Campath, Vidaza Payments Raised In OPPS Rule; Zevalin, Bexxar Unchanged

Ilex' Campath (alemtuzumab) will receive enhanced reimbursement in the hospital outpatient setting under the final 2005 OPPS rule.

The Centers for Medicare & Medicaid Services has decided to reimburse Campath as a "single-indication orphan drug" eligible for payment at a higher rate under the Outpatient Prospective Payment System.

As a result, Campath will be reimbursed at a rate of $541.45 per 10 mg injection (88% of AWP), an increase of more than $30 from the rate in the proposed rule (83% of AWP).

The decision also means that Campath will be reimbursed by Medicare at a higher rate in the hospital outpatient setting than in the physician's office.

CMS' projected reimbursement for Campath under the new Part B methodology (average sales price plus 6%) will be $511.50. The final payment rate will be determined when CMS analyzes ASPs from the third quarter.

CMS released both the OPPS and Part B physician payment final rules Nov. 2 (¹ , p. 23).

CMS said it made the decision to increase reimbursement for Campath in the OPPS rule in response to comments from the manufacturer. Ilex markets Campath in partnership with Schering AG/Berlex. Genzyme is in the process of acquiring Ilex and expects the deal to close before the start of 2005 (² (Also see "Genzyme Enters Oncology Market Via $1 Bil. Acquisition Of Ilex" - Pink Sheet, 1 Mar, 2004.), p. 12).

Campath is indicated "for the treatment of B-cell chronic lymphocytic leukemia in patients who have been treated with alkylating agents and who have failed fludarabine therapy."

Although many oncology drugs are approved for use in narrow patient populations, CMS applies a strict standard for payment at the "orphan" rate: the agency also reviews compendial off-label uses in determining whether the product can be considered a "single indication" product.

Campath was one of four products CMS reviewed before issuing the final rule to determine if they qualify for coverage as single-indication orphan drugs.

The agency decided that Pharmion's Vidaza (azacitidine), launched in July for myelodysplastic syndromes, also qualifies for orphan payments (³ (Also see "Pharmion Vidaza Clears FDA With Full Approval For Bone Marrow Disorder" - Pink Sheet, 24 May, 2004.), p. 28). It will be reimbursed at $3.81 per mg.

The two other products reviewed by CMS - Allergan's Botox (botulinum toxin, type A) and Sanofi-Aventis' Elitek (rasburicase) - do not qualify "because these drugs have an off-label use as indicated by the 2004 USPDI," CMS said.

CMS also agreed to lift a proposed cap on reimbursement of orphan products at 95% of AWP. Instead, the agency will pay for the drugs at either 88% of AWP or 106% of ASP, whichever is higher.

The agency said it received "several" comments arguing that it should not impose the 95% cap, including one focusing specifically on Ligand's Ontak (denileukin diftitox).

CMS added that, "while we are not implementing the 95% AWP cap on single-indication orphan drugs in CY 2005, we will monitor this decision and may apply the cap in future OPPS updates."

CMS declined to revisit the payment rates for two other oncologic products: Biogen Idec's Zevalin and Corixa/GSK's Bexxar .

The agency noted that it received several comments from cancer research centers, trade associations and the manufacturers arguing that the proposed payment of 83% of AWP for both brands is too low. Corixa also expressed concern about the "inequity" of paying for Bexxar at a rate that is $1,500 less than Zevalin because of the differences in AWP between the two brands.

CMS acknowledges that the available claims data suggest that Zevalin is purchased at prices below 83% of AWP, but the agency notes that the Medicare Modernization Act sets 83% as a floor for reimbursement.

As for Bexxar, CMS says it has no claims data to use to analyze the appropriate payment for the product, so it is applying the 83% payment rate there as well.