Cancer drugs cost a lot, and don't work very well for most people. Not surprisingly, this is at least part of the reason there's a popular backlash against drugmakers. And tomorrow, we're going to see some unusual political theater that could say a lot about how cancer drugs get priced in the future.

Seattle-based Dendreon (Nasdaq: DNDN), a poster child for all sorts of controversy over the years, is gearing up to defend the effectiveness of its prostate cancer drug, sipuleucel-T (Provenge), in front of a panel of physicians and researchers in Washington D.C. on Wednesday. This advisory panel will make remarks to the Centers for Medicare and Medicaid Services (CMS) about how strong it thinks the evidence supporting the FDA-approved use of the drug is, and about potential "off-label" uses of the treatment. And based at least in part on those comments, CMS will decide under what circumstances it will cover the treatment's sky-high price tag.

Dendreon won FDA approval for sipuleucel-T, a first-of-a-kind immune boosting therapy, back in April -- and promptly announced that it would charge $93,000 per patient for the product. Since this is for terminal forms of prostate cancer that afflict elderly men, it has been vital to the company that this product be reimbursed by Medicare, the national health insurance program for people over age 65. Medicare has basically automatically covered cancer drugs in the past when the FDA has cleared them as safe and effective. This time, it has opened up what it calls a "national coverage analysis" to discuss the strength of the evidence to support prescriptions of Provenge.

Nowhere in the 55-page briefing document prepared by Medicare staff for tomorrow's meeting will you find the words "cost," or "price," or any reference to the drug's $93,000 tab. And from what I can gather, the letter of the law doesn't allow Medicare to refuse to pay for a drug because it costs too much. But as Pharmalot's Ed Silverman fleshed out in this interview with a former CMS official, it's the elephant in the room. What the agency really seems to be doing here is sending a message to other drugmakers with visions of big price tags in their heads, says David Miller, president of Biotech Stock Research in Seattle. 

"It's a shot across the bow," Miller says. "Whoever is next in the pipeline, maybe will think twice about pricing strategy after watching this."

Many Dendreon followers, I'm sure, have already reviewed the Medicare agency's 55-page briefing document in advance of tomorrow's hearing. I personally didn't think it added much to what those of us who follow Dendreon has already written ad nauseam, but you can check out Forbes' Matthew Herper's initial take on the document if you're curious.

The Cliff's Notes version is essentially this: The Dendreon drug was approved on the strength of a clinical trial of 512 men, called Impact, that showed that patients lived a median time of 25.8 months if they got the drug, compared to 21.7 months if they got a placebo. This finding represents a 4.1 month advantage in median survival on the drug. Side effects were mostly fever and chills that lasted one or two days after injections. The approval followed an aggressive attempt on the part of Dendreon a couple years earlier to win approval based on a thinner clinical trial database of 127 men, which essentially showed the same thing as the bigger trial eventually did.

The watershed Impact trial was conducted in men whose prostate cancer had spread through the body and had stopped responding to standard hormone-deprivation therapies. The FDA approved label for the Dendreon drug states clearly that this is the type of patient for whom the drug is approved, but physicians are free to prescribe any drug they want for any condition, whether it's in the drug label or not. And because Dendreon's treatment is an immune-boosting therapy, most scientists suspect it will work better against earlier forms of prostate cancer.

Prostate cancer kills 30,000 men in the U.S. each year, but it is diagnosed in more than 200,000 men a year. Dendreon already projects that its drug will generate U.S. sales of $1.2 to $2.5 billion a year for the approved use, and if it starts being prescribed "off-label" at early stages of disease, at $93,000 a patient, then you're talking about really serious money, even to Uncle Sam. Still, there is more than one side to this story. As I noted a couple weeks back, while it's politically difficult for an agency to shell out billions of tax dollars for a single drug made by one company, it's even more politically controversial to deny dying constituents access to a potentially life-saving therapy to save some money. So it's likely the agency will want to strike a balance, Miller says.

"I think they see the demand, they see the patient excitement," Miller says. "I think they hope this will limit off-label use. That's primary."

Dendreon already tossed out a few trial balloon arguments in support of Medicare coverage of its drug earlier this month on its quarterly conference call, showing it isn't exactly striking a conciliatory tone. The company raised more than $1 billion to get where it is, and it has never turned an annual profit since its founding in 1992. It plans to burn through $460 million in cash this year for a massive manufacturing and marketing push. Chief Operating Officer Hans Bishop noted on the call with investors that Provenge showed a median survival advantage of more than four months when compared to placebo, and "over the last 15 years, only three therapies in metastatic cancer have been able to show a survival benefit of four months or more."

The process of Wednesday's meeting will be a bit unusual for biotech executives and investors who are a lot more familiar with the public hearings run by the FDA. The advisors to Medicare will not be asked to make an up-or-down recommendation on whether to reimburse for the Dendreon drug. They will record their confidence, on a scale of 1-to-5 on various questions about the clinical trial evidence. The Medicare agency will issue a draft report in March, take more public comments, and make a final decision in June, Miller says.

The most likely outcome is that Medicare says it will reimburse for the Dendreon drug as long as it is used in accordance with the FDA approved label, Miller says. That's just fine for Dendreon, because it has limited manufacturing capacity at the moment, and can't fulfill all the demand from patients that it wants to anyway. Regional Medicare agencies, except for one out of 15 around the country, have already started reimbursing or have stated they plan to reimburse for the treatment. The national coverage analysis could offer new rules for the regional units to follow.

I have registered for the webinar, so I will plan to report on this tomorrow as it's happening. I'm sure many of our regular readers will be listening too. If you aren't already, I encourage you to follow me on Twitter, or send me notes at on how you think things are going, or what you think might be good questions to ask.


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Luke Timmerman is the National Biotech Editor of Xconomy, and the Editor of Xconomy Seattle. You can email him at, or follow him at

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