Shares of Dendreon (DNDN) took a nasty hit on Wednesday after Medicare officials announced plans to review its new prostate cancer vaccine to see whether the federal program should pay to provide it for seniors. Medicare's policies are considered very influential with payers, and investors pushed Dendreon's high flying shares down 23 percent on fears that an obstacle at the agency could blunt Provenge's blockbuster sales potential.
Medicare plans to have an external group determine if the cancer vaccine is "reasonable and necessary" for the 45 million seniors in the program. And it could take almost a year before it delivers its decision. For its part, Dendreon said it welcomed the review, noting that local Medicare contractors who manage the program can still provide it to patients.
For now, though, Dendreon's biggest challenge has been to ramp up production for Provenge to begin meeting the enormous demand for the product, which costs $93,000 for a three-infusion course. Bloomberg has reported that Dendreon can only provide enough of the therapeutic vaccine to treat two percent of the patients who can qualify to benefit from it.