Magazine article Drug Topics

Drug Approval Only the Beginning; Tackling Codes Is Next

Magazine article Drug Topics

Drug Approval Only the Beginning; Tackling Codes Is Next

Article excerpt

Getting a new drug into general use is trickier than it appears. Just ask Scios, which got Food & Drug Administration marketing approval for Natrecor (nesiritide) in August 2001. Fewer than one-third of the 250,000 to 500,000 congestive heart failure patients who might benefit from nesiritide are actually getting it.

Nesiritide didn't get an Ambulatory Payment Classification (APC) pass-through code under the Hospital Outpatient Prospective Payment System (HOPPS) until April 1. Without a reimbursement code, clinics and emergency departments could not get reimbursed for the new recombinant human B-type natriuretic peptide. "Smaller companies launching their first product typically miss the boat on reimbursement," explained Tom Feldman, Scios vp. of sales and marketing.

So do some large manufacturers. For example, pharmacists and physicians who want to use Eli Lilly's new drug for sepsis, Xigris (drotrecogin alfa [activated]), face severe utilization restrictions in most institutions. Sepsis kills 215,000 annually, Lilly said, but first-quarter sales of $22 million suggest that only about 3,250 patients received the drug.

"FDA approval is only the beginning," said Mark Erwin, reimbursement manager for IDEC Pharmaceuticals. "The second hurdle to open utilization is being able to get reimbursement."

IDEC's Zevalin (ibritumomab tiuxetan) was not used to treat as many as 17,000 non-Hodgkin's lymphoma patients in the first four months after FDA approval, Erwin said. The radiotherapeutic agent was approved this past February. A typical course of treatment costs $20,000. Medicare reimbursement for outpatient use under HOPPS won't begin until October.

Institutions are dragging their feet because of cost, said consultant Daniel Albrant, president of Pharmacy Dynamics. Providers are reluctant to adopt expensive new products until reimbursement is available, he explained. The problem is that reimbursement codes are all bestowed by the Center for Medicare & Medicaid Services (CMS). The CMS Healthcare Common Procedure Coding System (HCPCS, pronounced hick-picks) is used to pay more than five billion claims annually.

Drugmakers can't even apply for a permanent HCPCS code until they have at least six months of sales data. Given current application deadlines and implementation schedules, providers wait between 15 and 26 months from the time of FDA marketing approval to reimbursement, noted Deborah Walter, policy director for the Pharmaceutical Research & Manufacturers of America.

Temporary HCPCS codes can be obtained for some products in five to seven months, she said. But creating temporary codes and tracking utilization across multiple codes is an administrative headache. …

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