Medicare lines up payments for Gilead’s CAR-T med Yescarta, but parts of the picture remain murky

Gilead is awaiting a decision from CMS on whether to provide supplemental payments to hospitals that administer its personalized CAR-T cancer treatment. (Image: Gilead)

Editor's note: This story and headline were updated to reflect a Medicare cap on outpatient copays and clarified information from CMS, as well as input from Gilead and Novartis.

Investors were none too happy last December, when news broke that only five patients had received Gilead’s personalized CAR-T treatment for lymphoma, Yescarta, which has a list price of $373,000. Part of the problem, the company indicated at the time, was the Centers for Medicare & Medicaid Services (CMS) and private insurers hadn’t yet worked out payment systems for the therapy.

Well, now CMS has determined how it’s going to pay for Yescarta. CMS will pay $395,380 for Yescarta when it’s used on an outpatient basis, with a published co-payment charge to patients of $79,076, a spokesperson for the agency confirmed in an email to FiercePharma. But patients' out-of-pocket burden won't be that high; it is capped at $1,000 under law, plus the Part B deductible if that has not yet been met.

Many patients will receive Yescarta in the hospital, however, so they can be monitored for dangerous side effects. The total list price of that process, estimated by some analysts to run as high as $1 million, will be bundled into CMS's payment for hospital stays. A spokeswoman for Gilead declined to estimate what proportion of patients would receive Yescarta on an outpatient vs. inpatient basis and said the decision would be "at the discretion of the treating physician and center."

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In an effort to ease the cost burden for hospitals, Gilead has filed for a new technology add-on payment (NTAP), which the agency sometimes provides for new treatments that are deemed to be breakthroughs. Novartis, which launched its $475,000 CAR-T Kymriah last year, has also requested the additional CMS reimbursement for inpatient treatments.

The CMS spokesperson said that the agency intends to issue a notice of its proposed rule on CAR-T add-on payments soon. It will then invite the public to comment on the proposal. 

Gilead previously told Fierce that it expects about 30% of Yescarta patients will be covered by Medicare, with the rest by private insurers. Still, private payers often use CMS as a model for how they should reimburse for newfangled treatments, so the agency’s decision on the NTAP request could prove vital to solidifying hospital reimbursement.

Gilead has plenty riding on the success of Yescarta. The company bought the product’s developer, Kite Pharma, last year for $11.9 billion, when it was under pressure from investors to boost its sagging top line. Gilead’s revenues dropped 14% to $26.1 billion last year amid declining demand for its hepatitis C drugs. Analysts had hoped Yescarta would get enough pickup to bring in $9.7 million in sales last year, but the reimbursement hurdles proved too high for Gilead to meet that forecast.

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Both Gilead and Novartis have received mixed reactions to the list prices of their CAR-T products. In late March, the cost watchdog Institute for Clinical and Economic Review, issued a report suggesting that both treatments are cost-effective (PDF). But the advocacy group Patients for Affordable Drugs has criticized both companies, saying most recently that Yescarta is “so wildly overpriced that we can’t afford it.” And in February, an analysis published by Health Affairs concluded that Novartis could cut the price of Kymriah by a third and still make a profit.

A spokesman for Novartis said in an email to FiercePharma that the company "is encouraged by early responses from payers and the value they see in Kymriah for patients." Novartis has an outcomes-based payment model and "does not charge participating treatment centers for the cost of Kymriah when a patient does not respond by the end of the first month after treatment," he added.

As for Yescarta, Gilead said late last year that the “vast majority” of private payers had committed to covering the product. A spokeswoman for the company said at the time that it continues to work "actively with Medicare to ensure we are doing all we can to support access."