Medicare’s CAR-T Payment Change Helps the Entire Regenerative Medicine Field ... A Little Bit

BY SARAH KARLIN-SMITH

Executive Summary

Alliance for Regenerative Medicine says CMS’ plan to create new reimbursement category for CAR-T helps validate entire field, but it may not make it any easier for other products to navigate the payment landscape. ARM is prioritizing value-based payment legislation in its Congressional lobbying.

The Centers for Medicare and Medicaid Services decision to establish a new reimbursement category for chimeric antigen receptor T-Cell (CAR-T) therapies is an important milestone for the cell and gene therapy field, but won’t necessarily make it any easier for other regenerative medicines to get similar payment arrangements, Robert Falb, the director of US policy and advocacy for the Alliance for Regenerative Medicine told the Pink Sheet.

Medicare is proposing to establish a new Medicare diagnosis severity related group (MS-DRG) category specifically for CAR-T treatment in 2021, which would result in a higher average payment rate than is currently used for CAR-T (Also see “Medicare CAR-T Payment Policy Walks Line Between Innovation and Cost Concerns” - Pink Sheet, 13 May, 2020.).

That payment arrangement would start about four years after the first CAR-T was first approved in the US.

The proposal “sends a message about the validity and promise of these sorts of therapies,” Falb said in an interview. “I think that’s the underlying message out there because now you have a big program like Medicare recognizing these therapies with a standalone DRG and recognizing the importance they play in patients’ lives and the need to try and establish appropriate reimbursement so patients can have greater access to them.”

Falb said ARM is still evaluating the details of the proposed rule and soliciting feedback from its members.

Despite the positive milestone, he added that this does not mean other cell and gene therapies will now have an easier or faster path to a unique DRG.

“If you’ve seen one cell or gene therapy, you’ve seen one cell or gene therapy,” Falb said. “It all comes down to the data,” and CMS had made it clear that understanding the reimbursement data for a particular therapy is key to their decisions making.

“It helps in the bigger picture, but that doesn’t mean its now a slam dunk for future cell and gene therapies,” Falb said.

Value-Based Payments Are ARM’s Focus With Congress

Falb spoke with the Pink Sheet ahead of a “virtual fly-in” Wednesday on 20 May, where its members will speak with lawmakers in Congress about the Alliance’s legislative priorities.

The group’s current focus is advancing legislation that will spur the adoption of value-based payment agreements for cell and gene therapies. ARM is supportive of the GENE Therapy Payment Act, H.R. 5882, a bipartisan House bill that would allow for value-based contracting for regenerative medicines targeting rare diseases in the Medicaid program, and a companion measure that is included in the leading Senate drug pricing legislation, S. 2543, the Prescription Drug Pricing Reduction Act.

However, ARM wants Congress to craft legislation that would lead to adoption of these payment arrangements for all cell and gene therapies in all federal government health programs including Medicare.

The bills currently under debate deal with one of two primary obstacles to value-based deals that have been discussed for some time and are a concern of ARM’s – the impact of a value-based deal on Medicaid’s “best price” requirement. Drug manufacturers are required to offer Medicaid the lowest price offered on the US market and there has been concern that if a rebate given when a drug doesn’t work under a value-based deal were to become the new “best price” it could make these types of payment arrangements unsustainable, Flab said.

The legislation does not deal with ARM’s other concern, that value-based payments might violate the Anti-Kickback Statue if these payment arrangements are perceived as creating incentives for the adoption of one product over another or for increased use of a product. However, ARM said this concern could likely be better addressed by regulation, not legislation.

While Falb acknowledged that Medicaid has already permitted states to implement valuebased payment deals, he said national legislation will create “more predictability,” and more clearly outline “the rules of the road.” Plus, CMS under President Donald Trump has expressed some

interest, but also a good deal of skepticism on value-based contracts and has taken no action to start up value-based arrangements in Medicare. (Also see “New Payment Models For Curative Treatments Have CMS’ Attention, Verma Says” - Pink Sheet, 23 May, 2019.)

Similarly, Falb acknowledged that private sector health plans already make use of value-based agreements, but he hopes broader adoption by federal programs thanks to legislation will increase their use in the commercial sector.

“In the US, CMS typically sets the standard for reimbursement through its decisions regarding coverage and payment, private payers often follow their lead,” he said.

COVID-19 Creates More Hurdles To Congressional Progress

A major near-term challenge to value-based payment reform is that COVID-19 has lowered the chances any drug pricing legislation gets done in 2020, Falb said.

Even communicating with Congress members and their staff is harder now, he said. Things “we used to take for granted” are much more difficult because of the amount of time legislators must dedicate to COVID, Falb said. “It is a whole different world.” The organization hasn’t yet thought about whether it might be possible to tie their valuebased payment reform to one of Congress’s COVID-19 legislative packages given the possibility that there may be cell or gene-based treatments to address the virus, Falb said.

Meanwhile, ARM is undeterred by some of the non-legislative barriers that have been cited for implementing value-based payment arrangements – in particular that payers and drug companies often find it difficult to reach agreement on how to determine whether a drug did or did not help a patient.

Falb said this isn’t an area ARM is focusing on because it involves very specific decisions that will vary by each company, therapy and disease state.

“Because this is new, there is going to be lots of challenges,” Falb said, but he didn’t see those challenges as barriers to the overall promise of the reimbursement approach. Another problem he said that needs to be solved is how to deal with contracts that require a patient to be monitored over a period of years, if the patient switches to a new payer or plan during that time.