Dendreon ($DNDN) got some welcome news from U.S. health officials: Medicare and Medicaid will now pay for the cost of infusing its prostate cancer therapy Provenge. Previously, the government health programs had only expressly covered the cost of the drug itself.
Dendreon said the Centers for Medicare and Medicaid Services' new coverage policy will allow the cost of administering Provenge to be billed separately from the cost of the drug, as Reuters reports. Doctors typically are paid an average of $125 per infusion, the news service notes. The change will be retroactive to Jun. 30, Dendreon says, and typical waiting time for reimbursement on the drug is now 30 days.
The infusion fee isn't much, compared with Provenge's $90,000-plus cost, but every little bit helps when you're trying to persuade cash-flow-conscious physicians to use your product. Provenge sales haven't taken off as Dendreon had hoped--or investors had expected--partly because of doctors' uncertainty about reimbursement. The company pulled its sales forecast on the drug in August, sending its stock reeling, and has since dialed back its growth expectations for the next several quarters.
"Today's announcement provides additional comfort to physicians concerned about Provenge reimbursement," ISI Group analyst Mark Schoenebaum said in an investor note (as quoted by Reuters). But the CMS coverage guidelines don't address another obstacle: The patient's share of the cost.