CAR-T cancer therapies look to be super-promising. They also look to be super expensive. They also are tough to administer with significant credentialling and training needed to safely use the therapies. Yescarta is a CAR-T therapy for non-Hodgkins Lymphona which promises intriguing results and has a significant caveat:
In the single-arm ZUMA-1 study, Yescarta demonstrated an objective response rate (ORR) of 82 percent and a CR rate of 54 percent. After 8.7 months of follow-up, 39 percent of the patients who initially experienced a CR maintained that status. The CAR T-cell therapy was approved with a boxed warning regarding cytokine release syndrome (CRS), a potential serious or severe side effect caused by the immune system attacking healthy organs, which occurred in 13 percent of patients in the trial….
All patients had disease that was resistant to chemotherapy and had received a median of three prior lines of therapy, with 54 percent resistant to two consecutive lines of therapy. Overall, 79 percent of patients had not received prior transplant of their own stem cells and had disease that was resistant to their most recently received line of chemotherapy. The remainder had disease that had relapsed within 12 months of receiving such stem cell therapy….
To address the risk of CRS and neurologic toxicities, the FDA approved Yescarta with a risk evaluation and mitigation strategy, which includes elements to assure safe use. Additionally, certification and training will be required before hospitals will be cleared to administer the T cell therapy. The required training will focus on identifying and managing CRS and neurologic toxicity.
These are very sick patients. Not every hospital that currently treats these patients will go through the training and certification process because there might not be enough patients to make it worthwhile.
Bloomberg has some recent details on the few hospitals that are certified to use this therapy:
Five people have received the treatment, called Yescarta, at the 15 cancer hospitals authorized to administer it in the U.S., the hospitals told Bloomberg. Waiting lists for the $373,000 treatment have grown to at least 200 people, shrinking only as some very sick patients have died…..
The total cost per Yescarta patient, when including hospital and doctors fees, will be well in excess of $575,000 and could reach $1 million, doctors said. Since hospitals have to buy the treatment at full cost from Gilead, most places are waiting to have insurer guarantees of reimbursement before moving ahead.
It is plausible that in regions where there are multiple centers that currently treat non-Hodgkins Lymphomas there may be only one or two places that can do the CAR-T treatment. This invites high pricing as competition between providers will be low if the only options are the local academic medical center or the academic medical center half a day drive away.
More interestingly (to me at least), is the invitation to play more network games for insurance companies attempting to screen and select their own risk. Mark Shephard has a paper that I keep on going back to as he describes how networks are used as screening and selection mechanisms. Networks are a critical aspect of insurer buyer’s choice:
I study the role of adverse selection when health insurers compete on an increasingly important benefit: coverage of the most prestigious (and expensive) “star” hospitals. Using data from Massachusetts’ pioneer insurance exchange, I show evidence of substantial adverse selection through a channel theoretically distinct from standard selection on medical risk. Plans that cover star hospitals attract consumers with high costs because when sick, they tend to use the expensive star providers. This selection persists even with risk adjustment, which does not offset higher costs driven by hospital choices rather than medical risk. I show evidence of adverse selection through this mechanism using consumer choices across plans that differ in star hospital coverage and using switching choices after a plan drops the star hospitals from network. I then estimate a structural model of insurer competition to study the welfare and policy implications of selection. I find that adverse selection creates a strong incentive not to cover the star hospitals.
If there are multiple insurers in a region that offer somewhat similar products where the only difference is whether or not a CAR-T hospital is in-network, people who are already sick and know that they may be on the pathway to needing a CAR-T treatment will choose the insurer that has the CAR-T hospital in network. Risk adjustment can help a bit but it is a lagging adjustment that usually pays an average cost of care and may not adjust for the specific hospital’s potentially higher baseline fee structure. There is a strong incentive for insurers selling individual level policies (Exchange, Medicare Advantage etc) to avoid hospitals with CAR-T certification.