Washington Editor

WASHINGTON - The government hasn't changed its policy on the rates at which it will reimburse Aranesp and Procrit for Medicare patients in the hospital outpatient setting.

On Wednesday, the Centers for Medicare & Medicaid Services issued its annual proposed rule updating reimbursement rates for the calendar year 2004. And if Amgen Inc., the Thousand Oaks, Calif., maker of Aranesp thought the agency's proposal would lean its way, the company was wrong.

Despite Amgen's efforts to convince CMS otherwise, the agency continues to believe that when dosed appropriately, the two anemia drugs produce the same outcome. Officials at Ortho Biotech Products LP, the division of New Brunswick, N.J.-based Johnson & Johnson that makes Procrit, believe the same thing.

Mark Wolfe, a spokesman for Ortho Biotech, told BioWorld Today, "The bottom line is we think CMS is acting in the best interest of Medicare recipients by preserving equitable reimbursements for both products, that when dosed appropriately result in similar outcomes for patients with anemia."

The controversy between Aranesp and Procrit began unfolding in November when CMS finalized its 2003 reimbursement rules. Under former guidelines, new products - or old products with new indications - are supposed to be reimbursed at a higher rate for a specified period of time, usually two years. Aranesp missed that opportunity when CMS decided it was equivalent to Procrit. Amgen fought the decision, even filing an unsuccessful lawsuit and appeal against CMS. (See BioWorld Today, Nov. 4, 2002, and Dec. 27, 2002.)

While CMS proposes continuing the current rule, the agency says it remains open to establishing a different conversion ratio in the final rule if it concludes that a change is warranted based on public comments and information submitted during the 60-day comment period. The conversion ratio is 260 units of Procrit equals 1 microgram of Aranesp.

Wolfe said Ortho Biotech believes the ratio is appropriate.

According to Amgen, the average patient uses 200 micrograms of Aranesp every other week, compared to 40,000 units of Procrit weekly.

Under the proposal, Procrit's reimbursement rate is expected to increase from $9.10 per 1,000 units to $9.67 per 1,000 units. Aranesp will be reimbursed at $2.51 per microgram, up from $2.37 in 2003. The Medicare hospital outpatient setting represents approximately 15 percent of the Aranesp market, Eric Schmidt, an analyst with S.G. Cowen in New York, said in a research note.

Michael Beckerich, an Amgen spokesman, told BioWorld Today he didn't have exact figures to reflect the amount of money the company has lost since the rule was implemented in January. He said Aranesp has been accepted in the market. "All we can do is stand on the power and ability of our product. Aranesp is a unique molecule that has changed the face of the way anemia is treated."

He said Amgen recently submitted to CMS a "compelling and convincing package on Aranesp's superiority," in an effort to state its case.

Over on Capitol Hill, both Senate and House Medicare reform bills contain language dealing with functional equivalence. The Senate version would prohibit the government from using such a method to determine prices, while the House version would allow it within certain parameters. (See BioWorld Today, July 7, 2003.)

Meanwhile, the 60-day comment period is ticking away.

The rule also mentions the government's concern about the price of drugs for Medicare patients compared to the market-based cost.

CMS uses the average wholesale price (AWP) published in the "Red Book" to determine payment amounts for pass-through drugs (newer products). In Senate hearings in January, CMS administrator Thomas Scully noted his displeasure with the AWP method, saying such costs are exorbitant. (See BioWorld Today, Jan. 31, 2003.)

To correct the system, CMS is developing new regulations that should be published before 2004.

The proposed OPPS rule will be published in the Federal Register Tuesday. Currently, it is available at www.cms.hhs.gov. Comments will be accepted until Oct. 6, and the final rule will be published later in the fall.