By Deena Beasley

(Reuters) – The U.S. Centers for Medicare & Medicaid Services (CMS) on Friday proposed coverage of expensive CAR-T cell therapies at cancer centers that meet criteria including a registry or clinical study to monitor how well patients fare for at least two years after treatment.

New hospital payment terms from Medicare, the federal government healthcare program for the elderly and disabled, are expected later in the year.

If the proposal is finalized, use of CAR-Ts for Medicare patients could continue to be limited to the largest regional cancer centers. “The initial requirements for centers to be engaged in a registry could limit breadth of use until there is additional real-world experience,” RBC Capital Markets analyst Brian Abrahams said in a research note.

Both Gilead Sciences Inc’s Yescarta and Novartis AG’s Kymriah have U.S. prices for advanced lymphoma patients of $373,000. Kymriah is also approved for a type of pediatric leukemia at a price of $475,000. Cancer centers have to be certified to administer the CAR-Ts.

CMS said evidence collected after treatment would help it to identify the patients that benefit from CAR-T therapies.

Chimeric antigen receptor T-cell therapy, known as CAR-T, involves drawing white blood cells from a patient, processing them in the lab to target cancer, and infusing the cells back into the patient.

“Today’s proposed coverage decision would improve access to this therapy while deepening CMS’s understanding of how patients in Medicare respond to it,” CMS Administrator Seema Verma said in a statement.

Medicare last year said it would pay close to its standard mark-up rate for CAR-Ts given on an outpatient basis, but patients are almost always admitted to a hospital for CAR-T treatment because of the risk of life-threatening side effects.

For hospital patients, Yescarta has been reimbursed under an existing Medicare coverage code and a “new technology add-on payment,” but that can leave a large portion of the drug and hospitalization costs uncovered.

“We still do not have a clear pathway for Medicare payment,” Jack Kolosky, chief operating officer at Moffitt Cancer Center in Tampa, Florida, told Reuters in an interview on Friday. He said Moffitt currently has around $10 million in unpaid Medicare CAR-T claims.

He said Moffitt supports “delivering therapies based on the best evidence possible” and is confident that outcomes data will show the benefits of CAR-Ts.

“Had this treatment not cost $373,000 to $475,000, I don’t think they (CMS) would require this,” Kolosky said. “We share their concern, but we also don’t control how much the cost is.”

Novartis, in an emailed statement, said it is pleased to work with stakeholders to ensure patients have access to therapies like Kymriah and it plans to provide comments to CMS during the 30-day comment period.

Gilead said it was encouraged by the CMS statements and also plans to submit public comments.

(Reporting by Deena Beasley in Los Angeles and Manas Mishra in Bengaluru; Editing by Steve Orlofsky and Matthew Lewis)