Corixa wins full reimbursement for lymphoma drug

The federal government has been trying to clamp down on what it pays for prescription drugs, but Corixa and GlaxoSmithKline were able to resist the pressure, persuading the government to pay full price for a new lymphoma drug that costs $26,000 a patient.

The decision from the Center for Medicare & Medicaid Services to reimburse hospitals the full cost for Bexxar came three weeks faster than the Seattle biotech company and its giant pharmaceutical partner were predicting. The Food and Drug Administration approved Bexxar 10 weeks ago.

It took Bexxar's chief rival, Zevalin, eight months to win federal reimbursement last year. And when Zevalin received coverage in October, the federal agency agreed to pay 78 percent of the wholesale price — one of the factors analysts say contributed to Zevalin's slow start, $14 million in sales last year.

Federal coverage is important for both drugs because many lymphoma patients are over 65. More important, the approval sets a precedent for private insurers that cover younger patients.

The drugs work similarly, by using genetically engineered antibodies that zero in on cancer cells and carry a load of radiation to kill them. The companies claim both drugs can cause long-term remissions.

Corixa stock rose nearly 4 percent after the news, to close at $9.39, a 52-week high.

Corixa Chief Executive Steve Gillis said his partner's long history of dealing with the Medicare agency helped clinch the decision.

"(The Medicare agency) could have provided a lower reimbursement, but they didn't," Gillis said. "Maybe they were convinced about the benefits of the product."

Gillis said his company and GlaxoSmithKline are making progress with private insurers on coverage, but he wouldn't identify them and won't say how much he expects Bexxar will sell.

Analysts have their own predictions. In a note to clients yesterday, Tom Dietz of Pacific Growth Equities said he expects Bexxar to pull in $36 million in sales next year, compared with $30 million for Zevalin. Paul Latta of McAdams Wright Ragen called the coverage decision a "pleasant surprise." Both analysts own Corixa stock.

Many industry watchers consider trends in Medicare reimbursement, and general attempts to rein in health-care costs, to be one of the biggest challenges facing the biotech industry, because it makes genetically engineered drugs that it prices much higher than chemical-based drugs.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com