As if Dendreon doesn't have enough problems. A new survey shows that 68 percent of payers believe utilization for its controversial Provenge prostate cancer vaccine will remain flat over the next to six to nine months. And 69 percent say the true cost is anywhere from $101,000 to $120,000, when factoring in lab tests, administrative costs and lost productivity, as opposed to the $93,000 price tag.
Meanwhile, 79 percent of payers report low uptake among physicians. Of that group, 60 percent also believe that many physicians are not yet prescribing Provenge. Why? They listed limited clinical value; high cost; a lack of physician confidence in the vaccine; a lack of qualifying patients and an insufficient number of cancer centers willing to administer Provenge.
What's more, the insurers believe docs face substantial barriers before using Provenge - 31 percent cite strict policies toward utilization, 27 percent point to high patient cost sharing and 14 percent note a complex treatment regimen, according to the survey of 20 medical and pharmacy directors from health plans and pharmacy benefit managers who are responsible for formulary or coverage decisions.
"Physician demand just isn't there right now and, in the payers' opinion, they don't see it changing for a few months," says Rhonda Greenapple, who heads Reimbursement Intelligence, the market research firm that earlier this month conducted the survey. "What payers are telling me, in their view, is that physicians are reluctant to use Provenge because of the utilization policies, high cost share and complicated regimen. I don't think the problem is the payer, but physician reluctance."
The findings underscore the difficulties confronting Dendreon, which earlier this month shocked investors by lowering its sales forecast for the year. The vaccine maker, which is also laying off workers, blamed skittishness among physicians who are concerned about reimbursement (read here). However, some doctors say the concerns are mostly with Medicaid (see this).
The episode subsequently renewed debate about the extent to which Dendreon execs and its board are capable of managing the fast-growth scenario they are trying to navigate. Several shareholders with varying holdings privately wrote the vaccine maker to do a better job of communicating to investors, including one who renewed his public calls for the board to diversify (look here).
Nonetheless, most third-party payers are giving a green light to Provenge - 84 percent of those surveyed say they cover the vaccine, albeit with varying restrictions to ensure on-label use. And 91 to 100 percent of physician requests are approved by 26 percent of the plans surveyed. Another view - 58 percent of payers are approving 80 percent of physician requests to administer Provenge.
Meanwhile, one biotech watcher says the survey suggests payers are demanding criteria that goes beyond what Medicare requires for coverage, which he claims is problematic. "The NCD (National Coverage Determination) doesn't have some of the requirements" noted in the survey, says David Miller of Biotech Stock Research, who holds an option position in Dendreon stock. He also expressed surprised that payers reported they are reimbursed separately for apheresis when the process is covered by Dendreon. "These people are supposed to be experts on reimbursement," he says.
In response, Greenapple notes that NCD coverage requirements may not be as specific as what payers require. For instance, she says that plans can add criteria for coverage in Medicare Advantage, which means commercial plans with Medicare Advantage can restrict beyond the NCD criteria. As for apheresis, she notes the wording and timing of the question may have been confusing, since the Medicare coding that mentions apheresis was issued just before the survey was conducted.
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