With the prices of some potentially curative treatments now reaching into the millions of dollars, the U.S. government is grappling with how it will cover the costs of those medicines for Americans enrolled in Medicare and Medicaid, the top official who runs those programs said.

"We really need to have some serious discussions about how we're going to pay for some of the new innovations and treatments," Centers for Medicare and Medicaid Services Administrator Seema Verma told reporters last week.

Expensive gene therapies and other curative treatments that have been coming onto the U.S. market in recent years are significantly different than what CMS has dealt with in the past, Verma said during a May 22 briefing.

"The payment systems that we have in place are really not set up to deal with that," she said.

CMS Adminstrator Seema Verma Source: CMS

Verma's remarks came two days before the FDA approved Novartis AG's gene therapy Zolgensma, which the company priced at $2.1 million — the most expensive drug on the U.S. market.

The drug is used to treat children less than two years of age with spinal muscular atrophy, a group of genetic neuromuscular disorders characterized by the loss of motor neurons and progressive muscle wasting.

Verma said she was particularly concerned about how state Medicaid programs, which cover low-income Americans, will handle paying for gene therapies and other high-priced treatments.

"If they're having to pay for multimillion-dollar drugs for lots of their beneficiaries, there's going to be some serious issues there," she said.

Verma said CMS was planning to tap into the expertise of outside researchers to help brainstorm solutions.

While there has been a lot of discussion about outcomes-based and value-based payment methods, Verma said those approaches may encourage higher launch prices, "because they're going to be potentially giving rebates if the treatment isn't effective."

The CMS chief said some organizations have also approached her agency with ideas about paying for expensive drugs over time, like Americans do with their house mortgages, though she said that also could be problematic because many people often do not have the same insurance coverage over extended periods.

"We're thinking about this from all different angles," she said. "I haven't found the silver bullet but I am looking for it."

CAR-T coverage delay

Verma noted CMS had delayed its plan for covering chimeric antigen receptor T-cell, or CAR-T, therapies, like Novartis' Kymriah and Gilead Sciences Inc.'s Yescarta, under Medicare.

"It's not only new technology for the entire medical community and cancer care but it's also new ground for the agency," she said. "We want to make sure that we're doing this appropriately, dotting our i's and crossing our t's."

"It's just taking us a little bit more time because it's not a routine type of decision," Verma added.

CAR-T cell therapies involve taking immune cells from a patient's blood and re-engineering them to attack cancer cells. The processed cells are then infused back into the person's body.

In February, CMS had issued a so-called national coverage determination describing under what conditions the agency would pay for CAR-T therapies. It was expected to be finalized in mid-May, but it has been postponed.

The list price for Novartis' Kymriah is $475,000 for a single course of treatment, while Yescarta's list price is $373,000, though the government only reimburses about half of those amounts under its hospital payment policies. The drugs are approved to treat certain types of blood cancers.

Capitol Hill drug pricing work continues

Meanwhile, lawmakers on Capitol Hill continued their push last week to lower Americans' costs for prescription drugs.

The Democratic and Republican heads of the House Ways and Means and Energy and Commerce Committees asked Americans to weigh in on a bipartisan draft bill that seeks to cap the out-of-pocket costs for beneficiaries in the Medicare Part D program, which covers medicines picked up at the pharmacy by seniors and disabled people.

The measure would also reduce the government's share of the catastrophic coverage phase from 80% to 20% over four years, putting more of the responsibility onto health plans.

But the bill does not call for Medicare to negotiate directly with drugmakers on their prices — a proposal a number of Democrats have been pressing their colleagues on Capitol Hill to adopt.

House Speaker Nancy Pelosi's office has been working on a more scaled back idea for negotiating drug prices, allowing only the costs of a limited number of medicines — as few as potentially 25 per year — to be considered. The U.S. Government Accountability Office or another independent body would act as an adjudicator under the approach, which already is meeting resistance on Capitol Hill from both sides of the aisle in both chambers.

Also last week, Republican Sens. Rick Scott of Florida, Cory Gardner of Colorado and Susan Collins of Maine introduced a bill that would create a central federal online database where Americans can find the list prices of prescription medicines, average net prices and an aggregate of the rebates manufacturers pay to pharmacy benefit managers on behalf of drug plans.

Drugmakers would also be required under the legislation to report financial and non-financial factors for any changes in their product prices.