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EPO REIMBURSEMENT: AMGEN COMMISSIONS COST-BENEFIT STUDY

Executive Summary

EPO REIMBURSEMENT: AMGEN COMMISSIONS COST-BENEFIT STUDY from the Battelle Institute, which will be forwarded to Medicare by the end of December. The study of Epogen, Amgen's recombinant erythropoietin (EPO) product, is being conducted at the Battelle Human Affairs Research Center in Seattle under the direction of Roger Evans. In June, Amgen began meeting formally with the Health Care Financing Administration (HCFA) in an effort to ensure that a reimbursement policy is issued soon after marketing approval. A Product Licensing Application for Epogen has been pending at FDA since late 1987 and could be approved by the end of this year. As part of the analysis, Evans devised an "EPO questionairre" to collect data not gathered from the standard medical protocols for clinical trials. The questionnaire addresses issues such as patient activity levels and ability to return to work. For example, nurses treating patients in Epogen clinical trials estimate daily patient activity at home and the amount of strain on family members due to an inactive patient. Neither HCFA nor Amgen provided cost estimates for the product, but the biotech firm's U.S. marketing partner, Johnson & Johnson, places the cost of per-patient therapy at $ 4,000-$ 8,000 annually. The Battelle analysis is aimed at demonstrating that Epogen's treatment benefits balance its steep price tag. Probably the most important single factor in demonstrating to HCFA that the drug can be cost effective, Amgen said, is the "virtual elimination" of blood transfusions for Epogen patients. This would reduce both costs and risk of transfusion-caused infections such as hepatitis or AIDS, the company pointed out. In addition, transfusions result in the formation of cytotoxic antibodies that increase the likelihood of organ rejection if the patient is a transplant candidate, Amgen said. Epogen reduces the frequency and duration of hospitalizations, decreases blood transfusions, increases patient energy level, raises hematocrit levels and improves other side effects associated with hemodialysis, according to Amgen. The company predicts that cost benefits from Epogen will be most significant for patients in earlier stages of dialysis because they are not as weakened by chronic anemia and will not require long-term therapy to reverse debilitation. Amgen said it has developed a "good working relationship" with HCFA. Agency staffers visited Johns Hopkins the week of Sept. 19 to observe clinical trials under way there. Approximately 450 to 500 patients have participated in the clinical trials since they began in December 1985, in Seattle. Medicare's End-Stage Renal Disease Program covers the cost of treatment for patients of all ages with end-stage renal disease. According to National Medical Care, an operator of dialysis facilities, about 85% or more of dialysis patients receive treatment three times weekly, on a schedule of every other day. Two-thirds of the treatments are performed in independent or freestanding facilities, and one-third in hospital-based hemodialysis units. Treatments last from three to four hours, or less. Medicare pays a lump payment of about $ 125 per session in freestanding facilities and about $ 129 in hospital-based units. The average rates vary nationwide, depending upon the area wage index. Clinical Nephrology Professor Joseph Eschbach, recently predicted that once approved, two-thirds to three-fourths of patients on kidney dialysis in the U.S., or about 75,000 people, would receive EPO. Eschbach, from the University of Washington, said EPO "probably has more potential for rehabilitating patients than anything" in almost two decades.
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