Anyone who has private health insurance probably knows by memory all of the caveats and conditions imposed by managed-care companies, ranging from lifetime maximums to pre-existing conditions.
So imagine how hemophiliacs -- and their doctors and families -- feel when they hear that
a new blood-clotting drug will cost more than existing drugs, especially when the yearly cost of current therapy can be $50,000 to $75,000 -- and even six figures for the most severe cases. An insurer's lifetime maximum of $1 million or less can be spent very quickly under these circumstances. And considering that hemophilia is often diagnosed in infancy, the financial stress can be overpowering.
How insurers will respond to
new drug Advate "worries the heck out of us," said Dr. John Bouhasin, clinical professor in pediatrics at the St. Louis University School of Medicine and director of the Hemophilia/AIDS Treatment Center at Cardinal Glennon Hospital in St. Louis.
He's also concerned about a cascading effect in reimbursement policy that often occurs when the federal government makes a decision about Medicare; which, in turn, influences decisions by the state-federal Medicaid programs for the poor; which, in turn, influences private insurers.
That's what patients, families, advocacy groups, doctors and hemophilia product providers -- Baxter as well as competitors -- are watching right now as a review of federal hemophilia drug reimbursements is playing out. But these participants have been quite successful in the past to make sure hemophilia patients don't fall through the cracks of the reimbursement system.
"The world of hemophilia is different in terms of the payers," said Dr. Bruce Ewenstein, Baxter's global director for hemophilia therapies. "In my experience, you don't get pushed back by the payers."
The latest push comes from Congress and the federal government, which, since the mid-1990s, have been conducting studies and have been arguing that Medicare reimbursements for many outpatient drugs far exceed reimbursements in the private marketplace.
The spotlight was turned on hemophilia when a January 2003 report by the General Accounting Office -- the investigative arm of Congress -- said Medicare's payment for blood-clotting products exceeds the providers' costs of purchasing them. Medicare's payment for these products -- like its payment for other outpatient drugs -- is 95% of the average wholesale price, which is a price established for each drug by its manufacturer.
Companies like Baxter sell the drug to hospitals, special hemophilia treatment centers and home health companies, which then provide -- and mark up -- the drugs to patients. The GAO report said these middlemen are buying clotting products from manufacturers for 22% to 48% of the average wholesale price. Then they bill Medicare. In 2001, the General Accounting Office says, 1,100 hemophilia patients accounted for $105 million, or 2%, of all Medicare spending on outpatient drugs.
The GAO recommended that the federal government establish Medicare payments for the clotting drugs "that are more closely related to providers' acquisition costs and then establish a separate payment for the cost of delivering" the clotting drug to Medicare beneficiaries.
The federal government's Centers for Medicare and Medicaid Services has proposed four options, which are open for public comment through mid-October.
"It is too soon to measure any potential impact on drug manufacturers," said Caroline L. Copithorne, a Merrill Lynch analyst in an Aug. 18 research report. She said the proposed changes would have an impact on Baxter's blood-clotting products business, but she offered no dollar estimates.
It's also too early to ascertain the impact on private insurers, which, the National Hemophilia Foundation says, covers about 60% of U.S. hemophiliacs. Medicaid assists 30% to 35%; Medicare helps 5% to 7%.
"We have found that if we can educate before legislation is done, it prevents a patient from being excluded" from coverage, said Larry Guiheen, president of Baxter's North America biopharmaceuticals unit. Baxter works with patients and advocacy groups to influence government agencies and insurers.
Guiheen pointed out that Medicare -- the federal program for the elderly and disabled -- represents only about 7% of Baxter's hemophilia business, but Medicaid -- the state-federal program for the poor -- accounts for about 25%. Medicare covers about 14% of the U.S. population; Medicaid covers about 13%.
"As we market our product, a bigger piece is paying attention to reimbursement," said Guiheen, noting the domino effect of new Medicare policies on Medicaid and private insurance. But efforts by all those affected by hemophilia have led to "very few patients not covered by insurance," Guiheen said.
On the front lines, Bouhasin, the St. Louis pediatrics professor, said negotiations with insurers often produce ways to exempt hemophilia patients from lifetime maximum limits. Bouhasin, who hasn't done research for Baxter but who is conducting a clotting factor clinical trial for
, praised Baxter's efforts to step in when a patient loses insurance coverage.
Baxter's "Factor Assist" program can keep patients on their clotting drug therapy in case there's a lapse in insurance or a patient exceeds his policy's lifetime maximum. The patient must be taking Baxter products; he can receive certificates for three months of free treatment for up to four years of care. The program is administered by an independent company that acts as a patient advocate and will try to secure insurance for patients who can't afford it.