Much has been said and written about the circumstances surrounding the launch of Dendreon’s innovation in cancer treatment, Provenge, a novel immunotherapeutic treatment for end-stage prostate cancer. In the months following the initial launch, capacity limitations were said to have constricted the potential uptake of the treatment in the medical community, masking the balance between sales and projected sales. As time went on and capacity issues were resolved, a Q code was assigned in July 2011 to the treatment, which improved billing issues, and expectations remained high among investors for product uptake. Those hopes were challenged as Dendreon
announced a slowing of sales versus estimates for the later quarters of 2011. This article will explore some of the issues behind the launch of Provenge, and discuss, from a community oncology perspective, whether the Provenge story reflects a rapidly changing landscape that moved faster than was anticipated for a new drug launch or rather serves as a claxon warning for revision of expectations for new drugs related to oncology for the future.
Typical Launch Delays in Production and Approval.
Provenge, an autologous cell therapy, first won US Food and Drug Administration (FDA) approval in April 2010, and was officially launched the following month. CMS resolved national uncertainty over whether it would reimburse for Provenge at the end of March 2011, and after much national attention was drawn by the cost of the treatment ($93,000 for 3 infusions of the vaccine over 30-40 days), CMS announced that it would reimburse for Provenge when used for its approved indication. Private insurers continued to watch both the efficacy and the cost of the new treatment, and put into place a combination of prior authorization and post-claim medical reviews for physicians wishing to prescribe the treatment for their patients.1
Capacity issues constrained the initial drug launch for much of the first 12 months it was on the market. Full-scale production wasn’t achieved until May 2011, which limited the number of sites at which the drug could be launched. Initial focus of distribution of Provenge was limited mostly to about 50 academic hospitals and cancer centers, despite more than two-thirds of asymptomatic or minimally symptomatic metastatic, castration-resistant prostate cancer (CRPC) patients being treated in community practice settings.1 After the production issues were resolved, Dendreon Extended its sales force activities out into the community, targeting both oncology and urology practices. Those sites now number over 800, yet the investment community is still wondering if final 2012 sales will reach expectations.2
Atypical Questioning of Launch and Sales.
More questions have surrounded the launch of Provenge than any other oncology product in recent history. This launch is unique for a few reasons. It is a novel treatment, using the patient’s own cells to create the product. There is not likely to be a generic version of this treatment on the horizon. The patients do not have many other options—this is for a specific group of end-stage prostate cancer patients. Ultimately, survival is not an end product of this treatment, but it does seek to extend life for patients by a margin without complications of chemotherapy alternatives. Potential patients are found primarily in the community practices of both urologists and oncologists.
Questions from market analysts regarding the Provenge launch have centered around issues such as price, potential lack of patient demand, potential lack of education of physicians regarding access and administration, and particularly the probability and speed of reimbursement. None of these are new issues, and particularly not for oncology drugs. What happened during this product launch to cause such angst for Provenge?
Timing Is Everything: Provenge Entered the Market During Tumultuous Times
Recent Reimbursement Changes.
Since 2003, when the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was passed, drug reimbursements for oncology have steadily declined. Medicare now pays based upon a market calculation of cost that doesn’t match the direct and indirect expenses that physicians incur to buy drugs for treatment. This Average Sales Price (ASP)-based reimbursement rate was adopted by Medicare in 2005 and more slowly by private insurers. By 2010, a cancer center (private or hospital-based) could see from 50% to 75% or more of its drugs reimbursed on an ASP basis. After factoring in both direct and indirect costs of drug acquisition, stocking, and handling, many practices could hope, at best, for breakeven on most of the drugs they stock. However, at the same time, private payers were rapidly ramping up oncology drug management processes, such as prior authorizations and reviews of medical necessity.
Increasing Pressures for Costly Technology.
Medical providers, both hospitals and physician practices, have faced rapidly escalating demands for information technology, including electronic medical records that can track and report on certain measures. The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law on February 17, 2009. The ARRA was intended to kick-start healthcare investments in information technology, and in so doing, it created significant financial pressures on healthcare providers, which had already tight operating margins to fund technology initiatives.
Increased Patient Financial Responsibility.
Following the passage of the MMA in 2003, new Medicare Advantage Plans and private insurers started pushing
greater financial responsibility for care upon the patients. Rising costs of care, driven by combination drug regimens and higher drug prices, even affected Medicare patients with regular Medicare insurance. If those regular Medicare patients did not also have supplemental insurance to assist with the 20% for which they are responsible, treatments could become unmanageable for those patients.
Community Practices and Provenge
As operational margins tightened for medical practices, cash flow assumed great importance. Practices could often see delays in payment due to medical reviews and other payer processes of 30, 60, or even 90 days. In earlier years, margins on practice operations could more easily cover those cash flow delays, but by 2010, practices were feeling such financial pressure that timing of cash flow and cash outlays became very important, even if a drug were to be ultimately covered and funded. According to an Updated Practice Closings Report released by the Community Oncology Alliance in March 2011, more than 1000 cancer clinics nationwide have experienced closings or financial struggles to pay bills, have sent patients elsewhere for treatment, or have been acquired by other entities. Dr David Eagle, president of the Community Oncology Alliance, reports that these closings are due to both Medicare reimbursement cuts since 2004 and increasing numbers of private insurers following the Medicare pattern of reimbursement cuts.3
With increasing health plan focus on appropriate use and prior authorizations came a large stick: If a treatment did not get appropriate prior authorization, or was found under subsequent medical review not to be covered, it was the practice that tended to absorb the loss.
It would not be uncommon by 2010 and 2011 for a practice or physician to look at a newly approved drug, try it initially for 1 patient, and observe not only the financial approval and reimbursement patterns for that drug, but also compare the results of the drug for their own patient against the published trial results. New drugs were being exposed to a much higher level of scrutiny in the real world medical community than ever before. No longer was simple approval by the FDA a blanket pass into uptake in the medical community.
Current Physician Community Perspectives on Provenge
For this article, local practices in Connecticut were interviewed on their current experiences and concerns regarding Provenge. While concerns about whether or not the treatment will be covered seem to have lessened, cash flow for payment, financial impact on the patient for copays and co-insurance (even for Medicare patients), and performance efficacy of the treatment in light of the cost of treatment continue to be significant themes.
Indications and Appropriateness.
One oncology physician noted that they continue to see occasional problems with Provenge, primarily because of detailed oversight and insurance expectation that treatment will follow FDA approval very closely. Another practice administrator indicated that although they are one of the busiest practices in the area, they have not yet put any patients on Provenge, stating however that they believe one patient will soon meet the criteria. Conversely, it was noted that so much goes into pre-authorization before the patient is put into the process that the practice feels well assured of payment before the process begins.
It appears from the responding practices that cash flow is still a concern, but the depth of the concern may vary depending on the practice and the respondent. One practice administrator noted that drug distributor delays of drug payment due date of up to 90 days is very helpful. However, she went on to note that if a practice has more than 1 patient on Provenge, it needs to plan carefully for making that payment when the 90 days is up. If the practice has more than 1 patient on at a time, a due bill of over $100,000 could be significant for any practice. That administrator also wondered whether the payment terms for product could be restricted now that the Q code has been issued. Another physician noted that patient acceptance has been generally poor (from a financial rather than clinical standpoint). Another practice administrator noted that with practices across the country experiencing significant cash flow problems related to the Medicare implementation of new software (5010), any high dollar amount item for any reason is being closely scrutinized.
Concern was still expressed over the financial impact on the patient. Dendreon was complimented for the resources that it does make available to patients, but there were concerns over not only the impact on the patients who do not qualify for needed assistance, but also the burden on the patients and practice of the process for obtaining assistance. Even if assistance is found, the burden on human capital in the administrative and education process is significant, and may be untenable for a private practice or for the patient relative to the medical opportunity afforded by the treatment. A 2010 survey by the Association of Oncology Social Work reported that as many as 68% of cancer patients and caregivers reported that the patient is experiencing financial hardship due to medical bills. The survey also reported that about 49% had stopped treatments, skipped medications, or missed doctor’s appointments due to the financial burden, and many more never start treatment at all because of the catastrophic costs of cancer care.4
Value, like anything, is found in the eye of the beholder. Both patients and physicians still express concern over the balance between the efficacy and benefit of the treatment versus the cost of obtaining that treatment. Even when patients have insurance that pays the bulk of the expense, cost is still considered as part of their evaluation process. The physicians who were interviewed, while not a significant sample, were interesting in that they all expressed either their own or their patients’ concern with the clinical experience in comparison with the literature or when compared with alternatives.
Conclusion: Both a Symbol and Victim of the Times
As will be done with many more oncology treatments to come, Dendreon pushed to develop an individualized treatment for a patient population with few other alternatives. Under other circumstances, this innovation would have been lauded more than questioned. But, because of the maelstrom of financial pressures hitting practices, patients, and health plans alike, what was probably planned to be a conventional launch was beset with questions about value, pricing, efficacy, and slow uptake in its primary market, the community practice.
The new reality for any drug launch is now probably a litany of what Dendreon experienced:
• Increasing scrutiny of efficacy against alternatives (; but probably with an expectation that such efficacy will be measured in half, threequarter, or full years rather than a few months).
• FDA approval may mean acceptance on Medicare formularies, but health plans may accept FDA approval or conduct their own reviews for what they consider to be medical appropriateness. Physicians may increasingly slowly adopt a product under FDA approval within their own practice, but observe treated patients for actual clinical experience in comparison with the published literature— as much for their own clinical satisfaction as for their ability to explain medical necessity to a health plan when prescribing the product.
• Patients may consider treatment options, even if FDA approved, and decide to proceed or not based upon their own financial benefit packageand personal situation. Dollars paid are being weighed heavily as debt incurred for a family that will linger once the patient is gone.
• Cost of product acquisition and timing of payment of that debt related to payment for treatment using that product are increasingly important to physician practices. Cash flow will be measured, and the higher-priced products may be subject to volume limitations on numbers of patients being treated at the same time to reduce exposure, and in the process, restrict market volume.
These concerns will remain whether treatment is delivered in a physician office or a hospital setting. Cash flow for oncology care and operational concerns have now become a permanent fixture in the treatment of cancer for the providers, the health plans, and the patients. Value is a function of all these pressures on the involved entities, as well as on the pharmaceutical company that develops the innovative treatment. For good or bad, that value equation has changed forever, and will actually continue to evolve as we learn more about the actual performance of all the alternatives for oncology treatment in the clinical setting. This may be a surprise message for financial market investors, but the physicians, patients, and health plans have been living with this reality for several years. Good products with strong efficacy will launch and do well, even if it is more slowly than expected based upon old market rules.
Competition Rising QuicklyApproval for Zytiga on the Horizon?
In the fall of 2011, while Provenge was still making news as a front-runner treatment for prostate cancer, another treatment, this time taken as a twice daily oral pill, was being approved for a slightly different indication.1 Zytiga, made by Johnson & Johnson, was first approved in 2011 for men with prostate cancer who had previously failed chemotherapy. However, a recent clinical trial was halted early by independent data monitors due to findings which, if approved, would move Zytiga into direct competition with Provenge for men with less advanced prostate cancer.2
The nature of cancer research and treatment is that the unexpected is likely to prevail. With hundreds of clinical studies under development, new information is produced each year in peer-reviewed journals and clinical meetings, and submitted for approval. Placement of a new drug on the market requires a delicate balance of pricing strategy, proven efficacy under parameters whose importance sometimes varies with the beholder, and some degree of luck in terms of uptake on the part of patients, physicians, and health plans. If drugs are then held up in scrutiny to alternatives and found to have comparative issues on any of a number of fronts, it could be a challenge to its market success and position, no matter how new the drug itself is. There are differences in delivery, perceived convenience, and medical efficacy between Zytiga and Provenge that are now very much a part of the clinical discussion and ultimately will play out in the market.
1. Pierson R. Zytiga creeps up on Provenge prostate-cancer drug. Reuters.com website. http://www.reuters.com/article/2011/10/07/us-dendreon-zytigaidUSTRE7965JF20111007. Published October 27, 2011. Accessed April 27, 2012.
.Published March 8, 2012. Accessed April 27, 2012.
2. Feuerstein A. J&J prostate cancer drug scores big win, hurts Dendreon, helps Medivation. Thestreet.com website. http://www.thestreet.com/_yahoo/story/11448569/1/jj-prostate-cancer-drugscores-big-win-hurts-dendreon-helps-medivation.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NAAuthor Affiliation: From DGH Consulting, South Windsor, CT.
Funding Source: None.
Author Disclosure: The author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
Authorship Information: Concept and design; acquisition of data; analysis and interpretation of data; drafting of the manuscript; and critical revision of the manuscript for important intellectual content.1. Shaeffer S. Dendreon’s curve ball. BioCentury website. http://www.biocentury.com/biotechpharma-news/coverstory/2011-08-08/whydendreon-stumbled-on-its-launchof-provenge-forprostate-cancer-a1. Published August 8, 2011.
2. Cohen T. Dendreon: where do things stand on Provenge reimbursement? Seekingalpha.com website. http://seekingalpha.com/article/315329-dendreon-where-do-things-standon-provenge-reimbursement. Published December 21, 2011. Accessed February 29, 2012.
3. Pace of community cancer clinics closures increasing: an escalating trend [press release]. Washington, DC: Community Oncology Alliance, redOrbit.com, PRNewswire; March 31, 2011. http://www.redorbit.com/news/health/2022226/pace_of_community_cancer_clinic_closures_increasing_an_escalating_trend/. Accessed February 29, 2012.
4. Mellace J. The financial burden of cancer care. Social Work Today website. http://www.socialworktoday.com/archive/032210p14.shtml. Published March/April 2010. Accessed February 28, 2012.