When Novartis’s new CAR-T therapy was approved last year, the treatment was greeted with a mix of awe, enthusiasm, and apprehension. Here was an effective treatment for a seemingly intractable type of cancer that afflicts children, but Kymriah (tisagenlecleucel) also had a head-spinning price.
A subsequent cost-effectiveness analysis added more din to the cognitive dissonance.
Although the one-time cost for Kymriah is $475,000, the Institute for Clinical and Economic Review (ICER), an increasingly influential not-for-profit organization in Boston that does economic analyses of new medications and other medical interventions, deemed it more economical than standard chemotherapy. On the one hand, ICER determined that the cost would exceed conventional chemo for B cell acute lymphoblastic leukemia by almost $330,000. On the other hand, its analysis showed that Kymriah would provide youngsters with about eight extra years of life beyond what conventional treatment would typically provide. ICER hedged its endorsement (“uncertainty in the evidence raised questions about the long-term value for the money.”) Even so, its verdict reframed the question about Kymriah’s cost from “is it worth it?” to “how can we possibly afford it?”
“Innovative CAR-T therapies with high upfront costs pose substantial challenges for our fragmented, mixed public-private insurance system,” says Lou Garrison, a health economist and an emeritus professor at the University of Washington who has served as a consultant to Novartis but not about Kymriah. “Their high cost and low incidence create a need for better mechanisms for spreading the costs over multiple plans and over time.”
Insurers may not fight covering Kymriah for several reasons. One is the small patient population. About 3,100 youngsters are diagnosed with acute lymphoblastic leukemia each year, most of them with the B cell variety, according to the National Cancer Institute. As a result, individual payers are likely to face covering just a few if any cases each year. Insurers have learned (sometimes the hard way) that it is easier to bear the cost of a few expensive cases than risk a barrage of negative publicity from coverage denials.
Meanwhile, Novartis is offering what amounts to a money-back guarantee: If a patient fails to respond in the first month, there will be no charge. That kind of cutoff can work in the company’s favor because most cancer patients are likely to experience at least some short-term benefit. Indeed, treatment with Kymriah is the sort of scenario—a brief “one-and-done” therapy—ripe for outcomes-based contracting.
“Cost-effectiveness is always difficult to sort out,” says Robert Easton, co-chairman emeritus at Bionest Partners, a consulting firm. “If the drug is cost-effective, then it should save the system money. But often, there is some kind of fiction in that conclusion. You want to know if the economic benefit that is being distributed is equal to the risk the payer is assuming.”
And payers may not have much choice about covering new cancer drugs, according to Roger Longman, chief executive of Real Endpoints, a research firm that tracks reimbursement issues. New therapies are likely to be included in a handful of compendia compiled by organizations like the National Comprehensive Cancer Network, a group of 27 cancer centers. As long as therapies are in the compendia, payers are likely to pay for it, Longman says. “They would love to figure out a way not to pay, but that’s not how it works in cancer.”
Still, payers can limit their financial risk by pushing back against how much providers mark up a drug. The shift is already under way, but the newest therapies “may accelerate movement from the traditional buy-and-bill model in oncology,” says Longman.
Ultimately, this episode may simply be a harbinger of still more difficult decisions, says Walid Gellad, MD, at the University of Pittsburgh. “People may feel like (Kymriah) is affordable now, because the drug will be used in rare circumstances,” he says. “But when such situations become more common, then affordability issues will become more important. As prices increase, we have to get a handle on what it means to say that something is cost-effective.”