Medicare Cuts Payout on 2 Cancer Drugs
By Alex Berenson, New York Times
December 7, 2007
New Medicare rules cutting reimbursement for promising cancer drugs are threatening cancer patients’ access to treatment that may be most helpful. The drugs, called Bexxar and Zevalin, are used to treat non-Hodgkins lymphoma and may be the only effective therapy for patients. While Bexxar costs $30,000 for one treatment, Medicare will reimburse only $16,000 of the cost. Medicare reimbursements are based on what hospitals have reportedly paid this year, but for other drugs, Medicare reimburses based on a scale informed by the average prices of drugs reported by drug making companies. Because of such high financial losses to hospitals, these medicines may not be as readily offered to patients who really need it.
New Medicare rules for a small but promising class of cancer drugs may cause thousands of lymphoma patients to lose access to the treatment, which in some cases is the only therapy available to them.
The drugs’ makers and patient advocacy groups say the changes will sharply cut reimbursement for the medicines next year, and they predict that many hospitals will stop offering the treatments. The Medicare changes come just as new data provides additional evidence that the medicines, called Bexxar and Zevalin, are effective.
The drugs are given to treat non-Hodgkins lymphoma, the fifth-most-common cancer, and are usually prescribed for patients who have not responded to other therapies and who have few remaining treatment options. Clinical trial data show that they put the disease into remission for years in many of those patients.
Under the new rules, after Jan. 1, Medicare will reimburse hospitals about $16,000 for each treatment with the drugs, which a patient needs to receive only once. GlaxoSmithKline, which markets Bexxar, says it is priced at almost $30,000 a treatment, and Biogen Idec, which sells Zevalin, says it costs nearly as much. While high, such prices are not unusual for new cancer therapies, which can cost $50,000 or more for a year of treatment.
Senior Medicare officials say they are not trying to prevent hospitals from giving Bexxar and Zevalin. They say that $16,000 is a fair price and is based on the actual prices hospitals have paid for the medicines this year.
Zevalin was introduced in 2002, and Bexxar in 2003. Until now, Medicare has reimbursed each hospital claim individually, without setting a single nationwide price for the drug. The practice has resulted in wildly varying reimbursement, Medicare says.
But the companies say Medicare’s data must be inaccurate and that no hospital will offer the drugs to Medicare patients if it is losing $10,000 or more on each treatment.
Hospitals typically do not disclose their reimbursement rates, or whether they make money on any given treatment. The American Hospital Association declined to comment on the matter.
Under federal rules, hospitals that do not offer a drug to Medicare patients are barred from offering it to other patients, even if their insurers fully cover the cost of treatment. Because Bexxar and Zevalin contain radioactive material, the drugs must be administered by specially licensed technicians and doctors. They are usually given in hospitals.
Sarah Alspach, a spokeswoman for Glaxo, said the company had voluntarily submitted its pricing data to Medicare to prove that the hospital claims data was wrong. “Our feeling is there is a flaw in the methodology,” Ms. Alspach said.
Doctors, lymphoma patients and advocacy groups say they do not understand Medicare’s decision. About 60,000 people are diagnosed with non-Hodgkins lymphoma every year, and 20,000 people die of the disease.
“The explanation that they’re giving is really flawed,” said Dr. Mark Kaminski, the co-director of the leukemia and lymphoma transplant program at the University of Michigan. Dr. Kaminski helped discover Bexxar two decades ago and receives a royalty for it.
Bexxar and Zevalin are part of a new class of drugs called radioimmunotherapies. They combine a radioactive particle with a biologically engineered molecule that attaches to cancerous white blood cells.
In clinical trials, they have proven as good as or better than standard treatments for non-Hodgkins lymphoma, a cancer of the immune system. In a trial of 414 patients scheduled to be discussed next Monday at a hematology conference, the combination of Zevalin and chemotherapy put lymphoma into remission for three years on average, compared with one year for chemotherapy alone.
Marion Swan, a spokeswoman for the Lymphoma Research Foundation, says the drugs are the only option for some patients. “Our No. 1 concern is that patients have access to all viable treatment options,” she said, “and it looks like this might be denying access.”
The drugs can require private cancer doctors to transfer their patients to hospitals, and the private doctors may view the hospitals as competitors. As a result, fewer than 10 percent of patients who are candidates for the drugs get them.
Advocates for the drugs had hoped that new clinical trial evidence, like the Zevalin data that will be presented next week, would persuade more doctors to prescribe them. Now they worry that Medicare’s decision will end most use of the drugs and chill the development of other radioimmunotherapies.
“If you can’t get two products that basically hit home runs into the marketplace, there’s very little incentive for further development,” Dr. Kaminski said.
Herb B. Kuhn, deputy administrator of the Centers for Medicare and Medicaid Services, the agency overseeing Medicare, said that the agency recognized the value of the drugs. But, he said, Medicare does not want to overpay for the medicines and believes that hospital data is the most accurate way to set reimbursement.
But most other drugs administered via injection in doctors’ offices or hospital outpatient clinics — as Bexxar and Zevalin are — are not reimbursed on the basis of what hospitals say they have paid. Instead, companies report the average price of their drugs to Medicare. Medicare then reimburses doctors and hospitals at that price, plus a 6 percent fee to cover handling costs.
GlaxoSmithKline said it had asked Medicare to switch to that system for Bexxar. So far, Medicare has refused.
Lymphoma patients, meanwhile, are anxiously watching the fight between Medicare and the companies.
Lora Beckwith, 66, first learned she had the disease in 2004. So far, her illness has progressed slowly, but last month, she was told that she would probably need treatment by February.
Because Ms. Beckwith, who lives in Ann Arbor, Mich., has Parkinson’s disease, she cannot receive standard chemotherapy for the disease, making Bexxar and Zevalin among her only alternatives. Now she fears she may not be able to get them.
“I’m not usually a vengeful or resentful person,” she said. “But I am feeling a bit resentful about having this taken away — if I can’t have access to a drug that would extend my life.”
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