CMS quietly cancels plan for indication-based pricing on Novartis' Kymriah

When Novartis won its groundbreaking CAR-T approval last year, both the drugmaker and U.S. officials touted performance-based pricing as a way to help fund the $475,000 drug. Now, the Centers for Medicare & Medicaid Services has quietly backed away from a plan to implement a novel contract for Kymriah.

Officials cancelled the plan after it drew internal HHS scrutiny, Politico reports. The plan has also come under fire from Democrats in Congress after revelations that Novartis paid President Donald Trump's personal attorney Michael Cohen $1.2 million for healthcare consulting. A Novartis representative told the publication the Cohen arrangement had nothing to do with drug pricing.

In an email to FiercePharma, Novartis spokeswoman Julie Masow said the company's outcomes-based contract with treatment centers "remains in effect." It's a voluntary agreement that only allows for payment when patients respond by the end of the first month. CMS is not a party to that deal, however. CMS has canceled a "pilot demonstration program on CAR-T indication-based pricing," she said. 

"CMS was exploring a demonstration program, one aspect of which would potentially reimburse treatment centers for CAR-T therapies based on the indication and the indication-based price," Masow said via email. She said based on the government's recent drug pricing blueprint, CMS "continues to be interested in this approach." Even without the CMS program, treatment centers can still secure Kymriah reimbursement from Medicare or Medicaid.

A CMS spokesman said the agency "reviewed Novartis’s proposed demonstration and then decided to go in a different direction." 

CMS "considers proposals from a wide range of stakeholders during the policymaking process–each discussion helps deepen our understanding," he said. The agency is still committed to "moving to value-based payment for high-cost drugs and therapies," according to the spokesman. 

RELATED: At $475,000, is Novartis' Kymriah a bargain—or another example of skyrocketing prices? 

Last summer, Kymriah became the first CAR-T drug to win an FDA approval. The new class of drugs, which are made from a patient's own immune cells, can provide a cure for patients who previously had few or no other options. At the time, Novartis and CMS said they were working on novel contracting strategies to help the government pay for the treatment.

According to Politico, the CMS announcement, which came the same day as Novartis' approval, was a departure from agency protocol. Administration attorneys became worried about how much Novartis was influencing the proposal, according to the publication. CMS canceled the plan earlier this year, according to Politico.

Then, in May, Novartis came under scrutiny for paying Cohen $1.2 million for a consulting deal. In response, Novartis said it paid Cohen because it thought he could "advise the company as to how the Trump administration might approach certain US healthcare policy matters, including the Affordable Care Act." After its first meeting with Cohen, Novartis said it determined Cohen couldn't provide assistance. Novartis made monthly payments of $100,000 for one year—until February 2018—and let the deal run out rather than cancelling it for cause.

RELATED: Senator, launching probe into Novartis' deal with Cohen, calls contract a 'corporate shakedown'

The company's answers weren't enough for critics, including Sen. Ron Wyden, D-Ore., who reached out to CEO Vas Narasimhan seeking more details about the deal. Kymriah was among the topics Sen. Wyden probed. He wrote that the Senate Finance Committee must "ensure that pharmaceutical companies providing services to federal health programs are conducting business in a legal and transparent manner."

CMS' move to cancel the novel contracting effort also marks a setback to the Trump administration's work to lower drug costs. In May, the administration unveiled its plan to lower prices, including an "immediate action" to experiment with value-based purchasing in federal drug programs and to remove regulatory barriers to the contracting model. Aside from that effort, the administration's plan also pushes more competition, more negotiation, incentives to lower list prices and efforts to lower out-of-pocket costs.

Editor's note: This story was updated with a statement from CMS.