U.S. Medicare sets outpatient rate for Yescarta reimbursement

[April 06, 2018] By Deena Beasley

(Reuters) - Medicare, the U.S. government healthcare program for the elderly and disabled, will pay hospitals close to its standard mark-up rate for administering cell therapy Yescarta for cancer outpatients, who will have a co-payment of nearly $80,000, according to the Centers for Medicare & Medicaid Services (CMS).

Additional Medicare reimbursement for inpatients has been requested by Yescarta maker Gilead Sciences Inc and Novartis AG, which makes Kymriah, a similar therapy. Both therapies were approved last year by the Food and Drug Administration and are being used by growing number of major cancer centers.

The CMS has not made a decision on the requests, it said in an emailed statement on Thursday.

Reimbursement has been a major issue for investors because the high costs of the so-called CAR-T therapies could affect usage, especially for the Medicare population.

The therapies involve drawing white blood cells from a patient, processing them in the lab to target cancer, and infusing the cells back into the patient.

Most patients are first admitted to the hospital because the treatments may have life-threatening side effects, and inpatient services can bring the total cost to as much as $1.5 million.

For outpatient drugs, Medicare typically reimburses providers at the net price (after discounts and rebates) plus 6 percent. New drugs are paid at the manufacturer's wholesale acquisition cost plus 6 percent for the first three quarters.

As of April 1, CMS said it would pay $395,380 to health providers who use Yescarta, with a list price of $373,000, on an outpatient basis. The minimum patient co-payment for Yescarta is $79,076.

For Kymriah, with a list price of $475,000, the Medicare payment rate is $500,839, and the co-payment is $100,168.

For inpatients, Medicare bundles CAR-Ts into the payment for a hospital stay. Gilead and Novartis have filed for additional "new technology add-on payments" from Medicare to cover the cost of cell therapies in the hospital.

Yescarta is approved for patients with a type of lymphoma who have failed to respond to other therapies, while Kymriah is approved for children and young adults with acute lymphoblastic leukemia that has not responded to other treatments.

Novartis has also filed for use of Kymriah in lymphoma patients and a decision from the FDA is expected by mid-year.

(Reporting by Deena Beasley; Editing by Richard Chang)

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