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Executive Summary

FACTOR VIII HIGH PURITY PRODUCTS MUST SHOW ADDED MEDICAL BENEFIT to justify reimbursement at higher prices, Health Care Financing Administration (HCFA) Special Coverage Issues Branch Chief Barton McCann, MD, told a March 10 conference on Factor VIII at the National Institutes of Health. "We have to see that there is some added medical benefit before we pay an additional amount," McCann said. Noting HCFA's policy of finding the "least costly medically feasible alternative," while not interfering with medical practice, McCann said: "These two principles are clearly going to be in conflict with Factor VIII unless we find some clear evidence that there is added medical benefit to the new Factor VIII preparations." Much of the conference discussion centered on the benefits of "high purity" vs. "intermediate purity" Factor VIII products. Several of the participating researchers maintained that the clinical safety and efficacy of intermediate methods of purification for viral material -- such as dry heat, pasteurization, and vapor heating -- are comparable to the newer, more costly method of monoclonal affinity purification. McCann noted that the conference "raised some questions in ]his[ mind" as to whether the benefit of monoclonal products over others "is clearly demonstrated and warrants a separate and additional payment." Currently marketed Factor VIII products are purified through both intermediate and high purity methods. For example, Armour's Monoclate and Baxter Hyland's Hemophil are both purified by monoclonal affinity, while Cutter has a product purified through pasteurization and dry heat. Although only a small percentage of hemophiliacs are covered by Medicare, McCann pointed out the importance of HCFA policy, stating that "other third party payors look to HCFA for policies in developing their own." Hemophiliacs account for only 1,000-2,000 of the 33 million Medicare benficiaries, McCann said. Medicare dollars spent on Factor VIII amounted to only $3 mil. in 1987. Noting that diagnosis related group coverage for coagulation disorders was around $3,200 in 1988, McCann pointed out that monoclonal-purified products can cost three times as much as heat-treated products. Participants at the conference also noted that prices of Factor VIII products have risen precipitously in the last few years. Craig Kessler, MD, Division of Hematology/Oncology, George Washington Medical Center told the conference that the price of dry heat processed Factor VIII has risen from between 6 and 9 cents per unit in 1987 to 20 cents in 1988. "The largest increase involves that of the pasteurized ]factor[ which is now selling for approximately 95 cents ]from 42 cents per unit in 1987[," Kessler said. Monoclonal products have been more stable, rising from 55 cents in 1987 to 65 cents per unit in 1988, Kessler said. McCann identified two possible ways of paying for Factor VIII products. The first would be a single payment price that would be determined by the cost of the various Factor VIII products and physician prescribing patterns. The result of such a payment plan, McCann speculated, would be "a probable lowering in price of the expensive product" and a rise in low-cost product prices with an associated augmentation in Medicare patient copay. A second option would be separate rates for each Factor VIII product with "a gradual increase and sometimes not so gradual ]increase[ in every one of the catagories," McCann remarked. Setting a unit rate of 65 to 75 cents for the monoclonal high purity product would result in a larger copay for the patient and a reduction in supply of low-cost Factor VIII, McCann predicted. Several companies are currently working on development of recombinant Factor VIII, including two with products in clinical trials: Baxter's Hyland Division is in Phase II with a recombinant Factor VIII licensed from Genetics Institute, and Miles' Cutter Biological is currently conducting Phase I trials with their recombinant product, which is licensed from Genentech.

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