(Page 2 of 3)
correctly, that Provenge was priced in line with other cancer drugs that have shown a similar ability to prolong lives. It also reminded people on many occasions that it spent 15 years and $1 billion on this very big roll of the dice. Basically, it was time to recoup that investment.
But there was a major downside to being that aggressive on price. Dendreon had spent years roiled in controversy about how convincing its clinical trial data were. Not even an FDA approval silenced the doubters. The high price further galvanized opponents in academia and their friends on Wall Street, who questioned whether the drug was worth that much for only a median time of another four months of patient survival. Sure enough, three months after FDA approval, the Centers for Medicare and Medicaid Services opened up an unusual process known as a national coverage analysis, in which it sought to review whether it ought to reimburse doctors for this new treatment, and if so, under what circumstances. Coming a few months after President Obama’s healthcare reform law passed, people wondered if this was some kind of stealth price control move by Medicare, and whether Dendreon would become the sacrificial lamb.
Much of that uncertainty was supposedly laid to rest last November, when Dendreon persuaded an expert advisory panel that clinical trial evidence supported the company’s claims about the drug. The Medicare agency followed up on that hearing by issuing a draft opinion in March in favor of Provenge. By the time the official National Coverage Determination (NCD) was etched into federal policy on June 30, reimbursement was considered a fait accompli on Wall Street. Dendreon had prevailed, the question was settled. Time to move on.
Or so we thought. While Dendreon spent much of the past year pooh-poohing the impact of the Medicare agency’s review, saying regional Medicare units were reimbursing docs in the interim, a more worrisome side of the story emerged on last week’s conference call. While regional Medicare units had been reimbursing doctors who prescribed Provenge for the past year, that was apparently happening under very strict criteria for certain patients—not the broad group of people who are actually eligible under the FDA-approved prescribing information. That created a lot of hassles, and confusion among doctors about exactly which patients were eligible for reimbursement. And just as doctors learned the ropes of that arcane process, they are now being told that the patient eligibility rules and financial reimbursement processes are changed again, to make things smoother. Trouble is, only about one-fourth of doctors have gotten the message in the past few weeks, Dendreon said.
Looking back now, the national Medicare review “really did create headwinds for us over the last year. We now need to educate physicians that it’s gone away,” Gold said on the call.
Even if Dendreon does a great job now in getting the word out about smooth sailing at Medicare, doctors aren’t necessarily going to line up and start prescribing Provenge a lot. That’s because even though Dendreon priced its drug like comparable cancer drugs, there’s an unusual “cost-density” with Provenge that puts physicians’ necks on the line. As with many cancer drugs, once a doctor prescribes Provenge, he or she has to buy it, typically using their own private practice checking account. Since Dendreon’s drug is given through three infusions in one month, doctors have to shell out for a full $93,000 bill for giving one month of infusions to one patient. Other costly cancer drugs run up big tabs over many months, or even years, meaning that doctors can spread out the pain of reimbursement uncertainty.
Shockingly, Dendreon said on the call that it wasn’t really aware of how far and wide the reimbursement anxiety extended among small community-based physician practices until very recently. What that essentially means is that the company admitted it didn’t really understand a vitally important segment of its customer base very well, even after it was a full year into a product launch.
Things didn’t have to turn out this way. If Dendreon had priced its product more modestly, … Next Page »
By posting a comment, you agree to our terms and conditions.