Earlier this week, Dendreon (NASDAQ:DNDN) shocked investors by scrapping its 2011 sales forecast for its controversial and innovate Provenge prostate cancer vaccine after disclosing that sales were slower than planned. The stated reason was that many doctors, particularly those in smaller settings, were slow to adopt the $93,000 vaccine since they had to wait for reimbursement. Along with unexpected layoffs, the announcement stunned investors, causing Dendreon stock to plunge 60 percent. Wall Street wags began deciphering the extent to which some doctors are truly worried about reimbursement or are simply unethusiastic about the product (back story). We spoke with Leonard Liang, a Los Angeles urologist who is sufficiently enthusiastic about Provenge that he posted his own YouTube video. He maintains he has no ties to Dendreon, but does have reimbursement concerns…
Pharmalot: Before we discuss reimbursement, tell me why you chose to become trained to administer Provenge.
Liang: I think it’s pretty clear. It’s a wonderful advancement for the treatment of prostate cancer and can help many men live longer with very few side effects. I don’t think there’s an argument about that. I think the clinical trial is pretty much pristine and the results are robust. Any patient that’s a candidate should get this.
Pharmalot: So what’s your take on the reimbursement problem that Dendreon execs have described?
Liang: The issue is that doctors may not want to prescribe because they are worried about reimbursement, because it’s so expensive. And it is. It’s a reason why urologists, in particular, who don’t make money prescribing drugs, are probably very slow to start giving this. They’re surgeons and do procedures to make money. Most prostate cancer is diagnosed and treated by urologists. And the average community urologist is not going to want to take the trouble to become a Provenge infusion center for just one or two patients at most a year who they run across and who would be candidates.
Pharmalot: Can you be more specific about reimbursement problems?
Liang: There are two problems – identifying patients and a reluctance to take a financial risk. I’m an early adopter. I think the science is fascinating. It was possible for community urologists to become an infusion center, and I was probably one of the earlier ones. It took awhile to get trained, but eventually, I infused two patients. So far, I’ve given 5 infusions to those two patients. I have one more to give to one of them. So that’s three infusions given to one patient and two to another.
Right now, I have a bill for $155,000 from McKesson (NYSE:MCK) and I have to start making payments in October. I’ve only gotten paid by Medicare for the first two infusions and I’m billed at $31,000 for each infusion by McKesson. That’s daunting. I don’t keep more than $80,000 in my business checking account. If I don’t get reimbursed by the payer, it’s going to be terrible.
Pharmalot: Can you be more specific?
Liang: This is why I understand doctors are uncomfortable. I’m uncomfortable, too, and I’m a true believer. So I’ve gotten paid by private insurers – a PPO insurer paid for the firstt infusion for one patient given in early June. So for those infusions that cost $31,000 each, Medicare paid 80 percent. With the other 20 percent, I was paid by one patient’s insurance for one of the infusions. They paid the full amount I asked for, which is 6 percent above the cost. Basically, I came out slightly ahead. I made around $1,600 or $1,800. But for the other patient, who has Medicaid as secondary insurance, which is called MediCal in California, I only just got paid. My concern had been that, if Medical doesn’t come through, I took a huge risk and I’m at a loss. I’m still concerned I won’t get paid.
Pharmalot: Why is that?
Liang: It was a big overhang. I feel a lot better, but it doesn’t mean that billing for every patient with MediCal will turn out the same way. Many of these patients are 65 and older, so many could be on Medical as secondary insurance. I’ll give you an example. There’s a doctor in Marina Del Ray, who is a private oncologist, he specializes in prostate oncology and has probably the busiest infusion center in Los Angeles, with maybe 30 to 50 patients already infused. I talked to his billing person and they told me they don’t infuse patients with Medical as secondary insurance, they only take private insurance. Why? They don’t take the risk of not getting paid by MediCal. It’s not just me who worries about this.
Pharmalot: And the reason is…
Liang: MediCal often stiffs doctors. It’s a hard concept for folks who aren’t doctors to understand. Often there are long delays and often non-payment for physician services. Like anything else, the code may not be right. There’s a million reasons how insurer or the state can try to keep payment or reduce payment. The concern among physicians is for patients without good insurance, they are just not going to take the risk. Historically, you know, doctors don’t want to take risks.
Pharmalot: So what do you think this means going forward?
Liang: I think what’ll happen in the future is that not many centers will give this. It’s not like a pill that all urologists can write a prescription for. Only a certain number of centers will give this. Community urologists largely won’t. I’m trying to become the community urologist that other community urologistss refer to. I think 99 percent of urologists will not be infusion centers and not give it in their clinics.
The company is saying it’s the urologist’s fault for messing up their cash flow. But I don’t think it’s an issue that can’t be solved. I’m surprised they didn’t do more research to understand this point. It won’t be like every other urologist in the US will start giving this. I think they misjudged. But in fairness, there’s never been anything like this. It’s unique. It’s expensive, although when you compare it to chemotherapy, I don’t think the price is out of line, especially since this is something you have to make. But it’s a new concept for oncologists and urologists to understand.