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MEDICARE EPO PAYMENTS TOPPING $190 MIL. ON ANNUALIZED BASIS

Executive Summary

MEDICARE EPO PAYMENTS TOPPING $190 MIL. ON ANNUALIZED BASIS, according to a Health Care Financing Administration review of claims data. HCFA currently is paying $16.2 mil. per month for Amgen's Epogen for 39,000 patients of all ages in Medicare's End-Stage Renal Disease program. When Medicare issued EPO coverage instructions in June for dialysis-associated anemia ("The Pink Sheet" July 3, T&G-3), the agency estimated that it would spend$65-82 mil. for the first six months of coverage. Under Medicare Part B, HCFA pays 80% of the $40 per-dose cost of Amgen's brand of recombinant erythropoietin. The average patient receives a 5,000-unit dose during each dialysis treatment, with about 13 treatments per month, HCFA staff said. EPO is reimbursed as a payment add-on to the composite rate, now $129, that covers most nonphysician services needed in a dialysis session. HCFA is reviewing charge data as part of an evaluation of the initial coverage instruction. "No new payment rules" are presently in the works, though HCFA notes that Medicare's EPO expenses could come down if other versions of EPO are approved by FDA. Scientific review of the PLA for Chugai-Upjohn's EPO product, Marogen, has been finished and the application is currently awaiting review by FDA's legal staff, Genetics Institute President and CEO Gabriel Schmergel told an Alex. Brown health care conference in Baltimore May 8. U.S. rights to the product are licensed from Genetics Institute. The product's status was discussed at an April 26 meeting between FDA Acting Commissioner Benson and Upjohn Chairman Theodore Cooper, Chugai-Upjohn Exec VP Joseph Sabota and Genetics Institute's Schmergel. Regarding the patent litigation between Amgen and Chugai-Upjohn, the U.S. Federal Appeals Court on May 4 granted Chugai's motion to expedite the appeals process. Both sides had appealed the December Boston Federal Court decision that upheld certain of their respective patent claims and invalidated others ("The Pink Sheet" April 23, T&G-2). The expedited schedule requires initial briefs by the beginning of June and oral arguments sometime in August. When Medicare's June instructions were issued, HCFA expected that initially, only 20-25% of the 100,000 ESRD patients would use EPO. Epogen now has over 65% penetration into the 110,000 total U.S. dialysis population, and that population is increasing by 8% per year, according to Amgen Chief Financial Officer Lowell Sears. Addressing the annual Alex. Brown & Sons Health Care Seminar in Baltimore on May 8, Sears said Epogen sales have reached more than $148 mil. in the 10 months since the June 1 launch. First-quarter 1990 sales alone were $89 mil. Commenting on the patent dispute, Sears said he expects a decision from the Appeals Court by the end of the year.
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