While winter is approaching and the hockey season has already begun for sports fans, another kind of hockey related event is approaching for Dendreon investors. The event will be the outcome of the November 17th Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) meeting sponsored by Medicare (CMS) that will provide input into its ongoing National Coverage Analysis (NCA) and subsequent National Coverage Decision (NCD) for Provenge. A preliminary NCD decision will be made by March 30, 2011 and a final decision will be made by June 30, 2011.
As CMS is the primary insurer of the majority of these late-stage elderly prostate cancer patients, Dendreon’s sales projections will be hugely impacted if the NCD is negative and coverage of the $93,000 per year immunotherapy is denied. Furthermore, third party payers would use the negative NCD findings as a rationale to also deny coverage. But is a negative NCD a reasonable possibility? In an effort to discern CMS’s concerns and bias about the coverage of Provenge many analysts will be watching the outcome of the upcoming MEDCAC meeting. Speculation has already commenced after questions for the committee were recently posted here:
Several insightful posts have been made about the questions and what they could mean. You can read comments on these links:
From my review of the questions a couple of observations come to mind. For the first time CMS is asking questions about the safety and efficacy of a newly approved cancer drug despite the fact that it was approved by the FDA. CMS and the FDA have recently signed a memorandum of understanding whereby the FDA will share data from its reviews with CMS. It appears that CMS does not consider Provenge to be an anticancer chemotherapeutic and thus not subject to 1861 (t)(2)(A) of the Social Security Act which mandates coverage of them. In fact, the Provenge package insert describes Provenge as an autologous cellular immunotherapy treatment, not an anticancer chemotherapeutic.
CMS has also stated that the NCA was being done partly because Provenge is the first autologous immunotherapy product to be approved. It could also be argued that Provenge is an immunotherapy service comprised of the collection of a patient’s lymphocytes which are exposed to PAP (a prostate cancer antigen) ex-vivo and returned to the physician for administration into the patient. Ramsey Baghdadi, in his post at cancernetwork.com, suggests that CMS may be holding the threat of delayed reimbursement or classification of Provenge as a service (with lower reimbursement) to force Dendreon to reconsider its price. This isn’t a new idea and occurred previously when the novel cancer immunotherapy product Zevalin was classified as a service. This, along with other factors, had a disastrous effect on sales of Zevalin.
Lesson to marketers and regulatory departments: to ensure Medicare coverage, if the FDA will accept it, a cancer treatment should be described as an “anticancer chemotherapeutic” in its labeling.
Since chemotherapeutic implies a chemical it would probably be a stretch to describe Provenge in those terms in its labeling. Furthermore, I would assume that Dendreon wants to distance Provenge as far as possible from chemotherapy. The “activating your own immune system to kill the cancer with relatively low toxicity” message is understandably very appealing to patients. To be fair Rituxan and Avastin, both of which are novel monoclonal antibodies that could also be called immunotherapy, are not described in their labeling as anticancer chemotherapeutics. However, Medicare carriers chose to treat Rituxan as an anticancer chemotherapeutic and CMS classified Avastin as such in its 2005 NCD for colorectal cancer treatment. Unfortunately, the wording in 1861 (t)(2)(A) didn’t envision the use of immunotherapy products as anticancer agents and it appears that CMS has taken some liberties when applying the term.
Is it just a coincidence that Provenge and Zevalin were launched by small companies while Rituxan and Avastin had the backing of Genentech? Perhaps the need for effective lobbyists is another take home lesson from the Zevalin and Provenge CMS coverage processes. I believe that legislators should take some action and replace the “anticancer chemotherapy” language with “anticancer agent”. This broader language would ensure that cancer patients would have access to the best treatments to control their disease regardless of the type of therapy and independent of the whim of CMS while also respecting the intent of the Social Security Act.
So is it possible that the NCA will determine that Provenge is not “reasonable and necessary”, the hurdle for CMS coverage of any treatment? I doubt it very much. Although there is some controversy about the trials which the Provenge approval is based on, I can’t imagine that CMS will countermand the basis of an FDA drug approval. It would provide too much fuel to the fire for advocates of quality cancer care and the Republicans.
However, what is likely will be a very strict definition of the patient population covered with absolutely no off-label use. I would watch for signs that Dendreon is talking to CMS and offering a price concession as a positive sign for coverage of Provenge as a drug. If a legal fight is formulating in the wings, look for signs Provenge could be classified as a service by CMS. This NCA is a signal to all manufacturers of novel anticancer therapeutics that CMS will not take premium pricing lying down. Oh, and watch for the “hockey stick” changes to Dendreon’s share price if the MEDCAC discussion November 17 goes “sideways”!
David is a veteran of the cancer business with 15+ years of experience commercializing several well known oncology therapeutics. He is currently a consultant and lives in San Diego. Please send your questions and comments to firstname.lastname@example.org.
Onyx Pharmaceuticals (NASDAQ: ONXX) has announced that they are delaying their NDA filing for FDA approval of carfilzomib—their investigational treatment for refractory/relapsed multiple myeloma—until at least mid-2011. During a pre-NDA meeting, the agency requested more information on the highly selective proteasome inhibitor's manufacturing process as the company is transitioning from clinical manufacturing to commercial manufacturing.
While preparing for commercial-scale production, Onyx specifically said that relatively routine enhancements to the manufacturing process for carfilzomib were made, however after these enhancements, the company observed minor variations in the handling of the drug that it believes are mainly related to equipment temperature variances. The problem, although considered minor, may not have been cause for an announcement, but Onyx has been planning on getting accelerated approval based on its Phase 2b data.
As a result, Onyx stock sold off over 7% in after-hours trading reflecting that the market does not like the approval process delay. On the other hand, Onyx is only down 2.5% on the NASDAQ today, perhaps reflecting the unwavering potential of the NDA submission. Anthony Coles, MD, CEO of Onyx, said on a conference call that the FDA has not yet signaled whether the Phase 2b data is enough for its review, but he remains confident in the data.
Given the recent problems for Roche/ImmunoGen’s investigational agent trastuzumab-DM1 and their inability to file an NDA based on Phase 2 data in refractory breast cancer patients, we can acknowledge why investors would be nervous about carfilzomib. After the recent string of unapproved FDA decisions, anything negative with FDA in a headline is bound to keep investors at bay.
That being said this appears to be an addressable manufacturing delay, and not a change in the overall filing strategy for Onyx. The American Society of Hematology meeting in December should have more data that supports the filing for carfilzomib in 2011, and should also help assuage investors’ concerns regarding the potential for an accelerated approval.
By John McCamant, Editor of The Medical Technology Stock Letter. You can learn more about MTSL at www.bioinvest.com.