Cash for CART

CAR-T therapies are a type of innovative cancer therapy that tweaks a patient’s immune system cells to attack cancer.  The National Cancer Institute explains:

A type of treatment in which a patient’s T cells (a type of immune system cell) are changed in the laboratory so they will attack cancer cells. T cells are taken from a patient’s blood. Then the gene for a special receptor that binds to a certain protein on the patient’s cancer cells is added in the laboratory. The special receptor is called a chimeric antigen receptor (CAR). Large numbers of the CAR T cells are grown in the laboratory and given to the patient by infusion.

This treatment regime has good clinical results and the attack path is expanding to more diseases.  However it is (to use a technical term) wicked expensive.  Novartis charges a list price of $475,000 for their CAR-T regime.  This is one more example of something that we’ve looked at with Hep-C last March.   Hep-C cures generate two true statements with a significant tension.

1) They are really freaking expensive on both a per-patient basis and total spending basis
2) They are really effective and thus high value

JAMA Pediatrics just published a cost-effectiveness study on CAR-T for a particular type of childhood cancer .**  This paper raises the same points as the Hep-C cures:

In this decision-analytic modeling study using deidentified data, cost-effectiveness analysis generated an incremental cost-effectiveness ratio between $37 000 and $78 000 per quality-adjusted life-year gained over a patient lifetime horizon, with more than 40% of those initiating tisagenlecleucel treatment becoming long-term survivors.

Currently, the next best alternative to CAR-T treatment has a survival rate of 5% to 10%.  So there are huge survival gains.  Secondarily, those survival gains are cost effective gains.  Most health policy analysts in the United States assume that a quality adjusted life year price of under $100,00 is a reasonable deal.  Very few analysts will argue that a treatment with an upper bound price per QALY well below $100,000 is unreasonably priced.

A policy problem is that these are huge cash outlays for an insurer that has to assume that a patient won’t be covered by them for the rest of their life.  The insurer will pay for the treatment and won’t get any of the gains of the new, high cash outlay treatment.  If there is perfect risk adjustment with a technological innovation plus-up, this could remove some incentives for insurers to either not cover CAR-T facilities at in-network rates or to try to drown a patient and their family in paperwork and pre-authorization purgatory.

We need to figure out ways to pay for treatments that are both incredibly expensive and incredibly cost-effective within the insurance model that we are committed to.



** Whittington M et al, “Long-term Survival and Value of Chimeric Antigen Receptor T-Cell Therapy for Pediatric Patients With Relapsed or Refractory Leukemia”, JAMA Pediatrics, October 8, 2018


12 replies
  1. 1

    One thing that’s going to help with this long-term is that it’s relatively straightforward to develop new CAR-T treatments. Designing a new kind of CAR-T that goes after a new target is now at the level of being a dissertation project for a single graduate student; I know because I know a graduate student who’s doing that for her dissertation. There’s still a lot of work going from a new design to an approved drug, but you can expect a lot of “me too” CAR-T therapies to come out in the next decade and take a lot of the rent seeking cost out of the equation. Also, the unit cost is likely to come down as the procedure becomes more common. It’s still going to be expensive, but it’s going to cost a lot less than it does now in fairly short order.

  2. 2
    patrick II says:

    We need to figure out ways to pay for treatments that are both incredibly expensive and incredibly cost-effective within the insurance model that we are committed to.

    Cost in a new anything, but particularly with a high origination overhead, is high. Cost for most things come down over time if it is effective and widely used. So, my question is there something integral to the treatment that will keep prices very high? Or as it becomes more common and the overhead of investment comes down per treatment will the cost come down? And if it is the later of the two, how do you get past the very high cost stage quickly but effectively to bring the price down if, at the start it is so expensive?
    AIDS drugs are an example of something wicked expensive that came down in cost as they became more widely used. It would seem that CART-T treatment would be more expensive by nature because of its individualization, but if widely used and an efficient “manufacturing” process became practical costs could come down. But you have to get over the hump of the high cost at the beginning.

  3. 3
    patrick II says:

    Roger said the same thing more eloquently. But it seems being able to recover high origination costs of the first one through the door would encourage cheaper treatment faster. Perhaps access to financing paid back over long term?

  4. 4
    PAM Dirac says:

    @patrick II:

    So, my question is there something integral to the treatment that will keep prices very high?

    I don’t know how efficient the treatment “manufacture” can get. It depends on harvesting cells from the specific patient, modifying those cells and then growing them in conditions where they can be safely put back into the patient in a time critical process. That’s pretty finicky business in the best case. Things that grow tend to grow (or not grow) the way they will, not necessarily the way you want. There are also some regulatory challenges in finding the best way to provide safety checks to an individual process, especially one that is time critical. None of these challenges seem insurmountable, but there is bound to be mis-steps as things get worked out.

  5. 5
    Luthe says:

    Could these high-cost, long-term payoff treatments be subject to government coverage/reinsurance? Like, the government steps in and helps the insurer with the cost because even if the insurer might not get the long-term gain of a healthy patient, the state gets the long-term gain of a healthy citizen who will (theoretically) pay taxes and be a productive member of society.

  6. 6
    kindness says:

    Car-T-Cell tx has been approved for care for a few dx’s so far. So it isn’t just Clinical Trials any longer. There are a few clinical trials still going on to see how far it can go. Here in N. Cal, Kaiser sends people to Stanford for it. The people who qualified for the original Clincal Trials had to have failed Bone Marrow transplants or not responded to Chemotherapy at all. There are still a couple Clinical Trials running though. One is for Sickle Cell. Not sure how that one is going. I saw a bunch of referrals at the beginning of this year but it’s trickled off since then.

    Future peoples will be aghast at how we treat most cancer patients now. They’ll think it not far removed from laying leeches on patients. Chemo for the most part just kills cells. The idea is it kills the fast reproducing ones, hence the cancer. That kinda works but it kills lots of cells, not just cancer cells. In the future, we will know how to tweak our own immune response to address things like cancer. That is more or less what Yerscarta/Car-T-Cell tx does. It’s a good beginning.

  7. 7
    jl says:

    Need to distinguish between ‘real economic resource cost’ and ‘dollar expense’. The latter includes the real economic costs, but it also includes the real economic cost of investment in R&D to produce the drug, it may just be a transfer payment due to monopoly power granted by patent. The current patent system is a crude mechanism to pay for real R&D costs by granting monopoly power for a limited time. The patent system strikes a good balance when the innovator bears all the costs of innovation, and there is market risk (i.e., do people want to buy the good, is it all that great, really? Might not know until it hits the market). And once the patent monopoly ends, it has to really end, and should be real competition and market entry to produce the good.

    But with drugs, basic science and initial high risk exploratory R&D needed for applied R&D is largely funded by government, a large market demand is nearly certain (and drug companies have huge marketing arms (often disguised as ‘outcomes research’) to extract every penny from the patent monopoly, and US has a very lax patent system that effectively extends the life the patent monopoly long into the future. There have been one or two efforts to limit length of drug industry patent monopolies, but I think on balance, drug companies have defeated them. And FDA resource allocation is so screwed up, even after patent expires, it is easy for companies to play monopoly games with licensing.

    Dave makes a very good point about the problem of capturing benefits under current system, which results in inefficiency. That can be solved with ‘Obamacare done right’ (Switzerland), through various means. The Swiss regulatory framework is much stricter than in US, in terms of delivering drugs to the population at an affordable price, and Swiss drug industry accounts for 30% to 40% of its export value, and is growing faster than other sectors. So, it can be done without killing the drug industry. Or, you can go Medicare for all, and I think Australia is the best example of that can be adapted to the US.

  8. 8
    jl says:

    @Luthe: Good point. I think it related to the problem of short term insurance contracts, when risks and benefits are dependent over far longer time horizons. Market structure, government insurance programs, and appropriate regulatory structure have solved this problem for other lines of insurance (though sometimes have costs in people taking on to much risk that is subsidized by others).

    The US approach to the problem in health care is really crude and wrong headed. Obamacare was a start at moving in the right direction, but it cost some powerful interests rental and monopoly profits, so we see the attempts to kill it.

  9. 9
    catclub says:

    @Luthe: Of course, those ‘stepping in by the government’ programs are bandaids to protect private health insurance companies, that would be unnecessary with some form of national healthcare. The government healthcare system will reap the benefit of the expensive drug. yet another case where health insurance markets are not like most other free markets.

    The insurer will pay for the treatment and won’t get any of the gains of the new, high cash outlay treatment.

  10. 10
    StringOnAStick says:

    @Roger Moore: You added to my reservoir of hope today; thank you. My husband has CLL and while his genetic profile says it should be another 10-20 years before he needs treatment, a permanent solution rather than starting treatment that never ends would sure be a nice option.

  11. 11
    Bob Hertz says:

    I have been questioning the whole QALY concept for a number of years. Just in cold dollars, if we help a 65 year old person live an extra decade, they will draw more Social Security and Medicare, and they will either be retired or they will have a job that could have gone to a younger and likely needier person.

    That being the case in the real world, I do not understand where one gets the accounting benefit that society is better off by $45K to $75K a year.

    I am open to being persuaded. By the way I am 70 yrs old.

  12. 12
    Sam Dobermann says:

    One way to protect the insurer with the patient with hi cost treatment is to make the cost to the Pharmaceutical company be split over say 5 years. So for patient who gets the treatment in year 1, insurer pays 1/5 of cost; insurer in year 2 pays 1/5 etc.
    If patient stays w. insurer 1 for 5 years, the insurer pays it all (but over 5 years). If patient changes every year each insurer pays 1/5.

    The years can be worked out. Depends on each drug & cost. …

    Now off to bed.


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