(Updates with type of coverage in sixth paragraph.)
June 30 (Bloomberg) -- Dendreon Corp.’s prostate cancer medicine Provenge should be covered by the U.S. health plan for the elderly and disabled, regulators said, confirming a proposal from March.
The Centers for Medicare & Medicaid Services issued a final ruling today saying the $93,000 treatment is “reasonable and necessary” for men with advanced, prostate tumors resistant to hormone therapy who have minimal or no symptoms. The decision is in line with prescribing information for the drug approved in April 2010.
Medicare reimbursement is critical for Seattle-based Dendreon as three-quarters of the men approved for Provenge are eligible for the government health plan because they are ages 65 or older. The ruling is the second catalyst in as many days for the company after the Food and Drug Administration yesterday cleared a new manufacturing plant in Los Angeles.
“CMS gathered comments and feedback and we do not expect material change to the fundamental conclusion, which is that Provenge is medically necessary and clinically beneficial for patients,” Michael Yee and Jason Kantor, analysts from RBC Capital Markets in San Francisco, said yesterday in a note to clients. They have an “outperform” rating on the shares.
Dendreon rose $1.45, or 3.7 percent, to $40.89 at 5:03 p.m. in extended trading on the Nasdaq Stock Market after closing down $1.06, or 2.6 percent. The shares have fallen 29 percent from a peak of $55.43 on May 3 on reimbursement and supply concerns.
Provenge will be covered as a drug under Medicare’s Part B program when it’s administered in a doctor’s office or hospital outpatient department, the agency said. Analysts such as Mark Schoenebaum of ISI Group in New York said earlier today that reimbursement may be lower if Provenge was covered as a service or supply rather than a drug.
The Baltimore agency that regulates Medicare began its review of Provenge last June after regional contractors voiced concerns about potential use beyond the approved patient population. Medicare coverage will help sales of Provenge reach $2.09 billion by 2014, according to the average estimate of four analysts surveyed by Bloomberg.
Provenge is the first medicine that trains the body’s immune system to attack cancer cells as it would a virus. The therapy involves extracting white blood cells from a patient, mixing them with vaccine components and delivering the combination as an infusion. The one-time treatment lasts one month with three doses, each given two weeks apart.
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