Cryoport…Reimbursement Issues, or Non-Event?

Yesterday an article came out on Bloomberg that discussed the issues with reimbursement on Gilead’s latest drug, Yescarta. For those who don’t know, Yescarta is a CAR-T therapy that was developed by KITE Pharmaceuticals. CAR-T is the hottest space in biotech and KITE was acquired by Gilead for $12B right around the time of approval, based on pretty-much this one drug alone.

The article talked about the cost of the therapy, which, all inclusive of hospital fees, etc, can run well over $500,000. As is usual with a very large ticket item, insurance companies have been slow in developing reimbursement codes and there is a backlog of patients waiting to get their medication. This is particularly true of Medicaid, which always leads in slowness to reimburse.

If Yescarta is slow to get reimbursement codes, does this reflect negatively for all of CAR-T? And, by extension, is it a negative for Cryoport, the company that is shipping all of the approved CAR-T therapies and looks to be the dominant player in CAR-T shipping for years to come? The answer to both these questions is NO!

There are currently two CAR-T therapies approved, with Novartis’ Kymriah the other one on the market. If insurers were balking at CAR-T in general, Kymriah would be suffering similar delays to Yescarta.

In my opinion, Kymriah is not seeing these delays. No, it could be that there are no delays for reasons specific to Kymriah; it does have several things going for it that Yescarta doesn’t.

  1. Kymriah treats a disease found in children…much likelier to get speedy action on this.
  2. Kymriah’s response rate is 80%, much higher than Yescarta.
  3. Novartis will reimburse all costs if, in two months, there is no response to Kymriah.

Those are compelling reasons why Kymriah would receive reimbursement codes much quicker than Yescarta. But, the point being made here is that, with getting their codes already, there is no insurance issues with CAR-T in general, nor with expensive therapies that work. Any slowdown in Yescarta is specific to that drug and will likely be handled in due course.

As such, extrapolating slowdown in reimbursement to Gilead to Cryoport would be a mistake. Cryoport remains in the sweet spot of delivery of the most exciting cancer cures to ever hit the market. Times are good for them and it’s only just begun.

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