By MATTHEW PERRONE
The Associated PressThursday, November 11, 2010; 4:33 PM
WASHINGTON -- Shares of biotech drugmaker Dendreon jumped Thursday after Medicare officials issued a mostly positive assessment of the company's prostate cancer therapy, setting the stage for the government to pay for thousands of patients to receive the drug.
Dendreon's drug Provenge is a first-of-a-kind therapy that uses the body's immune system to fight prostate cancer, offering an alternative to chemotherapy drugs used for decades. Despite that medical breakthrough, analysts and investors have voiced concern that the government's Medicare plan might decline to pay for the drug, which costs roughly $93,000 per patient and extends life just four months, on average.
But in a review posted online Wednesday, a government contractor hired to review Provenge appeared to endorse its use. The assessment graded Provenge's benefit as "moderate," with minimal side effects.
Next week an outside panel of experts will weigh in on whether the Centers for Medicare and Medicaid Services should pay for Provenge.
Analysts said the review appeared to remove a major hurdle for Provenge, which is expected to reach more than $1 billion in annual sales for the Seattle-based Dendreon.
"We are increasingly confident this meeting will go well for Dendreon, resulting in a recommendation to reimburse within Provenge's labeled indication," wrote Robert W. Baird and Co. analyst Christopher Raymond, in an investment note.
Shares of Dendreon Corp. rose $1.39, or 4 percent, to close at $36.22 Thursday.
The Medicare review was not entirely positive. Reviewers said additional studies should be conducted to fully gauge Provenge's benefits. Dendreon originally studied Provenge in the hopes that it would slow tumor growth. When it failed to do so, researchers changed the study's main goal to measure overall life expectancy, which increased significantly. But such mid-study adjustments are discouraged by health regulators because they can distort the picture of a drug's effectiveness.
The Food and Drug Administration approved Provenge in April, and many investors assumed Medicare automatically would begin paying for the product. However, Medicare took the unusual step in June of announcing it would conduct its own review, raising concerns the government would balk at paying for the therapy.
Medicare is legally prohibited from considering price when deciding whether to pay for a new treatment, but as health care costs account for almost one-fifth of the U.S. economy some experts say such expenses inevitably will become a factor in reimbursement decisions.
Most private insurers already pay for Provenge, and Medicare patients can receive it while the government conducts its review.
About 192,000 new cases of prostate cancer were diagnosed in 2009, and 27,000 men died of the disease, according to the FDA. Prostate cancer most often affects older men.
Currently doctors treat the disease by surgically removing tumors, attacking them with chemotherapy drugs or blasting them with radiation. Provenge offers an important fourth approach by directing the body's natural defense mechanisms against the disease.
Provenge is called a "cancer vaccine" because of how it works with the body's immune system. However, it does not prevent the disease.
But in a review posted online Wednesday, a government contractor hired to review Provenge appeared to endorse its use. The assessment graded Provenge's benefit as "moderate," with minimal side effects.
Next week an outside panel of experts will weigh in on whether the Centers for Medicare and Medicaid Services should pay for Provenge.
"Historically, 'moderate' means that CMS will reimburse the product," stated Deutsche Bank analyst Robyn Karnaukas, in a note late Wednesday.
Analysts said the review appeared to remove a major hurdle for Provenge, which is expected to reach more than $1 billion in annual sales for the Seattle-based Dendreon.
"We are increasingly confident this meeting will go well for Dendreon, resulting in a recommendation to reimburse within Provenge's labeled indication," wrote Robert W. Baird and Co. analyst Christopher Raymond, in an investment note.
Shares of Dendreon Corp. rose $1.39, or 4 percent, to close at $36.22 Thursday.
The Medicare review was not entirely positive. Reviewers said additional studies should be conducted to fully gauge Provenge's benefits. Dendreon originally studied Provenge in the hopes that it would slow tumor growth. When it failed to do so, researchers changed the study's main goal to measure overall life expectancy, which increased significantly. But such mid-study adjustments are discouraged by health regulators because they can distort the picture of a drug's effectiveness.
The Food and Drug Administration approved Provenge in April, and many investors assumed Medicare automatically would begin paying for the product. However, Medicare took the unusual step in June of announcing it would conduct its own review, raising concerns the government would balk at paying for the therapy.
Medicare is legally prohibited from considering price when deciding whether to pay for a new treatment, but as health care costs account for almost one-fifth of the U.S. economy some experts say such expenses inevitably will become a factor in reimbursement decisions.
Most private insurers already pay for Provenge, and Medicare patients can receive it while the government conducts its review.
About 192,000 new cases of prostate cancer were diagnosed in 2009, and 27,000 men died of the disease, according to the FDA. Prostate cancer most often affects older men.
Currently doctors treat the disease by surgically removing tumors, attacking them with chemotherapy drugs or blasting them with radiation. Provenge offers an important fourth approach by directing the body's natural defense mechanisms against the disease.
Provenge is called a "cancer vaccine" because of how it works with the body's immune system. However, it does not prevent the disease.
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