Is Gilead’s new CAR-T overpriced or is payer bureaucracy to blame for slow pickup?

gilead4
Hospitals have faced delays in reimbursement for Gilead's CAR-T treatment Yescarta.

Gilead and its much-hailed CAR-T for lymphoma, Yescarta, have been hit by some bad press over the past few days, with news that only five patients have actually received the potentially lifesaving therapy. The waiting list for the treatment, which involves removing T cells from patients and engineering them to attack their cancers, has grown to 200 at the 15 hospitals authorized to administer the product, according to Bloomberg research.  

The news has raised the hackles of critics who have been blasting Gilead and other companies for charging high prices that they believe limit access to new products. Yescarta, which is designed to be a one-time treatment, is priced at $373,000. David Mitchell, a multiple myeloma patient and president of the advocacy group Patients for Affordable Drugs, said in an e-mailed statement that Yescarta is “so wildly overpriced that we can’t afford it.”

But is the price really the problem here, or is it just that the Centers for Medicare and Medicaid Services and large private insurers don’t yet have the payment mechanisms in place to quickly approve CAR-T treatments for all the patients who need them? The answer is likely more nuanced than simply the eye-popping price.

There is one prediction, however, that can be made with confidence: The full launch of Yescarta will take longer than Wall Street analysts had predicted. They had estimated that the product, which was approved by the FDA in October, would bring in $9.7 million in sales this year. To reach that goal, 20 additional patients would need to be treated by New Year’s, according to Bloomberg’s calculations—an unlikely scenario.

A spokeswoman for Gilead said in a statement e-mailed to FiercePharma that Gilead's CAR-T unit, Kite, is "diligently engaged with payers to ensure they are prepared for this novel therapy." She added that the company is "confident" it will be covered by payers and is anticipating the mix to be 50% to 60% private payers and 30% Medicare. "To date, the vast majority of the commercial payers have confirmed coverage," she said, and the company continues to "engage actively with Medicare to ensure we are doing all we can to support access."

RELATED: ASH: Long-term CAR-T data look good for Gilead—but good enough to top its rivals?

One of the reasons the waiting list for Yescarta is growing quickly is that CMS and some private insurers do not yet have billing codes for CAR-T treatments, according to hospital administrators who talked to Bloomberg. Some hospitals are taking on the financial risk, assuming they’ll eventually be paid, while others are asking patients to sign waivers saying they’ll bear the costs if their insurers fail to pay. The total cost per patient, including hospital charges, is estimated to range from $500,000 to $1 million.

Novartis will likely face some of the same reimbursement hurdles with its new CAR-T product, Kymriah, which is approved for some young patients with leukemia. Kyriah is priced at $475,000. But Novartis differs from Gilead in one key way: It struck a deal with CMS stipulating that the federal payer will only have to reimburse the treatment for patients who respond to it within one month of receiving it.

A spokeswoman for Novartis said in an e-mail that CMS has established a payment code for Kymriah that will go into effect Jan. 1. The company has also applied for the product to be part of CMS's New Technology Add-On Payment program, which provides additional payments to hospitals that administer products that the agency considers to be breakthrough treatments. "We are working with payers to ensure they fully understand the value of Kymriah and provide coverage for patients," she added.

During Novartis’s third-quarter earnings conference call in late October, CEO Joe Jimenez was asked if outcomes-based contracts like the one it struck with CMS might become more prevalent going forward. Jimenez said he believes such contracts “are going to take over,” but only if regulators get on board and a host of other issues are addressed, including the need for insurers to adopt new technology to help facilitate outcomes-based payments.

“One of the reasons why CMS was willing to agree to this is that they're looking for ways to bring these new technologies to the U.S. in a way that will not break the bank,” Jimenez said. “I do believe that that will be a catalyst for more contracts but it's still going to be limited by the technology barriers and some of the regulatory barriers that still have a ways to go.”

RELATED: Gilead signals major hepatitis C trouble ahead with sales guidance tweak

As for Gilead, it could use a Yescarta bump to its top line. During the third quarter, the company’s hepatitis C franchise pulled in $2 billion in sales, falling short of analyst estimates and prompting Gilead to lower its revenue guidance for 2017 from $9.5 billion to $9 billion. The report was so gloomy that one analyst predicted “a wholesale reset of 2018 and 2019 expectations.”

Investors will be watching the Yescarta reimbursement situation carefully for signs that CAR-T can help pull Gilead out of its hep C slump—but for patients, the payment issue is far more visceral. Mitchell, who has criticized both Novartis and Gilead for high CAR-T pricing, told Fierce Pharma over the summer that he’s optimistic the technology could eventually prove to be the answer to his disease, multiple myeloma. But the news of Gilead’s reimbursement issues has left him worried that pricing may be coming into play. “Gilead must lower the price of Yescarta,” he said in the statement. “As a person who looks forward to the potential of CAR-T, we cannot allow fellow patients to die while this groundbreaking treatment sits on the shelf.”

Editor's note: This story was updated to include input from Gilead and Novartis.