Pink Sheet is part of Pharma Intelligence UK Limited

This site is operated by Pharma Intelligence UK Limited, a company registered in England and Wales with company number 13787459 whose registered office is 5 Howick Place, London SW1P 1WG. The Pharma Intelligence group is owned by Caerus Topco S.à r.l. and all copyright resides with the group.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By

UsernamePublicRestriction

EPO PURCHASING COSTS AVERAGE $28 PER TREATMENT AT DIALYSIS CENTERS

Executive Summary

EPO PURCHASING COSTS AVERAGE $28 PER TREATMENT AT DIALYSIS CENTERS, which is well below the $40 Medicare reimbursement rate for erythropoietin set last year, according to an Office of Technology Assessment report released May 25. The product acquisition cost per treatment is based on a survey of selected kidney dialysis centers between November 1989 and March 1990. When Medicare last year established coverage of erythroproietin for anemia in dialysis patients, reimbursement was set at $40 per treatment for doses of up to 10,000 units, with another $30 provided if more than 10,000 units are required. The payment is an add-on to the composite rate for dialysis treatment. No extra payment is provided for administrative services related to EPO treatment; such services are considered to be included in the composite rate. The payment level was based on the price for Amgen's recombinant erythropoietin Epogen and the preliminary estimate that the average patient would use 5,000 units of the blood product three times a week. However, Medicare claims data processed through February 1990 indicates that the dose per treatment at dialysis centers is averaging 2,700 units of erythropoietin. OTA reports that the treatment dose for EPO has ranged from fewer than 1,500 units to more than 10,000 units. Including those patient receiving more than 10,000 units, which generates the $30 additional reimbursement, the average Medicare payment is $41 per claim. In its report, "Recombinant Erythropoeitin: Payment Options for Medicare," OTA says that its survey found that "the selling price from wholesalers averaged $41 for the 4,000-unit vial. In March 1990, Amgen reported that its list price to wholesalers was $10 for 1,000 units." One dialysis facility studied by OTA had labor and supply costs averaging about $4 per treatment. If this is representative of other facilities' nonproduct costs, facility profits would average about $9 per treatment. However, the one facility reviewed had participated in clinical trials on EPO, and thus had "considerable experience" in administering the product, and did not include any portion of fixed overhead expenses in the $4, OTA notes. The congressional research agency also cautions that data "averaged from claims do not reflect the evolving nature of patient treatment and the dynamics of the patient population. Data from clinical studies suggest that the average dose for most patients may rise over time, at least during the initial phases of therapy." It adds, "Although clinicians appear to be initiating therapy at low doses, the amounts may rise as substantial numbers of patients fail to respond. Doses required to maintain hematocrits at the target level could be much lower, however." Folding EPO reimbursement in the composite dialysis rate would have "the greatest potential to constrain Medicare expenditures and beneficiaries [copayment] expenses," OTA says. "This option however, also contains the strongest incentive for providers to skimp on use, which could damage the quality of care that beneficiaries receive." Among other payment policy options, setting up a fee schedule based on units of EPO used "may contain moderate incentives encouraging use, with implications for expenditures and the quality of care. These drawbacks can be addressed, however, by judiciously setting payment levels and by monitoring use." While competitive bidding has been suggested. OTA notes that this is not viable approach unless competitor products -- such as Ortho's Eprex and Chugai-Upjohn's Marogen -- become licensed for use with renal failure patients. Several members of Congress have supported proposals to permit self-administration of EPO, which presently is prohibited by Medicare statutes. OTA comments that this changes likely would result in a "slight to moderate increase in use and higher costs to Medicare." The report does not indicate how many of the up to 18,000 home dialysis patients are now traveling to a dialysis facility or physician's office to receive EPO.

You may also be interested in...



Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth

Latest Headlines
See All
UsernamePublicRestriction

Register

PS017495

Ask The Analyst

Ask the Analyst is free for subscribers.  Submit your question and one of our analysts will be in touch.

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel