WASHINGTON — The Obama administration has decided that Medicare will pay for one of the newest, most expensive cancer medications, which costs about $178,000 for a standard course of treatment.
Patients, doctors, hospital executives and insurers have expressed concern about the high cost of prescription drugs, especially new cancer medicines and treatments tailored to the genetic characteristics of individual patients. Medicare officials recognized the cost and value of one such product, the anticancer drug Blincyto, by agreeing to make additional payments for it starting Oct. 1. The drug is made by Amgen for patients with a particularly aggressive form of leukemia.
The decision suggests a new willingness by Medicare to help pay for promising therapies that are still being evaluated. It is also significant because Medicare officials reversed themselves on every major scientific issue involved. After receiving pleas from Amgen and a dossier of scientific evidence, the officials agreed that the drug was a substantial improvement over existing treatments for some patients.
At issue are special "add-on payments" that Medicare makes to hospitals for new technology whose costs are not yet reflected in the standard lump-sum amounts that hospitals receive for treating patients with a particular disease or disorder.
In a preliminary decision in April, the Obama administration said it did not intend to pay extra for Blincyto because clinical studies were "not sufficient to demonstrate" that it substantially improved the treatment of Medicare patients with acute lymphoblastic leukemia, a cancer of the blood and bone marrow. Medicare officials said Amgen's application was based on data from "a small sample group of patients whose age demographic is much younger than the age demographic of eligible Medicare beneficiaries."
But in a final rule to be published in the Federal Register on Aug. 17, the administration says it received "additional information and input" from Amgen and other experts and now agrees with their arguments.
Blincyto "is not substantially similar" to other drugs available to leukemia patients, the administration said, and it "represents a substantial clinical improvement over existing treatment options."
Jane E. Wirth, 59, of Reno, Nev., a former preschool teacher, said her cancer was in remission after 28 days of treatment with Blincyto, also known as blinatumomab.
"It was amazing to me that it could work so well so quickly," Wirth said in an interview. "I had just spent a month going through standard chemotherapy, which did not make the cancer go away. It seemed so hopeless."
The drug, engineered from two antibodies, harnesses the body's immune system to help fight cancer. It brings certain white blood cells close to malignant cells so the blood cells can destroy the cancer cells.
Dr. Anthony S. Stein, a researcher at City of Hope National Medical Center in Duarte, Calif., who has treated more than 50 patients in clinical trials of Blincyto, said, "Its mechanism of action is totally different from that of any other approved drug."
After the Food and Drug Administration approved Blincyto in December, Amgen said the price would be about $178,000 for the recommended two cycles of treatment. Medicare says it will now allow a "new technology add-on payment" to hospitals for a fraction of that amount, up to $27,000. Actual payments will vary based on the number and length of a patient's hospital stays.
A cycle of treatment begins with intravenous infusions in a hospital. Patients typically continue treatments outside the hospital — at doctor's offices, at infusion centers or at home, with the help of specially trained nurses — and Medicare will help pay for the drug at those sites, too.
The prices of new cancer drugs often exceed $100,000 a year.
Health policy experts said that President Barack Obama had personally expressed concern in recent weeks about high drug prices and their impact on consumers and federal programs. In February, he asked Congress to authorize the secretary of health and human services to negotiate with manufacturers to determine prices for high-cost medicines taken by Medicare beneficiaries.
A poll by the Kaiser Family Foundation released last month found that 94 percent of Democrats and 84 percent of Republicans support allowing the federal government to negotiate with drugmakers to get lower prices on medications for those beneficiaries.
Dr. Steven M. Safyer, president of Montefiore Medical Center in the Bronx, said the Obama administration should use its influence and leverage with drug companies to restrain costs. "There are a number of very important breakthroughs with pharmaceuticals that can make a difference between life and death, and the price is too high," he said.
More than 100 oncologists from cancer hospitals around the country recently issued a manifesto decrying the prices of new drugs.
"Effective new cancer therapies are being developed by pharmaceutical and biotechnology companies at a faster rate than ever before," they said in a commentary in the journal Mayo Clinic Proceedings. But, they added, "the current pricing system is unsustainable and not affordable for many patients."
Robert E. Zirkelbach, a spokesman for Pharmaceutical Research and Manufacturers of America, the lobby for drugmakers, said that new spending projections issued by the government in July undercut such claims.
"Even with new treatments and cures for hepatitis C, high cholesterol and cancer," Zirkelbach said, "spending on retail prescription medicines is projected to remain approximately 10 percent of U.S. health care spending through 2024, the same percentage as in 1960." In the last two decades, he added, the cancer death rate has fallen 22 percent, thanks in part to new medicines.