UPDATED: Medicare ponies up to pay extra for Amgen's $178K Blincyto

Medicare has changed its mind on Amgen's ($AMGN) Blincyto--and for makers of other expensive cancer drugs, the news is good. The Centers for Medicare and Medicaid Services decided to shell out extra for the blood cancer drug, covering "add-on payments" made to hospitals for new treatments whose costs don't fit into standard lump-sum reimbursements.

It's an about-face from a previous ruling in which Medicare said it didn't consider clinical trial data sufficient to show that Blincyto significantly improved treatment of acute lymphoblastic leukemia (ALL), a rare type of blood cancer, the New York Times reports. Amgen's application was based on data in patients much younger than Medicare beneficiaries, officials said.

But after receiving new information from Amgen and other experts, Medicare has changed its mind, the Times reports. Officials now say Blincyto, which runs $178,000 per treatment course, "represents a substantial clinical improvement over existing treatment options."

The Medicare decision comes amid growing debate over the cost of cancer drugs, with payers promising new efforts to crack down on costs and experts casting about for ways to evaluate drug costs and effectiveness in various cancer types.

One such endeavor, from the Memorial Sloan Kettering Center for Health Policy and Outcomes, is an interactive calculator that tweaks prices using data on side effects, survival benefits, R&D spending and more. Users input the factors they consider most important, and the DrugAbacus delivers a price. Among the drugs flagged as overpriced were Blincyto, despite its status as a rare disease drug, which often run $250,000 and more.

Meanwhile, the American Society of Clinical Oncology recently rolled out a framework for evaluating cancer drugs in their various indications, based on clinical data. Right now, ASCO has unveiled only a few examples. Roche's ($RHHBY) colorectal cancer blockbuster Avastin, for instance, didn't do so well in lung cancer. Blincyto hasn't yet been assessed by the group.

Eventually, ASCO's framework "will form the basis of user-friendly, physician-guided, evidence-based tools that will provide transparent information about the clinical benefits, toxicities, and costs of treatments to help decide the most appropriate treatment option based on an individual's unique circumstances," an ASCO spokeswoman told FiercePharma.

Amid all this argument, Amgen has been racking up more data to support Blincyto, and a new indication in patients with another type of leukemia could be on its way. In a Phase II study unveiled last month, Blincyto helped a "clinically meaningful" number of patients with relapsed Philadelphia chromosome-positive ALL achieve complete remission. The drug is currently approved for Philadelphia-negative ALL, in which 32% of trial patients saw no evidence of disease for at least 6 months. The company is studying it in a variety of other blood cancers, including chronic lymphocytic leukemia.

And Amgen has stood by the drug's enormous cost. "We believe the price reflects the significant clinical, economic and humanistic value of the product to patients and the healthcare system, for an ultra-orphan population with a dramatic impact on a serious illness," spokeswoman Danielle Bertrand said when the price was announced. "The price also reflects the complexity of developing, manufacturing and reliably supplying innovative biologic medicines and local pricing, reimbursement and purchasing conditions and requirements."

- read the NYT piece

Special Reports: The new drug approvals of 2014 - Blincyto | The top 15 pharma companies by 2014 revenue - Amgen

Editor's note: This story has been updated with clarifications about the ASCO framework and a comment from the group.