During college I had the opportunity to intern at Dendreon, a Seattle-based biotech company that’s successfully developed an immunotherapy called Provenge. Provenge, a novel cancer vaccine, is pretty interesting — it features a unique treatment process and somewhat mysterious mechanism of action. Dendreon was an amazing place to work and my fellow researchers were phenomenal, but during my internships I developed an appreciation for the difficulties inherent in early-stage biotech companies: Provenge was in Phase III trials way back when I started my first internship in 2003, and only this year achieved approval! In addition to FDA uncertainties, I also had some reservations about the fact we were working so hard to gain approval for a drug that extended life by ~4 months and was set to cost over $50K per course of treatment. Could our time be better spent trying to apply the core technology elsewhere, and if so, where? How do you weigh the price tag relative to the extended survival (and additionally, the far better quality of life relative to a treatment like chemotherapy)? These were complex problems that I couldn’t hope to understand at the time. But I found them fascinating and they’ve had a role in helping shape my career path from there (and even impacted my decision to start this site and share my thoughts).
Since Provenge’s approval earlier this year, Dendreon has been generating a fair amount of attention given the challenging cost-benefit analysis. This has led me to reexamine the company and my learnings from the time I spent there.
It’s probably worth taking a second to describe how Provenge works — it’s pretty cool and helps explain why the price is so high: Dendreon’s partnered labs draw a special blood sample from prostate cancer patients. The lab ships the blood draw to one of Dendreon’s processing centers, where technicians present the patient sample with a special set of “antigens” (molecules that elicit an immune response) which carry structural markers similar to those seen on the surface of prostate cancer cells. Dendritic cells, among the immune cells pulled in the blood draw, absorb these antigens and subsequently display some of these markers on their surface. Dendritic cells are interesting in that they’re believed to offer a “learned immunity”: one of the big problems with cancer is that the immune system won’t attack cancer cells because they appear to be part of the body (simply a mutated version that won’t stop replicating). Dendritic cells are thought to present these markers to the body’s T-Cells, and in doing so, ‘teach’ them new things to attack. Upon being reintroduced to the body, these immune cells are expected to go on the war path against anything with the targeted structural markers — i.e., prostrate cancer cells.
In a perfect world, this would all work wonderfully and cancer would be cured. But the world is not perfect, as evidenced by The T.O. Show. The FDA was concerned that although Provenge patients significantly outlived placebo controls their tumors showed little to no slowing of progression. They extended out the pivotal Phase III trial. Finally, after several years, hundreds of patients and millions of dollars in clinical trials continued to prove safety and relative efficacy despite a mysterious mechanism of action, FDA finally approved Provenge for use in treating prostrate cancer in April 2010.
The price of the treatment — now pegged by the company at $93K — set off some shockwaves given the mere 4.1 months of additional (median) survival time relative to placebo. Key to recognize here is that Provenge treats late-stage prostate cancer, where 4 months can be a significant extension when less than 2 years of remaining life is expected. Additionally, the cost-to-additional survival time ratio is on par with chemotherapy. Finally, the side effects are far lesser than chemo, and the quality of life of someone living with prostrate cancer after undergoing Provenge treatment appears to be far better those who go untreated. A very strong analysis of the cost-benefit complexity of Provenge is provided here by David Miller.
Congress passed President Obama’s ambitious healthcare reform bill a mere one month prior to the FDA’s approval of Provenge. It will be years until the bill is enacted but the Centers for Medicare and Medicaid Services (CMS), the division under the Executive branch which administers Medicare, is already getting into the act and questioning the pricey treatment. This kind of analysis — into deciding whether or not to cover a therapy for “on-label” treatment (i.e., to fight the disease it is approved to fight) — is extremely rare. Oncologists are upset about the challenge, stating that CMS to honored to pay for cancer treatments approved by FDA and that reimbursement must be decided outside the paradigm of cost.
Some takeaways:
FDA Trials
- The high price tag is partly to cover the long road to approval: The FDA was right to be concerned when researchers couldn’t understand how Provenge was extending life, but it becomes a problem when the only way to allay their fears is to ask a cash-strapped startup to enlist hundreds of more patients and pay millions of dollars for extended trials to confirm the results are significant. This is a difficult burden, and despite the agency’s black eye after the Vioxx, they should look to step up their efforts to approve drugs in a way that doesn’t crush innovative new treatments and the companies trying to take them to market. Dendreon’s management was masterful in managing the capital markets, controlling their burn rate, and ultimately coming up with the cash they needed to get to this point; few others likely would have survived. Given the patients the FDA was angling to protect here were critically ill with ~2 years of life left, it’s curious as to why such a burden was placed on Provenge.
- Can biotech startups ever follow this path again? Dendreon’s IPO was in 2000 — a time when going public as a pre-revenue, pre-clinical approval startup was not a problem. Now VCs and other private investors are expected to take these companies all the way to revenue (or possibly an acquisition by Big Pharma, but that’s typically only after a lot of clinical data has been generated). It was a long route for Dendreon — one that exceeds the lengths most private investors can hang onto their investments given the need to deliver returns. More examples of FDA nightmares like Dendreon’s significant path to approval will scare early-stage investors out of biotech (or scare LPs out of biotech-focused funds).
Reimbursement
- Why shouldn’t cost be factored into coverage of cancer treatments? What is the right cost-benefit analysis?
- Several countries have a system for rationing healthcare spending based on the improved quality and length of life a treatment can provide. While this may be arbitrary, it makes sense this is the only way to handle scarce budget. The most wealthy can pay out of pocket for supplemental insurance or for one-off treatments.
- A QALY-based reimbursement policy like this would do a lot to force healthcare investors to fund projects that truly have an impact on extending life and the quality of health. It’s hard to argue a QALY system could ever be truly agreeable, but it’d be a step in the right direction and the only way we can hope to curb healthcare costs.
- The Social Security Act — the laws referenced by the Oncologists above as the basis for CMS needing to cover Provenge — does compel CMS to cover Provenge. While the intention of the law is admirable, isn’t it only human nature to expect drug companies or physicians to charge more than they really should when you give them a blank check and bind yourself to sign off on it?
- Is the CMS inquiry a sign of things to come? CMS’ timing was interesting on their decision to challenge reimbursement of Provenge, coming in only a few months after sweeping healthcare reform. This could signal a new era in challenging the profit layer that drug and device companies add into the system, or it may just be a one-off that goes away after the healthcare debate continues to simmer down.
