responds to the
treatment within 30 days of administra-
tion. 16 Yet, one year later, CMS backed
out of the outcomes-based payment deal
without a public explanation.
This value-based pricing model that
prices a drug based on its direct benefit to
a patient is one solution to relieve the ever-
increasing anxiety about drug prices in the
U.S. “The beauty of value-based pricing
is that, if the drug is priced in accordance
with value and the benefit it confers to a
patient, then everyone should be able to
have access to it,” Ms. Kaltenboeck said.
She would like to see more manu-
facturers engage in value-based pricing,
particularly for anticancer drugs. “We
should know how much a patient and the
health-care system are paying and how
much benefit a patient experiences. In our
system, drugs are continually priced up,
and, tragically, patients get priced out.”
Ms. Kaltenboeck is seeing more
health-care stakeholders exploring value-
based pricing but acknowledged that
this kind of innovation will likely come
in small, incremental steps. Companies
such as Regeneron and Novartis have
priced several of their new drugs in line
with ICER’s recommendations. Novartis,
after receiving a second FDA approval
for tisagenlecleucel for the treatment of
adults with large B-cell lymphoma, priced
the therapy at $373,000 – lower than the
$475,000 price tag for the pediatric ALL
indication – because the efficacy gains are
not as pronounced for the adult popu-
lation. This pricing scheme is the first
example of a type of value-based pricing
called indication-based pricing.
Still, both manufacturers and insur-
ance companies are hesitant to engage in
value-based pricing. “Drug companies
typically have not been very excited about
this scheme because of the risk of not get-
ting paid; payers typically just want drug
companies to lower their prices because
they don’t want to deal with the complexi-
ties of tracking patients’ outcomes,” said
Dr. Lakdawalla.
A Call for Transparency
A central issue in the drug-pricing debate is
transparency – which is lacking in the U.S.
“Drug and insurance companies want
rules that apply to everyone equally and
that are transparent and will sustain an
innovative health-care system,” said Dr.
Pearson, but that’s not likely to happen.
“With no regulation by the government,
the U.S. has created a bit of a monster:
It’s not a system that truly rewards drug
value. The consequence is that patients are
the ones who suffer from high prices that
trickle down to them.”
Dr. Lakdawalla agreed. “The issue is
figuring out how to align price with value.
Prices are completely unmoored from
value and the first step is to create a more
transparent pricing system.”
The argument for maintaining con-
fidential rebates is that “not everyone in
the system can receive the rebate, and
publicizing it would create a situation
where everyone would want to receive the
same discount, which drug companies
wouldn’t be able to provide,” Dr. Lak-
dawalla explained.
Unfortunately, the U.S. drug-pricing
system has become opaque, he noted.
“With so little transparency, it is diffi-
cult for employers buying health care to
make decisions about how much to pay
for drugs because they have no idea how
much individual drugs cost.”
“And, as consumers, we deserve to
understand the actual prices of drugs that
we are paying for,” he added.
For Dr. Lakdawalla, pricing and
rebate transparency would be a crucial
first step to improving the U.S.’ decen-
tralized, non–government-controlled
health-care system. “Pricing transpar-
ency is not sufficient to fix the system,
but I think it’s a necessary step for the
simple reason that we can’t have so many
players making good, clinically rational
decisions if they don’t know the most ba-
sic facts, like the actual cost of the drug.”
—By Anna Azvolinsky ●
REFERENCES
1. The New York Times. In cancer are, cost matters. Accessed October
2, 2018, from https://www.nytimes.com/2012/10/15/opinion/a-
hospital-says-no-to-an-11000-a-month-cancer-drug.html.
2. The New York Times. Sanofi halves price of cancer drug Zaltrap after
Sloan-Kettering rejection.” Accessed October 2, 2018, from https://
www.nytimes.com/2012/11/09/business/sanofi-halves-price-of-
drug-after-sloan-kettering-balks-at-paying-it.html.
3. Gordon N, Stemmer SM, Greenberg D, Goldstein DA. Trajectories of
injectable cancer drug costs after launch in the United States. J Clin
Onc. 2017;36:319-25.
4. Gorkin L, Kantarjian H. Targeted therapy: generic imatinib — impact on
frontline and salvage therapy for CML. Nat Rev Clin Oncol. 2016;13:270-2.
5. DiMasi JA, Grabowski HG, Hansen RW. . Innovation in the
pharmaceutical industry: new estimates of R&D costs. J Health Econ.
2016;47:20-33.
6. Department of Health and Human Services. “Average sales prices:
Manufacturer reporting and CMS oversight.” Accessed October 2,
2018, from https://oig.hhs.gov/oei/reports/oei-03-08-00480.pdf.
7. PhRMA. Follow the dollar: understanding how the pharmaceutical
istribution and payment system shapes the prices of brand
medicines.” Accessed October 2, 2018, from http://phrma-docs.
phrma.org/files/dmfile/Follow-the-Dollar-Report.pdf.
8. Lakdawalla D, Yin W. Insurer bargaining and negotiated drug prices in
Medicare Part D. Rev Econ Stat. 2015;97:314-31.
9. National Institute for Health and Care Excellence. “Appraisal
consultation document: Axicabtagene ciloleucel for treating diffuse
large B-cell lymphoma and primary mediastinal B-cell lymphoma
after 2 or more systemic therapies.” Accessed October 2, 2018,
from https://www.nice.org.uk/guidance/GID-TA10214/documents/
appraisal-consultation-document
10. Gilead press release. ”Yescarta® (axicabtagene ciloleucel) receives European
marketing authorization for the treatment of relapsed or refractory DLBCL
and PMBCL, after two or more lines of systemic therapy.” Accessed October
2, 2018, from http://www.gilead.com/news/press-releases/2018/8/
yescarta-axicabtagene-ciloleucel-receives-european-marketing-
authorization-for-the-treatment-of-relapsed-or-refractory-dlbcl-and-
pmbcl-after-two-or-more-lines-of-systemic-therapy.
11. Novartis press release. “Novartis receives European Commission
approval of its CAR-T cell therapy, Kymriah® (tisagenlecleucel).”
Accessed October 10, 2018 from https://www.novartis.com/news/
media-releases/novartis-receives-european-commission-approval-
its-car-t-cell-therapy-kymriah-tisagenlecleucel.
12. NHS press release. “NHS England strikes deal for ground breaking cancer
treatment in a new European first.” Accessed October 10, 2018 from
https://www.england.nhs.uk/2018/10/nhs-england-strikes-deal-for-
ground-breaking-cancer-treatment-in-a-new-european-first/.
13. Kaiser Health News. “Cascade of costs could push new gene therapy
above $1 million per patient.” Accessed October 2, 2018, from
https://khn.org/news/-cascade-of-costs-could-push-new-gene-
therapy-above-1-million-per-patient/.
14. Reuters. “U.S. Medicare sets outpatient rate for Yescarta
reimbursement.” Accessed October 2, 2018, from https://www.
reuters.com/article/us-cancer-medicare-yescarta/u-s-medicare-
sets-outpatient-rate-for-yescarta-reimbursement-idUSKCN1HC2N3.
15. Institute for Economic and Clinical Review. “Chimeric antigen
receptor T-cell therapy for B-cell cancers: effectiveness and value.”
Accessed October 2, 2018, from https://icer-review.org/wp-content/
uploads/2017/07/ICER_CAR_T_Final_Evidence_Report_032318.pdf.
16. Centers for Medicare and Medicaid Services. “CMS: Innovative
treatments call for innovative payment models and arrangements.”
Accessed October 2, 2018, from https://www.cms.gov/newsroom/
press-releases/cms-innovative-treatments-call-innovative-
payment-models-and-arrangements.
ASH Advocates for Affordable Therapies
The American Society of Hematology (ASH) is continuing to advocate for reasonable drug prices and supporting policies that
would expand access to treatments for people with hematologic conditions.
Advocating for New Payment Models
When the revolutionary chimeric antigen
receptor (CAR) T-cell therapies for treating
hematologic malignancies gained regulatory
approval in the U.S., the costs reached unprec-
edented levels. More gene therapies are on the
horizon, as are questions about who is going to
pay for these expensive treatments.
In June 2018, ASH submitted comments
on the Centers for Medicare and Medicaid
Services’ (CMS’) “CY 2019 Hospital Inpatient
Prospective Payment System” proposed rule.
As the CMS was working on finalizing its
payment policy for CAR T-cell therapies, the
Society urged CMS “to develop an innovative
payment solution to protect patient access.” 1
ASH proposed an alternative reimburse-
ment model in which CMS would pay for CAR
T-cell products separately as a “pass-through”
at actual acquisition or invoice cost, rather
than covering it with a New Technology Add-on
62
ASH Clinical News
Payment, or NTAP. ASH’s proposal would have
the “added benefit of being site-neutral, elimi-
nating financial incentives to treat patients in
settings that may not be medically appropri-
ate,” the Society explained.
Ultimately CMS granted NTAPs to the two
approved CAR T-cell products, but the Society
will continue to explore alternative, sustain-
able models for bringing these innovative,
expensive therapies to patients.
Stepping Up Against Step Therapy
Earlier this year, CMS issued guidance
allowing Medicare Advantage plans to
implement “step therapy” for physician-
administered and other Part B drugs. 2 Step
therapy stipulates that patients must start
(and fail) a less expensive (and often less
effective) treatment option before being
prescribed a more expensive, and frequently
more effective, option.
CMS intends the new policy to “encourage
patients to choose high-value medications,”
but members of the medical community
pushed back against this “fail-first” approach. 3
In a letter to CMS Administrator Seema
Verma, MPH, ASH joined more than 90 medi-
cal organizations in calling on CMS to retain
a 2012 policy that prohibits these plans from
using step therapy on Part B benefits. 4
The dissenting organizations argued that,
rather than giving Medicare an opportunity
to negotiate better discounts for patients (as
CMS claimed it would), the policy would erect
more barriers between patients and needed
therapies.
“For cancer patients, selecting the proper
personalized treatment as quickly as possible
can be critical to survival,” the organizations
wrote in the letter. “Delays in getting appropri-
ate treatments can mean prolonged symptom-
atic periods and irreversible damage, making a
‘fail first’ approach to treatment inappropriate.”
The proposed policy is effective begin-
ning January 2019, though details about its
implementation are limited.
REFERENCES
1. American Society of Hematology, “Letter to Ms. Seema Verma, RE:
CMS-1694-P; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2019
Rates,” June 25, 2018.
2. CMS.gov, “Medicare Advantage Prior Authorization and Step Therapy
for Part B Drugs.” Accessed October 11, 2018, from https://www.
cms.gov/newsroom/fact-sheets/medicare-advantage-prior-
authorization-and-step-therapy-part-b-drugs.
3. CMS.gov, “Speech: Remarks by Administrator Seema Verma at the
Financial Times Pharma Pricing and Value Summit.” Accessed October
11, 2018, from https://www.cms.gov/newsroom/press-releases/
speech-remarks-administrator-seema-verma-financial-times-
pharma-pricing-and-value-summit.
4. FierceHealthcare, “AMA leads nearly 100 medical groups calling on
CMS to rethink step therapy for Part B drugs.” Accessed October 11,
2018, from https://www.fiercehealthcare.com/payer/american-
medical-association-cms-step-therapy-part-b-drug-prices.
November 2018