Amgen's Blincyto Is First Cancer Drug To Get Medicare Add-On Payments

CMS agrees to provide new technology add-on payments for Amgen’s cancer drug for acute lymphoblastic leukemia after the company documents Blincyto’s uniqueness and its advantages over existing treatments.

Amgen Inc.’s first-in-class bispecific T-cell engager (BiTE) antibody for acute lymphoblastic leukemia, Blincyto,became the first cancer drug to be granted Medicare new technology add-on payments with a recent decision by the Centers for Medicare & Medicaid Services.

In its final rule for the Medicare Part A hospital inpatient prospective payment system, released July 31, CMS concludes that Blincyto (blinatumomab) is eligible for new technology add-on payments (NTAPs) of up to $27,017 per treatment cycle for an estimated 170 Medicare patients during fiscal 2016, which the agency notes adds up to $4,593,034 for the year.

Few drugs have been approved for NTAPs in the past, and those that have been are not anti-cancer agents, though one addresses chemotherapy toxicity.

They include CSL Behring’s prothrombin complex concentrate Kcentra, an emergency treatment for patients on long-term warfarin therapy who experience major bleeding. Supplemental payments for Kcentra began in fiscal 2014. Optimer Pharmaceuticals Inc.’s oral antibiotic Dificid (fidaxomicin), now owned by Merck & Co. Inc., and GTB PLC’s methotrexate antidote Voraxaze (glucarpidase) were approved for NTAPs beginning in fiscal 2013 (Also see "Optimer’s Dificid Gets Medicare Payment “Add-On” For Hospital Patients" - Pink Sheet, 2 Aug, 2012.). Prior to that, Eli Lilly & Co.’s now withdrawn sepsis drug Xigris (drotrecogin alpha) received add-on payments beginning in fiscal 2003.

CMS’ decision on Blincyto is also noteworthy because it represents a rare reversal from the agency’s position in the proposed version of the rule, released in April. CMS was persuaded by Amgen and other stakeholders to approve the payments after tentatively concluding in the proposal that Blincyto is not eligible to receive them.

“We agree with commenters that the Blincyto technology represents a substantial clinical improvement over existing technologies” and “have determined that the Blincyto technology meets all of the criteria for approval of new technology add-on payments,” CMS says in the final rule. “Therefore, we are approving new technology add-on payments for the Blincyto technology for FY 2016.”

The add-on payments will supplement the reimbursement amounts Medicare will pay for Blincyto based on cancer treatments for roughly comparable patients. The NTAPs will begin Oct. 1, 2015, and may continue for up to three years, subject to annual renewal and revision by CMS.

The additional Medicare payments of up to $4.6m in fiscal 2016 are relatively modest because Blincyto is an orphan drug with a small patient population (and Medicare beneficiaries are expected to make up only 20% of that target group). Nevertheless, the payments could provide a notable boost to sales. U.S. revenues for the drug reached $15 million in the first quarter. Amgen did not break out sales for Blincyto in the second quarter.

Blincyto was approved Dec. 3 to treat Philadelphia-negative (Ph-) relapsed/refractory B-cell precursor acute lymphoblastic leukemia (ALL), an orphan indication. About 6,000 patients are diagnosed with ALL in the US annually, just under half of which (2,900) are adults.

Blincyto launched with a wholesale acquisition cost of $178,000 for two treatment cycles, the median duration of treatment for patients who responded in clinical trials in the drug’s approved indication (Also see "Amgen Raises The Oncology Drug Price Bar With Blincyto" - Pink Sheet, 17 Dec, 2014.).

CMS Payment Based On Shorter Treatment Regimen

In calculating the add-on payment, CMS projects substantially lower payments per cycle. Amgen had argued that treatments should be reimbursed by Medicare based on a 28-day regimen. However, CMS says in the final rule it believes the appropriate payment should be based on a shorter duration, noting that in clinical trials on the drug, the weighted average of cycle 1 and 2 treatment lengths is 17 days.

On a 17-day basis, and a cost of $3,178 per vial, treatment with Blincyto would incur an average cost per cycle of $54,035, CMS says. The add-on payment is set at up to half that amount, or $27,017, in accordance with Medicare regulations.

“Using clinical data provided by the applicant, we believe that setting the maximum new technology add-on payment amount for a case involving the Blincyto technology for FY 2016 based on a 17-day length of treatment cycle is representative of historical and current practice,” CMS explains. However, “for FY 2017, if new data on length of treatment are available, we would consider any such data in evaluating the maximum new technology add-on payments,” the agency adds.

Introduced in 2001, new technology add-on payments are meant to encourage hospitals to adopt innovative treatments for inpatients by offsetting the financial disincentives produced by the traditional reimbursement system.

Medicare payments to hospitals for inpatient treatments are based on diagnosis-related groups (DRG), which reflect the average bundled costs of the full array of treatments for particular patients (defined by factors such as diagnosis, age and comorbidities). NTAPs are available in some situations where the cost of an expensive new technology is not yet accounted for in the DRG rate. The added payments are generally provided for two to three years as a bridge until DRGs can be brought up-to-date.

For a technology to be eligible for an NTAP, it must meet three conditions: 1) It must be new, which CMS typically defines as two to three years following FDA approval or market introduction; 2) The existing DRG payment for the service involving the technology must be inadequate based on thresholds calculated annually by CMS; and 3) The technology must represent a substantial clinical improvement over existing treatments.

CMS Concerns Addressed By Amgen

In its proposed rule, CMS had suggested that Blincyto may be similar to other drugs currently available to treat the same patient population and medical conditions, so “may not meet the newness criterion” to qualify for new technology add-on payments.

In addition, the agency said the patient population targeted by Blincyto “may not be sufficiently distinguishable from the overall patient population that may be eligible for treatment using options that are currently available for these types of medical disorders.”

Amgen pushed back in comments supporting the drug’s uniqueness and documenting the lack of an equivalent treatment option for patients. After reviewing the information, CMS says, “we agree with the applicant that the Blincyto technology is not substantially similar to other technologies currently available that also are used in the treatment of patients diagnosed with the same of similar types of conditions.”

Furthermore, the agency says, “we believe that [because] the Blincyto technology uses a different mechanism of action than other similar technologies, eligible cases involving treatment using the Blincyto technology would be grouped to a different … DRG than those cases treated with similar technologies, and the Blincyto technology would be used in the treatment of a different patient population than those currently treated with existing technologies.”

In a statement on the decision, Amgen said “we are pleased with CMS's determination that the Blincyto technology meets all of the criteria for approval of new technology add-on payments for FY 2016. New technology add-on payments for Blincyto under the [inpatient prospective payment system] will help ensure that Medicare beneficiaries with Philadelphia chromosome-negative relapse or refractory B-cell precursor acute lymphoblastic leukemia have timely and appropriate access to this new technology.”