Medicare reviewing over Dendreon cancer vaccine

The U.S. Medicare program said on Wednesday it was evaluating data on Dendreon Corp’s prostate cancer therapy to decide whether to cover the product for seniors nationwide.

The shares of Dendreon Corp. plummeted by 23% and became $25 after the news came and closed in on $32.33 on Nasdaq.

The Centers for Medicare & Medicaid Services (CMS) said it had opened a national coverage analysis after receiving inquiries following the approval of Dendreon’s Provenge therapy in April.

The Medicare coverage could be helpful in making the product successful throughout the country. However, if the product is not given an approval, then the sales will decline significantly.

The agency said it will determine if the treatment is “reasonable and necessary” for patients in Medicare, the federal health program that covers 45 million elderly and disabled Americans.

The full treatment comprises three infusions and amounts to a total of $93,000. The medicine is marketed under the name Provenge, while its generic name is sipuleucel-T.

CMS said Medicare was commissioning an external assessment of Provenge and would bring the issue to an outside advisory committee this year.

Dendreon said the announcement did not restrict local Medicare contractors from covering Provenge.

“Therefore, Medicare beneficiaries are still able to access Provenge and private payers can also still cover Provenge,” the company said in a statement.

Dendreon also said it “welcomes the opportunity to continue our discussions with CMS about how Provenge will be provided to Medicare beneficiaries, particularly given the survival benefit and safety profile.”

CMS said a proposed decision was expected by March 30, 2011, with a final ruling in June 2011.

The product is the first vaccine approved to treat a type of cancer. Unlike traditional vaccines that prevent a disease, Provenge treats prostate cancer by stimulating the body’s immune system to attack malignant cells.

The Food and Drug Administration cleared Provenge for advanced prostate cancer after a study showed men treated with the vaccine lived an average of 4.1 months longer compared with a placebo.

The vaccine is produced by taking cells from a patient’s tumor and incorporating them into a vaccine that is injected back into the patient.