[Ip-health] Rep. Doggett Calls for Transparency in New Cancer Drug Pricing Agreement

Kim Treanor kim.treanor at keionline.org
Wed Sep 13 10:58:32 PDT 2017

Rep. Doggett Calls for Transparency in New Cancer Drug Pricing Agreement

September 13, 2017
Contact: Jaimie Woo
(202) 225-4865

Washington, D.C. – Today, U.S. Congressman Lloyd Doggett (D-TX), called on
the Centers for Medicare and Medicaid Services (CMS) to provide information
on their outcomes-based payment approach for Novartis’ new chimeric antigen
receptor T-cell (CAR-T) treatment, known as Kymriah. Rep. Doggett said:

"As Big Pharma continues to put price gouging before patient access,
companies will point more and more proudly at their pricing agreements with
public and private payers. But taxpayers deserve to know more about how
these agreements will work – whether they will actually save the government
money, defray these massive costs, and ensure that they can access
life-saving medications. This transparency is especially important for
therapies like CAR-T, which the public invested millions in developing. We
cannot bank on savings without knowing the terms."

You may find a copy of the letter sent to CMS below.

September 13, 2017

Seema Verma
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Hubert H. Humphrey Building, Room 445-G
200 Independence Avenue SW
Washington, DC 20201

Re: Outcomes-Based Payment Contract for Kymriah

Dear Administrator Verma,

We write in regard to Novartis’ new chimeric antigen receptor T-cell
(CAR-T) treatment, known as Kymriah. As members strongly concerned with
both rising prescription drug prices and the need to protect taxpayer
access to therapies developed with public funding, we are watching closely
the discussion around pricing for this treatment. Novartis announced that
it is collaborating with the Centers for Medicare & Medicaid Services (CMS)
on an outcomes-based payment approach, which may help defray the impact of
the $475,000 price of this medication. Reports indicate that Novartis and
CMS have reached an agreement to only reimburse for Kymriah if patients
respond by the end of the first month of treatment. However, we are seeking
additional information about this approach and the process by which it was

We recognize that Kymriah is a promising treatment that may benefit cancer
patients. However, an unaffordable drug is 100 percent ineffective.
Already, 42 percent of insured cancer patients found their anticancer drugs
represented a significant burden on their budget, according to a 2013
study. Earlier this year, a study found that more than one in four
nonelderly cancer patients were not following their prescribed drug
regimens because of high costs. This burden is only growing as cancer drug
prices continue to soar and is exponentially more devastating for uninsured

The issue of pricing is all the more critical because American taxpayers
spent more than an estimated $200 million to develop the basic and
translational science behind the CAR-T treatment. While Novartis purchased
the exclusive global rights and contributed some additional resources, the
American taxpayers’ investment in CAR-T must be acknowledged and reflected
in the price. Novartis also benefitted from the 50 percent orphan drug tax
credit for clinical trials, which helped to offset the cost of approval and
development. Dr. Carl June, who led the development of the CAR-T treatment,
said that producing engineered T-cells costs around $20,000 per patient,
and could get cheaper as the procedure is scaled up.

We urge CMS to ensure that patients can access Kymriah and federal and
state governments can afford to provide it to beneficiaries of Medicare,
Medicaid, and other public programs.

We also ask for your response to these questions on how you worked to
develop an outcomes-based payment methodology for Kymriah:

1.     How many Medicaid and Medicare beneficiaries do you expect will be
eligible to take Kymriah next year, in five years, and in 10 years? Has
Novartis provided CMS with any estimates of future patient population
size?  If so, please provide those estimates.

2.     How was the one-month response period established? Were oncologists
within or outside of CMS consulted on this decision? Will the federal
government pay the full price ($475,000) if a patient relapses following
that period?

3.     What is the agreed-upon definition of success for the one-month
outcome?  What criteria will be evaluated in determining success?  Who will
be responsible for assessing these criteria?  Did Novartis propose these

4.     How does CMS plan to track whether outcomes-based pricing
arrangements lower prices for taxpayers and patients? Will CMS track how
many people ended up not being charged and how many people ended up paying
for this therapy, by month or by quarter?

5.     What are the metrics of success that will be used to determine
whether this program will continue or be modified?

6.     How will the patient data be collected by CMS for purposes of
determining reimbursement?  What resources will CMS be required to devote
to determining patient outcomes?

7.     Will this outcomes-based payment arrangement be ready to implement
as soon as Kymriah reaches the market? If not, when does CMS anticipate its

8.     What mechanism will CMS use to implement this reimbursement
arrangement? Does CMS anticipate that this arrangement will be established
primarily through Medicaid or Medicare? If Medicaid, how will CMS enact
these outcomes-based payments across different states and managed care

9.     Will Novartis be paid at the outset and then refund the money if the
outcome is not determined successful, or will Novartis only be paid after
the drug’s success is proved?

10.  Does CMS understand Novartis' profit margin on Kymriah, which could be
significant if the production costs estimated by Dr. June are accurate? If
not, how did CMS determine a fair price for taxpayers?

11.  Did CMS ask Novartis how the company accounted for the fact that
American taxpayers invested $200 million into the basic science behind
CAR-T when pricing the drug?

12.  Which CMS political appointees were involved in working on this
arrangement? Were any CMS political appointees who worked on the
arrangement previously employed by the pharmaceutical industry? Were any
specifically employed by Novartis?

13.  Does Novartis plan to charge US taxpayers the same amount as the
company charges citizens of other countries?  Did CMS ask Novartis about
its pricing plans during discussions about the outcomes-based payment

14.  Is CMS willing to consider the use of royalty free rights on the
various CAR-T patents to enable more supply and lower prices?

We look forward to the opportunity to learn more about how CMS established
this outcomes-based payment agreement and how it will be enacted. We look
forward to your reply and your continued engagement as the conversation
around outcomes-based pricing moves forward.

Lloyd Doggett
Mark Pocan
Carol Shea-Porter
Jan Schakowsky
Elijah Cummings
Jamie Raskin
Peter A. DeFazio
Keith Ellison
Peter Welch


Kim Treanor
Knowledge Ecology International
kim.treanor at keionline.org
tel.: +1.202.332.2670

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