1 

     

                     DEPARTMENT OF HEALTH AND HUMAN SERVICES

     

               ADVISORY COMMITTEE ON BLOOD SAFETY AND AVAILABILITY 

     

                               Twenty-First Meeting

                                    Volume II

     

                                    8:32 a.m. 

     

                             Friday, August 22, 2003

                         Hyatt Regency Capitol Hill Hotel 

                                   Capitol Room 

                              400 New Jersey Avenue 

                             Washington, D.C.  20001 

                                                                      2 

     

                             P A R T I C I P A N T S 

     

           Mark Brecher, M.D., Chairman 

     

           Larry Allen 

           Judy Angelbeck 

           Celso Bianco, M.D. 

           Ronald Gilcher, M.D. 

           Edward D. Gomperts, M.D. 

           Paul F. Haas, Ph.D. 

           William A. Heaton, M.D. 

           Christopher Healey, J.D. 

           W. Keith Hoots, M.D. 

           Jeanne Linden, M.D. 

           Karen Shoos Lipton, J.D. 

           Lola Lopes, Ph.D. 

           Gargi Pahuja 

           John Penner, M.D. 

           S. Gerald Sandler, M.D. 

           Mark Skinner, J.D. 

     

           Non-voting Government Representatives 

     

           James S. Bowman III, M.D. 

           Jay Epstein M.D. 

           Mathew Kuhnert, M.D. 

           Harvey Klein, M.D. 

           Captain Lawrence McMurtry 

           LTC Ruth Sylvester 

                                                                      3 

     

                                 C O N T E N T S 

     

           AGENDA ITEM                                             PAGE 

     

           Call to Order                                             4  

     

           Committee Discussion                                      5  

     

           New Technology Potentials 

            Terumo - Jeff Miripol                                   17  

            Haemonetics - Jerry Holmberg                            47  

     

           Comments of Steve Binion, Baxter                         75  

     

           Public Comment                                           77  

     

           Committee Discussion                                     77  

     

           CMS Prospective HOPPS 

             American Association of Blood Banks                   120  

             America's Blood Centers                               150  

             American Red Cross                                    166  

                                                                      4 

     

                              P R O C E E D I N G S 

     

                     DR. BRECHER:  Here's another public 

     

           service announcement that's related. 

     

                     [Videotape played.]

                     DR. BRECHER:  Okay.  It's a good thing a 

     

           little dog didn't get it before the big dog. 

     

                     With that little diversion, we're going to 

     

           move on to looking at new technology potentials, 

     

           and the first speaker is Jeff Miripol from Terumo,

           if he's here. 

     

                     Jeff is not here.  Why don't we--who's the 

     

           next one?  Why don't we get Jerry Holmberg?  Is he 

     

           here? 

     

                     Oh, this is good.  Anyone got any other

           film clips? 

     

                     [Pause.] 

     

                     DR. BRECHER:  So much for the best laid 

     

           plans.  Well, we could go ahead and have some 

     

           public comment, if there are any--nobody here for

           that either, huh? 

     

                     Anyone got any good jokes?  This is a 

     

           joke. 

                                                                      5 

     

                     I apologize.  It's looks like we're going 

     

           to just go on hold until 9 o'clock.  So much for 

     

           the best laid plans.  Is there anyone for public 

     

           discussion?  Anyone want to make a public comment?

                     [No response.] 

     

                     DR. BRECHER:  We tried.  Does the 

     

           Committee want to discuss what we've heard so far? 

     

           We could start on that.  Presumably we're going to 

     

           hear about some alternative technologies, updates

           from Haemonetics on the frozen deglycerolized red 

     

           cells. 

     

                     MS. LIPTON:  I was just going to suggest 

     

           that in light of everything we've heard to date, I 

     

           didn't see any need for a resolution on the part of

           this Committee with respect to the reserves.  But I 

     

           offered to take all of the comments that we heard 

     

           yesterday back to the disaster task force and ask 

     

           them to consider and then to come to this Committee 

     

           perhaps with a recommendation or a series of

           recommendations for consideration, if that would be 

     

           helpful. 

     

                     DR. BRECHER:  Further comments?  Jeanne? 

                                                                      6 

     

                     DR. LINDEN:  In the discussions yesterday, 

     

           I was giving some thought to our most recent modest 

     

           disaster, you know, the great power outage in the 

     

           Northeast, and thinking about what happened there

           and the possible ramifications had that been more 

     

           extended, because the transportation options were 

     

           extraordinarily limited, with no planes, no trains, 

     

           and gridlock traffic-wise with a lot of the bridges 

     

           closed.  And since most of the businesses, in fact,

           really all of the businesses closed, there couldn't 

     

           be new collections, and we lost several thousand 

     

           potential units that could have been collected and 

     

           weren't.  So that was another example of what--you 

     

           know, the blood we were using is the blood on the

           shelf.  And it would have been possible to get more 

     

           blood in over time.  But had that been extended, 

     

           that was really an issue.  And I think it was a 

     

           good learning experience to look at, well, when we 

     

           lost the infrastructure, you know, what can we do

           in those situations? 

     

                     I think examples like that and certainly 

     

           some of the ones that Ron has shared are really 

                                                                      7 

     

           good learning experiences.  We can look at the 

     

           actual issues that came up. 

     

                     Something else that came up with the loss 

     

           of power is the loss of computer services.  We even

           in Albany lost access to the Internet.  In New York 

     

           City, they had nothing, no phones, although AOL was 

     

           working so people could use their home e-mail.  But 

     

           because the laboratory testing is all done in the 

     

           state, we have no laboratories doing infectious

           disease testing for blood donations in New York 

     

           State, we couldn't get the test results back.  And 

     

           in small numbers for certain emergency donations, 

     

           you could get them by phone or fax in some cases, 

     

           if you had phone or fax.  Those of you who read my

           article about faxing, you know, know that faxing is 

     

           fraught with a lot of problems.  And, obviously, 

     

           when we're talking about thousands of units, that 

     

           can't be done.  It would be very error-prone if you 

     

           were to do manual transcriptions and basically a

           lot of units that were even on the shelf couldn't 

     

           be used because the test results couldn't be 

     

           accessed. 

                                                                      8 

     

                     So there's all sorts of ramifications as 

     

           we rely on electronic technology that, when you 

     

           lose the power, you all of a sudden lose that 

     

           electronic technology.  So it's just something I

           was thinking about over the last day or so that, 

     

           you know, I think is a good learning experience. 

     

                     DR. BRECHER:  Karen? 

     

                     MS. LIPTON:  Well, in fact, because the 

     

           disaster task force convened immediately, we were

           aware of these issues, and we're developing some 

     

           modules, particularly, as I said, on the water and 

     

           the computer situation. 

     

                     I think it was Ron who said this, that, 

     

           you know, planning for a disaster isn't the plan.

           It's knowing--it's really knowing how you react and 

     

           who you get to.  And so I don't think that we can 

     

           understand every situation.  I think the most 

     

           important thing we now do is at least we have a 

     

           communications hierarchy that allows us to

           communicate even if all those systems go down.  And 

     

           we just have to know that we're in touch. 

     

                     But we are aware of that, and we're 

                                                                      9 

     

           actually doing a debriefing on this.  Every time 

     

           something happens, we do a debriefing on it, and we 

     

           will go out to the regions as part of the process 

     

           to ask them what their experiences were that they

           could share with other blood centers. 

     

                     DR. BRECHER:  Ron? 

     

                     DR. GILCHER:  What I wanted to say was 

     

           that, in fact, that's absolutely correct.  The 

     

           disaster never fits the plan, and we've learned

           that from the two major disasters we've had in 

     

           Oklahoma.  But, in fact, the process of planning is 

     

           so important because you really then have to--you 

     

           have things in place so you can make the plans as 

     

           the disaster is in progress.  It's critical that

           all the staff know exactly where to go, what to do; 

     

           when something happens everybody has a place to go, 

     

           and then having redundant systems in place. 

     

           There's just no generator, fuel supplies and so 

     

           forth.  We have done that at our blood center so we

           can operate literally for a couple of weeks without 

     

           any additional power.  But that's a big problem to 

     

           us because we do take power outages in Oklahoma 

                                                                     10 

     

           quite frequently during the summer months. 

     

                     MS. LIPTON:  We just figured we're just 

     

           going to establish New York Blood Center as our 

     

           test case for everything because it always seems to

           happen to them. 

     

                     DR. BRECHER:  It makes you wonder if in 

     

           their disaster plan--I imagine there was huge 

     

           gridlock in Manhattan--if they include bicycle 

     

           messengers to deliver the units of blood around the

           city. 

     

                     We'll take a 30-second pause while they 

     

           fix the lines. 

     

                     [Pause.] 

     

                     DR. BRECHER:  Jerry, you're on.

                     DR. SANDLER:  Yesterday we didn't have a 

     

           chance to ask a lot of questions to Dr. Williams, 

     

           and I was wondering if I could pick up on that. 

     

                     Prior to the presentation, many people 

     

           correctly identified the fact that we don't have a

           nationwide information system that tells us how 

     

           much blood we have and where. 

     

                     On the other hand, we really have three.  

                                                                     11 

     

           For years, Marian Sullivan's operation has been 

     

           functioning.  The Office of the Secretary has 

     

           sponsored the sentinel sites, and Dr. Goldfinger 

     

           and myself and other blood bank directors have been

           participating and sending our information, and 

     

           there's been publications, and now FDA has taken an 

     

           initiative.  And I was wondering if you could 

     

           perhaps define if there's different functions for 

     

           each of these national data collecting systems that

           aren't. 

     

                     MR. WILLIAMS:  I don't have the advantage 

     

           of having the slides here, but in one of the early 

     

           slides, what I did was set out what I thought would 

     

           -- [sound out] -- of a national system.  And, yes,

           we have several systems in place.  Each one of 

     

           those measures a certain aspect of the blood supply 

     

           and is useful for a specific purpose but doesn't 

     

           cover the whole waterfront of what we might need. 

     

                     For instance, the NBDRC program, as I know

           it, speaking to the monthly data collection, is 

     

           from 26 sentinel sites.  It's rather comprehensive 

     

           data on collections and supply and variations over 

                                                                     12 

     

           time. 

     

                     The one aspect of that is that the data is 

     

           available sometime after the reports are actually 

     

           issued, so it's not realtime.  And, Karen, if you

           want to correct me on any of these, I'm going from 

     

           memory here.  But one disadvantage is that it's not 

     

           realtime information.  It's a good sample, but it 

     

           is a sample.  It's not a national population-based 

     

           assessment that will really give assessments at the

           local and regional level. 

     

                     The HHS program also is a sentinel program 

     

           at 29 sites.  It measures hospital inventory for 

     

           all blood types in inventory by a standardized 

     

           definition.  This is published on a daily basis.

           Again, I think one potential shortcoming of that 

     

           design is that it, again, doesn't represent the 

     

           local and regional shortages that might occur. 

     

           While it does give a national picture of, you know, 

     

           when things go up, when things go down, if you have

           a crisis in a specific area you really still don't 

     

           know what's going on.  And Mac is closest to that 

     

           and might wish to comment as well. 

                                                                     13 

     

                     The program that was described in some 

     

           depth at an earlier meeting--and I just went over 

     

           it very quickly yesterday--the TRANS-Net program is 

     

           specifically designed at the current time to

           measure shortages at primarily the transfusion 

     

           service level, although it would also function at 

     

           the blood center level.  It's designed to be a 

     

           population-based voluntary program so that--let's 

     

           assume for the moment we had 100 percent

           participation, which is unlikely.  We would be able 

     

           to capture individual local and regional shortage 

     

           issues, have that available in both the database 

     

           and a geospatial map so that we would be able to 

     

           pinpoint when trends were beginning to develop,

           compare them with a historical record, and be able 

     

           to do some predictive modeling, and really have an 

     

           in-depth perspective of how the nationwide picture 

     

           looks.  If there's a shortage in one area, there 

     

           may be a worse shortage in another area.  And I

           think one big advantage of the TRANS-Net program is 

     

           it gives an assessment of what impact those 

     

           shortages are having rather than just saying, okay, 

                                                                     14 

     

           there's a shortage in this area. 

     

                     If it starts to approach a point where 

     

           patient care is actually being compromised, you 

     

           know that through this program, and I think that's

           one advantage. 

     

                     None of these are ideal systems which 

     

           capture all of the elements, and I think, you know, 

     

           the plea that was being made is to build a 

     

           comprehensive system that as efficiently as

           possible through a combination of these programs 

     

           will capture the elements that we need, both to 

     

           assess what's going on in a routine situation as 

     

           well as in extreme crisis, just so it can be 

     

           managed efficiently.

                     DR. BRECHER:  Mat? 

     

                     DR. KUHNERT:  Mat Kuhnert from CDC.  I 

     

           just wondering in sort of thinking about the 

     

           discussions yesterday about what analogies there 

     

           are and sort of comparable systems in other fields.

           You know, there was some mention about Wal-Mart and 

     

           business models, which I don't know if we can hope 

     

           to model those efficiencies, but also to other 

                                                                     15 

     

           systems in health care like pharmaceuticals, 

     

           vaccines, but also other biological products like 

     

           organs.  There's an organ transplant network and 

     

           sort of--it's a different, I think, scale.  This is

           a far greater scale.  But I wonder if that could be 

     

           looked at and compared to as far as whether there 

     

           could be any analogies to blood from the experience 

     

           of organs and also tissues. 

     

                     The other thing I wanted to mention, it

           seems like there's a lot of existing efforts for 

     

           reserves, and, you know, maybe there isn't one 

     

           answer.  There's no one hemovigilant system in the 

     

           United States, and maybe it is going to end up 

     

           being that there's going to be different

           approaches.  But the key point will be connecting 

     

           those together, and the key point will be whether 

     

           the systems can talk to each other.  So I think 

     

           data exchange is going to be the biggest issue, I 

     

           think, to tackle.

                     DR. BRECHER:  Mark? 

     

                     MR. SKINNER:  I just want to make a 

     

           comment, and it's not really the focus of this 

                                                                     16 

     

           discussion, but we did have a presentation by Julie 

     

           yesterday afternoon on PPTA, on kind of the related 

     

           issues.  It wasn't the focus of all the 

     

           discussions, but I hope the Committee is mindful

           that the issues--there are a lot of parallels 

     

           between the discussions.  And while the nature of 

     

           the shortage may be different because of the supply 

     

           in the system for the plasma-based therapies, we 

     

           have experience with facing sustained shortages,

           like the two-year shortage of recombinant products. 

     

           And there really aren't the same kinds of 

     

           contingency and back-up plans there, as well as the 

     

           same issues of getting product to the rural 

     

           hospitals and other places when you need

           recombinant products.  That whole infrastructure 

     

           and that side of the equation in managing a 

     

           sustained shortage on the plasma products as well 

     

           as the emergency need in areas that don't have 

     

           ready access for certainly the coagulation

           therapies, that piece doesn't exist as well.  So 

     

           not that this is where we're going to answer that 

     

           question, but I just wanted to kind of point out 

                                                                     17 

     

           what was behind the rest of what Julie said 

     

           yesterday from my impression. 

     

                     DR. BRECHER:  Okay.  I think we're ready 

     

           to move on to our morning speakers on the new

           technology potentials.  Jeff, are you ready to go? 

     

                     MR. MIRIPOL:  Yes.  It looks like we 

     

           actually have some technology that might work.  of 

     

           course, I think like a lot of you, I had the So Big 

     

           virus as well.  I'll just give this a moment.  It's

           thinking.  It's going through the... 

     

                     DR. BRECHER:  While it thinks, if anybody 

     

           would like that little public service announcement, 

     

           let me know.  I can e-mail it to you. 

     

                     MR. MIRIPOL:  Good.  All right.  Again,

           thank you very much for the opportunity to speak to 

     

           you.  When Mac McMurtry called me and asked me to 

     

           speak, I sent him a little outline as to what I was 

     

           going to talk about, and he said that's fine.  So I 

     

           hope this is fine.

                     I wanted to give you an overview, at least 

     

           from a manufacturer's perspective, of issues as we 

     

           see issues in terms of I guess what one would 

                                                                     18 

     

           broadly call the availability of products for the 

     

           blood supply, to ensure the blood supply. 

     

                     Just as a little overview, you know, blood 

     

           is a unique product.  It's obviously the basic raw

           material that comes from humans.  It's a complex 

     

           drug, non-homogeneous product, blood component 

     

           therapies obviously required for a broad range of 

     

           medical conditions.  But it is a unique product in 

     

           that it's treated as a drug, but it's not a

           homogeneous drug. 

     

                     Blood products have a very finite shelf 

     

           life, and this is the big issue in terms of 

     

           ensuring supply.  Platelets have a five-day storage 

     

           period at room ratepayer; red cells, 42 days at 4

           degrees; plasma, obviously, frozen, fractionated, 

     

           et cetera.  And then the availability itself is an 

     

           uncertain, very unclear situation often, very 

     

           tenuous, as obviously the reason for this 

     

           conference.

                     Collecting blood, obviously, requires that 

     

           the donor is available, the donor is willing, and 

     

           the donor hasn't been frightened off.  I think one 

                                                                     19 

     

           of the problems we're seeing in this country is 

     

           that the donor is often in short supply for a 

     

           variety of reasons.  And I think a lot of times 

     

           it's because of fears within the donor community.

                     There's a unique interaction between the 

     

           donor and the blood center.  Obviously, the blood 

     

           center tries to appeal and does appeal to the 

     

           donor's sense of community, helping others, et 

     

           cetera, and the first dictum, which certainly

           applies to medicine and applies here, is, you know, 

     

           you don't want to do any harm to the donor and you 

     

           don't want to drive the donor away. 

     

                     The products required for blood collection 

     

           are various, and there's a large number of them.

           This just lists a few things that are used in blood 

     

           collection:  obviously, the collection bags, the 

     

           materials you need to do the skin preps, the 

     

           phlebotomy equipment, processing equipment, 

     

           apheresis equipment, testing equipment, test kits,

           labels, computer systems, refrigerators, freezers, 

     

           et cetera.  That just scratches the surface.  But 

     

           essentially to collect, store, inventory, ship, 

                                                                     20 

     

           transfuse blood, it's a very, very elaborate 

     

           process.  In some ways, it's obviously much more 

     

           complex than just making a vaccine or making a 

     

           specific drug because of the need for the raw

           material and how you have to process it, et cetera. 

     

                     Many elements of the supply, in terms of 

     

           the suppliers, the materials, the supply chain, are 

     

           really concentrated in a few companies.  This holds 

     

           for both the blood bag suppliers, holds also for

           the testing companies, the apheresis companies, et 

     

           cetera. 

     

                     This is clearly a very specialized 

     

           industry, and it has very clear specialized 

     

           manufacturing expertise.  The systems required are

           specialized to collect blood, and, of course, all 

     

           of this must meet stringent regulatory requirements 

     

           and oversight.  I'm not telling anything new to you 

     

           folks, but I thought it was helpful to at least 

     

           kind of summarize some of the issues that face all

           of us, all of you, in the area of blood 

     

           availability. 

     

                     The entry barrier for new suppliers is 

                                                                     21 

     

           relatively high.  This is a business where the 

     

           margins aren't that great from a supplier 

     

           standpoint.  If you were to get into a business, 

     

           this is not a business I recommend you get into.

                     There certainly are some companies that 

     

           are looking at the U.S. marketplace.  Certainly 

     

           MacoPharma in France is.  There's other companies 

     

           that are looking at the marketplace.  But I think 

     

           if, you know, one is rationally focused in a

           business model, this is not a business you'd get 

     

           into. 

     

                     There's a lot of regulatory oversight, and 

     

           the regulatory requirements do provide a very 

     

           important area of consistency, and they do limit

           variability.  But this is not a free-for-all 

     

           industry, and the supplier-user relationships are 

     

           extremely close, whether it's the apheresis 

     

           manufacturers, the blood bag manufacturers, the 

     

           manufacturers of the test kits, et cetera.  The

           relationships with us and the blood center, blood 

     

           center organizations, is extremely close. 

     

                     I want to focus now in the areas that 

                                                                     22 

     

           Terumo specifically deals in, and that's blood 

     

           bags.  There are right now in the U.S. three FDA-approved 

     

           suppliers:  Baxter, Pall, and ourselves. 

     

           So I guess one could say that you've got at least

           an assured supply of product because of the variety 

     

           and variability of suppliers. 

     

                     Terumo's capacity to supply is probably in 

     

           the neighborhood of 5 million bags to the U.S.  We 

     

           supply about 3, 3.1 million right now.  Baxter

           clearly has a larger supply capability for the 

     

           U.S., and I'm not sure what Pall's capacity is. 

     

                     The blood bag suppliers, our blood bags 

     

           are drug products.  They're unique products in many 

     

           respects.  The manufacturing facilities to make

           blood bags are quite unique and expensive 

     

           manufacturing operations to build and to maintain. 

     

           Essentially we're making IV solutions of small 

     

           volumes under very stringent FDA control and 

     

           requirements.

                     Many supply elements--and it's not just 

     

           for Terumo because our blood bags are made in 

     

           Japan, but many supply elements even with our 

                                                                     23 

     

           competitors are made outside of the continental 

     

           U.S.  This is something you have to consider 

     

           because the whole supply chain is, in my view, one 

     

           of the key issues in terms of supply of blood and

           blood products.  The requirement in the U.S. is for 

     

           over 15 million blood bags a year, so we're not 

     

           talking about an insubstantial number of products. 

     

                     The raw materials that are required, the 

     

           plastics, the solutions, et cetera, also must meet

           very specific requirements.  And the suppliers of 

     

           the raw materials, at least certainly of many of 

     

           the raw materials, are also specialized, and their 

     

           raw materials have to meet certain requirements 

     

           that are much more stringent than, say, the

           plastics use to make beach balls or things like 

     

           that. 

     

                     So, as I indicated, you have to look at 

     

           the total supply chain.  It's a very, very crucial 

     

           and critical element.

                     Also, the quality systems that we and our 

     

           competitors have are very complex and they're very 

     

           detailed and have very extensive oversight from the 

                                                                     24 

     

           FDA and other regulatory agencies. 

     

                     So what I'm getting at here is that from 

     

           the manufacturing standpoint, I think that the 

     

           public has a high level of assurance that, say, the

           blood bags or apheresis kits, if you will, or 

     

           whatever, have a very high level of quality and 

     

           assurance.  And one I guess might be asking:  Are 

     

           we concerned about sabotage?  Are we concerned 

     

           about some other issues?

                     The manufacturers all have plans for 

     

           various emergency situations, and I understood that 

     

           that was one of the things that, you know, Mac 

     

           wanted me to sort of address.  However, what 

     

           happens when transit is completely shut down?

           September 11th, no flights were flying, no trucks 

     

           were running, et cetera.  We actually were able to 

     

           supply blood bags, even though our bags come from 

     

           Japan, because we had large inventories in the U.S. 

     

           You know, we had folks getting in vans and bringing

           blood bags to blood centers, et cetera. 

     

                     But this is a critical element in terms of 

     

           planning and supply.  We need to have, I think, a 

                                                                     25 

     

           better plan to ensure that, you know, products are 

     

           made available. 

     

                     Now, that's just the raw material.  The 

     

           blood itself then, getting the blood from the blood

           centers to hospitals, that was probably also 

     

           affected to some degree. 

     

                     Also, what happens when you have rumors of 

     

           contamination?  And what happens when donors become 

     

           fearful of donating?  Again, just recently, in

           January and February, this issue of white 

     

           particulate--you know, blood is non-homogeneous 

     

           substance.  This was not an issue of contamination. 

     

           But, again, it's an issue of, I think, direction 

     

           and understanding the whole supply chain and also

           leadership. 

     

                     So what are the present issues in 

     

           supplies--or problems in terms of supply assurance, 

     

           at least from our view?  One of the major issues I 

     

           am obviously speaking about here is getting the

           blood bags and supplies from outside of the U.S. to 

     

           the U.S.  It takes twice as long now as it used to 

     

           prior to 9/11 for us to get blood bags, for 

                                                                     26 

     

           instance, into the U.S.  I think some of our 

     

           competitors and other suppliers are also seeing 

     

           situations much like this. 

     

                     We believe we have to simplify, develop a

           list of ways to release incoming products so that 

     

           the customs officials and the FDA, et cetera, can 

     

           work together to ensure a more assured supply and a 

     

           more simplified supply chain.  Again, it's 

     

           important to ensure safety, but if the product is

           not available, then it's obviously counterproductive. 

     

                     Also, we believe--I guess to that point, 

     

           we believe we need a better coordination of the 

     

           regulatory and customs processes and procedures. 

     

           Certainly this conference has been discussing

           yesterday and I'm sure more today the issue of 

     

           donor availability.  This is not our area of 

     

           expertise, but certainly one would think that we 

     

           need better national programs for donor awareness 

     

           and recruitment.  We also think that we need better

           media integration of the blood resource needs, and 

     

           we also need to reduce hysteria.  I think every 

                                                                     27 

     

           time there is a new pathogen--you know, West Nile, 

     

           et cetera--from every indication I have from our 

     

           colleagues in the blood centers, this leads to a 

     

           reduction in donors.  And, again, I think this has

           to do with perhaps multiple messages or a lack of a 

     

           consistent message. 

     

                     As you've been hearing here, blood is 

     

           available but it's not available in the right 

     

           places.  So the systems are complex, the response

           times are reduced, and, frankly, there's no 

     

           national coordination of blood policy.  To that 

     

           point, in terms of a national blood resources 

     

           disaster plan, from our perspective there really is 

     

           no plan.  There's a lot of efforts, and certainly

           this is a very good attempt to try to bring this 

     

           together.  But we don't really have a unified 

     

           process or unified group that gets together and 

     

           really pulls together the requirements chain, the 

     

           blood chain, and the supply chain.

                     So what is the real concern?  The concern 

     

           is bioterrorism.  Well, what does the bioterrorism 

     

           concern really mean?  Does it mean the blood bags 

                                                                     28 

     

           or the test/assay materials, et cetera?  Are they 

     

           being sabotaged?  I don't think so, and they're 

     

           very closely controlled during manufacture.  I 

     

           think that's the least of anybody's worries.

                     You know, is the fear of sabotage of blood 

     

           products once the products have been made in the 

     

           blood center or sent to the hospital?  Well, that's 

     

           a complex and, I think, a very, very difficult 

     

           question.  And I'll make a few points subsequent to

           this on that, but I think it's going to be very, 

     

           very difficult to try to develop systems to ensure 

     

           that every unit of blood has not been in some way 

     

           sabotaged by an unhappy worker or something like 

     

           that.

                     So, again, as I pointed out earlier, as 

     

           you all know, blood is a complex product, and it is 

     

           not homogeneous.  So if you see white cells in it, 

     

           don't get upset. 

     

                     In terms of our suggestions and our

           thoughts on this area, certainly we believe a 

     

           national blood resource plan would be important 

     

           and, frankly, mandatory as things become more 

                                                                     29 

     

           complex and fearful in our world.  However, we 

     

           believe that this ought to be a very simple plan in 

     

           its basics. 

     

                     Remember that you may not have power.

           Look at just what happened last week in New York. 

     

           We have colleagues here, of course, who are going 

     

           to talk about certainly freezing systems and other 

     

           kinds of systems, even apheresis systems, et 

     

           cetera.  Blood bag collection is low-tech and

           reliable.  You don't need a lot of equipment. 

     

           That's a big advantage.  It's easy to do in lots of 

     

           different places.  You don't have to have complex 

     

           environments to collect blood in blood bags. 

     

                     We believe there should be a supply depot

           situation in the U.S. based--sort of similar to 

     

           what the military did some years back, where this 

     

           is coordinated amongst all the suppliers and the 

     

           blood centers.  This could be done at blood 

     

           centers, probably most appropriately done at blood

           centers. 

     

                     We think that a centralized national group 

     

           with clear leadership to coordinate blood 

                                                                     30 

     

           availability and these plans should be put 

     

           together, should obviously include the military, 

     

           blood centers, suppliers, the providers, the 

     

           regulatory agencies, et cetera.  But--and this is

           something, I think, that became very clear 9/11--I 

     

           think we need to have a single focal point or a 

     

           single voice to give clear information in these 

     

           situations.  And I think that's a very, very key 

     

           issue in terms of the donor assurance and making

           sure that the donors are coming in and are willing 

     

           to donate under these kinds of circumstances. 

     

                     In terms of new technologies, we believe 

     

           that the major issue is actually patient safety, 

     

           and certainly one of the biggest problems is the

           mistransfusion of blood products.  So we believe 

     

           that resources ought to be put at the transfusion 

     

           area in terms of assuring the safety of the blood 

     

           products there, and really it has to do with the 

     

           assurance that someone who is an A patient gets an

           A unit of blood and not a B unit of blood and so 

     

           forth. 

     

                     New technologies in terms of bacteria 

                                                                     31 

     

           testing, admirable.  We ourselves are not working 

     

           directly in this area.  We believe it's important. 

     

           Virus testing procedures and making sure that 

     

           viruses or bacteria or other pathogens are

           inactivated, useful, expensive, and, again, does 

     

           not answer the issue of sabotage of blood products. 

     

                     Our thinking is that one of the areas, 

     

           although we ourselves are not working directly in 

     

           this area, that should be looked at and perhaps

           funded more strongly is the area of bio-sensors. 

     

           We think that there are some technologies out there 

     

           that are very, very promising that could be applied 

     

           to blood products, both to identify pathogens and 

     

           perhaps other kinds of drugs, et cetera.

                     Our efforts in terms of technologies are 

     

           basically fairly straightforward and relatively 

     

           simple.  In the blood bag collection systems, we've 

     

           developed a diversion blood bag system, as our 

     

           other colleagues have.  The intent here, of course,

           is to remove the initial bolus of blood from the 

     

           donor, that bolus perhaps being one that has more 

     

           bacteria, et cetera, associated with it.  A simple 

                                                                     32 

     

           system that we believe does improve safety. 

     

                     We obviously also are working on and have 

     

           approval for some blood filter systems, for white 

     

           cell removal.  This we believe increases some

           marginal safety from the standpoint of transfusion 

     

           reactions, et cetera, but certainly doesn't address 

     

           the kinds of things that I think you're concerned 

     

           about from a bioterrorism standpoint. 

     

                     And the other area that we're involved in

           is to continue efforts to optimize the logistics 

     

           and transport operations. 

     

                     And just as a summary of this, in terms of 

     

           our plan, we maintain a six- to eight-week supply 

     

           of blood bags in the U.S.  We have three domestic

           warehouses and shipping points.  We keep in transit 

     

           in terms of blood bags from our manufacturing 

     

           facility in Japan, four to six weeks for the 

     

           product in transit via boat.  We have three 

     

           domestic trucking firms that we work with, plus

           DHL, FedEx, et cetera.  We have computer back-up 

     

           systems and so forth, although I've got to tell 

     

           you, with that So Big virus, it slowed things down 

                                                                     33 

     

           quite a bit.  But it didn't shut us down. 

     

                     So that's really kind of the summary that 

     

           I wanted to give you in terms of our view of blood 

     

           resource availability.  I think the take-home for

           me, I guess, or from my perspective is keep the 

     

           system simple and provide a more centralized, if 

     

           you will, leadership situation so that the donors 

     

           get a clear message as to what's necessary and how 

     

           they should respond.

                     Thanks for your attention. 

     

                     DR. BRECHER:  Thank you, Jeff. 

     

                     Questions or comments?  Andy? 

     

                     DR. HEATON:  This is Andrew Heaton, 

     

           Chiron.  Jeff, do you have a minimum lot

           requirement for maintenance in country?  And do you 

     

           have a lot release process as well? 

     

                     MR. MIRIPOL:  Oh, absolutely, yes.  In 

     

           fact, you saw it.  To that point, with regard to 

     

           the manufacturing safety or manufacturing

           processes, Terumo, Baxter, Pall--I'm sure we're all 

     

           quite equivalent in this way--we have very 

     

           extensive lot release quality assurance 

                                                                     34 

     

           requirements.  And, actually, to get into our 

     

           manufacturing facilities is very, very difficult. 

     

           I think if we're talking about secure systems from 

     

           soup to nuts, you have to have special IDs; it's

           all kind of--doors are controlled electronically, 

     

           et cetera.  This is both in the U.S. and in our 

     

           manufacturing facility in Japan. 

     

                     You know, we vet our employees to a 

     

           reasonable extent.  We're not doing, you know, CIA-type

           vetting of employees.  But, you know, we have 

     

           a very high level of quality assurance. 

     

           Essentially, our philosophy is to have quality 

     

           built into the product.  Every blood bag, for 

     

           instance, is inspected by special photo systems

           that, you know, ensure the labels are properly 

     

           placed and needles are properly placed, et cetera, 

     

           et cetera. 

     

                     So I think from the standpoint--to your 

     

           point, Andrew--of quality systems and assurance of

           the raw material that goes in the blood bags, the 

     

           solutions and the bags themselves, that's an 

     

           extremely high level. 

                                                                     35 

     

                     DR. BRECHER:  Lola? 

     

                     DR. LOPES:  I have a question about the 

     

           margins that you mentioned.  It seems that in an 

     

           industry where there are few specialized

           manufacturers, you're making a critical product. 

     

                     MR. MIRIPOL:  You're right. 

     

                     DR. LOPES:  And it really doesn't cost 

     

           very much in the context of, say, an open heart 

     

           surgery, something like that.

                     MR. MIRIPOL:  That's right. 

     

                     DR. LOPES:  Why are your margins small? 

     

                     MR. MIRIPOL:  Well, there is competition. 

     

                     DR. LOPES:  But you don't have many--this 

     

           is not a commodity product.

                     MR. MIRIPOL:  Well, in some folks' eyes--I 

     

           look around at some of my folks that I supply.  In 

     

           some folks' eyes, they believe at least blood bags 

     

           and certain types of products are almost a 

     

           commodity product.  I mean, it's a very good

           question.  Obviously, we're not colluding with Pall 

     

           or with Baxter in terms of trying to maintain 

     

           prices.  I wish I could because it would make 

                                                                     36 

     

           things a lot easier. 

     

                     [Laughter.] 

     

                     MR. MIRIPOL:  Well, at least they'd be 

     

           more stable.  Let's put it that way.

                     You know, I think the real problem is 

     

           this, as I see it:  AdvoMed has kind of approached 

     

           this.  I know AABB, et cetera, have approached this 

     

           in terms of reimbursement for blood products.  And 

     

           if you take that chain all the way down, you know--blood is

           kind of neglected as a product within, you 

     

           know, our health care system.  And so, really, it's 

     

           a small percentage of the total cost of the medical 

     

           care, which is one of the reasons why, you know, 

     

           the payee system is really kind of ignoring it to a

           great degree, because it's kind of in the, you 

     

           know, decimals or the dust of the total cost. 

     

                     But, in reality, to a blood center and, of 

     

           course, to us, it's a major part of, you know, the 

     

           whole economic equation.  But the problem is blood

           bags as a technology is a relatively old 

     

           technology, and a lot of folks are in the business 

     

           worldwide, although not in the U.S.  And there are 

                                                                     37 

     

           some companies that are looking to get into the 

     

           U.S. market, and, frankly, they may have a lower 

     

           cost structure and believe that they can make some 

     

           money in it.

                     DR. BRECHER:  Jay? 

     

                     DR. EPSTEIN:  Dr. Lopes raised the issue 

     

           of market concentration.  I just would like to hear 

     

           your thoughts.  It seems as if the market forces 

     

           favor concentration in many areas related to blood

           products, but that the security of the system 

     

           actually favors more redundancy.  And even where 

     

           you have multiple manufacturers, you also have 

     

           system incompatibilities.  So, you know, the user 

     

           really does end up committed, both through contract

           mechanisms and through system incongruities. 

     

                     I just wonder what your thoughts are about 

     

           the problem of lack of redundancy and how the 

     

           market forces play out and whether there's anything 

     

           that could be done in that situation.

                     MR. MIRIPOL:  Right, right.  Well, you 

     

           know, to that point, actually if we're talking 

     

           about blood bags themselves, although they're not 

                                                                     38 

     

           all identical, they are fairly interchangeable.  If 

     

           you start talking about things like apheresis kits 

     

           and equipment, absolutely correct.  I mean, you 

     

           know, a Gambro kit will not work on a Baxter

           device, et cetera.  And certainly our blood bags, 

     

           you know, will work with everybody's centrifuges, 

     

           as will Pall's and Baxter's and that kind of thing. 

     

                     So I think from the products that are 

     

           simpler, i.e., blood bags, they are more

           interchangeable, which may be, again, one of the 

     

           reasons why the margins are lower, as opposed to 

     

           the apheresis kinds of equipment. 

     

                     I think that in many respects I actually 

     

           would argue that the FDA requirements and the kind

           of oversight have been very effective and 

     

           appropriate to have at least enough competition 

     

           while at least providing a consistency of products. 

     

           That is, I am not sure we want to have, you know, 

     

           20 different kinds of additive systems and, you

           know, blood that can be stored for 28, 35, 42, 49 

     

           days, because that can get more complex.  Right now 

     

           we basically have two red cell products:  CPDA-1, 

                                                                     39 

     

           which is stored for 35 days, and additive systems 

     

           which are stored for 42 days.  But as you well 

     

           know, probably--what?--85 percent of the blood in 

     

           the U.S. is stored in additive systems, maybe even

           more than that. 

     

                     So I would say that consistency in the 

     

           types of products is appropriate, at least to the 

     

           point that it doesn't stifle technology innovations 

     

           or improvements, and that from my perspective, at

           least on the blood bag side, you know, having three 

     

           suppliers gives the nation a fair security and 

     

           redundancy that if, you know, the Terumo plant 

     

           blows up or the Pall plant blows up, somebody else 

     

           can step in and supply the product.  Certainly we

           couldn't supply all the U.S.  I don't think Pall 

     

           can supply all the U.S.  And I doubt that Baxter 

     

           could supply all the U.S. right now. 

     

                     Does that answer your question? 

     

                     DR. EPSTEIN:  It's helpful.

                     MR. HAAS:  I was listening to the 

     

           presentation, but the word "complex" I think fits 

     

           here on multiple levels.  We talk about market 

                                                                     40 

     

           forces, and that gets my ears perked up really 

     

           quickly, and it's awfully hard for me to understand 

     

           the word "market forces" at the same time we have 

     

           reimbursement issues, which are directly counter to

           what a typical market force would be doing 

     

                     The idea of a few sellers, typically, the 

     

           idea is that, okay, that's bad because of potent--you know, 

     

           that we can't collude, but yet there's a 

     

           word in my discipline of "conscious parallelism,"

           but in this type of marketplace you want the 

     

           consistency.  I agree with that term quite a bit; 

     

           the whole sense of what is the relationship between 

     

           the reimbursement and technology. 

     

                     Well, there's an awful lot of literature

           that tells us that when reimbursement was rich and 

     

           full, technology thrived in the medical industry, 

     

           and now we have a situation where the reimbursement 

     

           levels are constantly being ratcheted down, so the 

     

           question becomes one of what's the impact of that

           in the future? 

     

                     And then I think there's another issue 

     

           that connects with this, too, in that here we're 

                                                                     41 

     

           talking about--I'll be unfair--but blood bags.  We 

     

           talked a lot yesterday about the blood products, 

     

           and then we started thinking of plasma or 

     

           components coming from the products, and then we

           think of the recombinant, which isn't a blood 

     

           product, but it certainly is important in that 

     

           area. 

     

                     And then the question is, all right, 

     

           what's the interaction among these?  What happens

           if in one of these areas there is a problem? 

     

           What's the spillover effect on all of the other 

     

           areas?  We have cascading effects in multiple 

     

           issues. 

     

                     And I guess, as I'm sitting here, I'm

           saying to myself, well, I can't pull this all 

     

           together, but this is something I think that we 

     

           need to be looking at. 

     

                     MR. MIRIPO:  Well, let me make a comment, 

     

           if I may.  You know one of the bad things about

           blood is that every individual unit is a separate 

     

           lot.  Every donor is different, but that's also, 

     

           you could say, a good thing because, to your point 

                                                                     42 

     

           about, you know, like a blood product that was 

     

           derived form a recombinant product, if you had a 

     

           bad lot, you're really up a creek.  You're talking 

     

           about a lot of product that's bad, and that's

           happened with IBGG, et cetera.  While if you have 

     

           some blood bags or let's say blood in a bag that's 

     

           bad, you've got one bad unit. 

     

                     So you might argue that having blood as a 

     

           product, in some sense, offers a lot of redundancy,

           as opposed to something that's made in a drug 

     

           environment, where one lot is many, many doses. 

     

           And if there's something wrong with that, you've 

     

           lost many doses, and that could have a major 

     

           impact.

                     MR. HAAS:  A quick follow-up.  I think 

     

           you're absolutely right, but then that again 

     

           triggers another thought in my head.  If we think 

     

           in terms of the recombinant market, for instance, 

     

           if the hemophilia users were to go almost

           exclusively to recombinant, that affects the blood 

     

           market in the sense that now the plasma products 

     

           aren't being used to make clotting factors. 

                                                                     43 

     

                     Does, and I'll say in quotes, the "market" 

     

           then tell the blood sector to stop making clotting 

     

           factor and then a clotting, a recombinant plant 

     

           goes down, the suite goes down, then where's the

           back-up?  And we just went through a situation like 

     

           that, where, if the plasma, the Red Cross hadn't 

     

           been there to step in, there would have been 

     

           terrible problems.  So, yes, I think this, we've 

     

           got to look at this stuff.

                     MR. MIRIPO:  Other questions? 

     

                     DR. BIANCO:  Jeff, that's been stimulating 

     

           discussion, but you didn't talk much in terms of 

     

           technology potential, in terms of that could 

     

           facilitate availability.  I have one that is my

           favorite, a needle that doesn't hurt. 

     

                     [Laughter.] 

     

                     DR. BIANCO:  But other things--how do you 

     

           see that facilitating or not availability, 

     

           particularly if we want to build a reserve in the

           country? 

     

                     MR. MIRIPO:  You're right.  I didn't spend 

     

           a lot of time, in terms of new technologies 

                                                                     44 

     

           because, frankly, as I did point out, the things 

     

           that we're doing are relatively low-tech, and I 

     

           think the things that we're also doing don't really 

     

           relate to sort of safety so much, except for

           perhaps the diversion bag, and you could certainly 

     

           argue filters are helpful to some degree. 

     

                     You know, I could, and we've had this 

     

           discussion, argue that some of the things that are 

     

           being proposed to improve blood safety will make

           availability worse; i.e., pathogen reduction 

     

           technologies, et cetera.  That, actually, even if 

     

           they work, a platelet product is now less 

     

           efficacious, and you've got to use more of it.  So 

     

           you've got to get more platelets, et cetera.

                     So one may see that some of these 

     

           technologies could have a negative impact, and 

     

           perhaps a substantial negative impact on blood 

     

           availability.  So it's the old story of, you know, 

     

           unintended consequences.  I think you need to think

           some of these things through, which is the reason 

     

           I'm interested in, even though I'm no expert in, 

     

           the bio sensor area.  I think that that could be a 

                                                                     45 

     

           very interesting way of maybe assuring safety of 

     

           the products in a simpler fashion. 

     

                     And the real problem is getting the donors 

     

           and getting the donors in the right place.  So I

           think it comes down to kind of a better national 

     

           program, perhaps, better coordination.  As you well 

     

           know, Celso, with your members, there are some 

     

           members that don't appear to have a problem getting 

     

           donors and others that do.  Why is that?

                     Well, it's complex.  It has to do with 

     

           populations, and urban/nonurban, this, that, and 

     

           the other thing.  There's a lot of variations in 

     

           that, but certainly there are some best practices 

     

           that could, perhaps, help improve donor

           availability and donor collections. 

     

                     I'm not sure if I answered your question, 

     

           but it's a complex situation, and I think new 

     

           technologies could have a negative impact on blood 

     

           availability.

                     DR. BRECHER:  Last question, Chris? 

     

                     MR. HEALEY:  Yes, I'd just like to echo 

     

           what Paul said.  I think it's completely 

                                                                     46 

     

           appropriate for the Committee to consider those 

     

           factors, the relationship of the plasma therapies, 

     

           and all of the ingredients that go into making 

     

           those in the blood sector, and how those

           relationships work. 

     

                     You pointed to the role of reimbursement, 

     

           and I guess we're going to hear more about that 

     

           this afternoon, and the importance of that to 

     

           preserving the viability of the blood industry and

           the plasma industry.  And, Jeff, you mentioned some 

     

           of the regulatory issues and cost factors, and I 

     

           think that's the other side of that coin, that also 

     

           this Committee might want to consider is what are 

     

           the cost factors that go into producing these

           therapies in these blood components, and how could 

     

           those costs be managed better.  Because, obviously, 

     

           you have the cost, and you have the reimbursement 

     

           side, and those need to balance out to make the 

     

           industries healthy.

                     MR. MIRIPO:  Right.  Thank you. 

     

                     DR. BRECHER:  Thank you. 

     

                     Our next speaker is Jerry Holmberg from 

                                                                     47 

     

           Haemonetics. 

     

                     DR. HOLMBERG:  While things are getting 

     

           set up, I just need to make a point of 

     

           clarification.  When Mac asked me to speak, I had

           to quickly tell him that I was no longer employed 

     

           by Haemonetics.  So please bear that in mind, when 

     

           I go through my presentation, that I do not 

     

           represent Haemonetics.  I will be showing you a few 

     

           slides, with their permission.  However, I've been

           involved with frozen blood, and especially the ACP-215, for 

     

           many, many years. 

     

                     By the way, can Drs. Haas and Penner 

     

           identify?  Okay. 

     

                     Dr. Haas, I just wanted to tell you that I

           send greetings to my schools, my alumni.  I did a 

     

           master's at Michigan State, and I will be talking a 

     

           little bit about my experience at Michigan State 

     

           years ago back in the '70s, and Bowling Green, I 

     

           obtained my Ph.D.  So I haven't been back to either

           institution for a long time, but one of these days 

     

           I'll get back there. 

     

                     I was invited back for the medical 

                                                                     48 

     

           technology reunion a few years ago and was unable 

     

           to attend that due to my son's wedding. 

     

                     DR. PENNER:  We won't forget you. 

     

                     DR. HOLMBERG:  Thank you.

                     DR. BRECHER:  See, that gets to the point 

     

           that the alumni offices can always track you down. 

     

                     DR. PENNER:  Oh, yeah. 

     

                     DR. HOLMBERG:  What I'd like to do today 

     

           is to go through some of my experience, both in the

           civilian world and in the military world.  After I 

     

           left academia and I decided that what I wanted to 

     

           do was to get a little bit more management 

     

           experience.  So I went into the military, and, boy, 

     

           did I get management experience.  So I went into

           the military relatively late in life and recently 

     

           retired about three years ago and joined 

     

           Haemonetics at that time. 

     

                     One of the things that I want to talk 

     

           about, first of all, I want you to keep in mind, as

           I go through this presentation, because I will be 

     

           giving you an historical presentation on the 

     

           history of frozen blood and where we are today with 

                                                                     49 

     

           some new technologies. 

     

                     But two things I want you to keep in mind, 

     

           especially as you look at the task force for 

     

           reserve of blood and even of frozen reserve, and

           that is--and I learned this from the military--keep 

     

           it simple and practice every day like you're going 

     

           to war.  Okay?  I would tell my people, and I ran 

     

           one of those facilities in Okinawa, Japan, that had 

     

           40 freezers and 40 M115s, and we practiced on a

           quarterly basis with a disaster drill activation of 

     

           my augmentation teams, and we also integrated 

     

           frozen blood on a daily basis.  So just keep those 

     

           two premises in mind. 

     

                     Yesterday, I think you heard that frozen

           blood has been around for three decades, but really 

     

           it's been around longer than that.  Dr. Valeri 

     

           actually has done or did frozen blood transfusions 

     

           back in Vietnam, back in the '60s.  It's been 

     

           primarily used in this country as a source for rare

           cells. 

     

                     And one of the things Dr. Valeri and I 

     

           have great philosophical discussions on, and I 

                                                                     50 

     

           think that where we might be missing the boat is 

     

           that it is a strategic, a quarantine strategic 

     

           reserve.  There are places around the world that 

     

           continue to suffer with high rates of HIV, and

           blood tends to still be a vector for that 

     

           transmission. 

     

                     Whether that's feasible to supply that to 

     

           those Third World developing countries is beyond my 

     

           financial means and also I think a lot of other

           supporting World Health Organizations or whatever. 

     

           But it is a quarantine strategic reserve. 

     

                     It's also been looked at for many, many 

     

           years as a strategic source for high-quality red 

     

           cells, such as red cells high in ATP and 2-3 DPG.

           This is one of the reasons why you notice in 

     

           yesterday's presentations they talked about--Commander 

     

           Bartley mentioned about six-day-old 

     

           blood.  Routinely, six-day-old blood is frozen, and 

     

           if you do go on for expiration and rejuvenate the

           whole thing that you're trying, the target that 

     

           you're trying to do is to regenerate the ATP and 

     

           the 2-3 DPG levels. 

                                                                     51 

     

                     Forty years ago, there was also, and I put 

     

           this, I want you to understand this was 40 years 

     

           ago that deglycerolized red cells were viewed as 

     

           washed cells to remove the plasma, also to remove

           white cells because they will reduce white cells 

     

           down to a two-log reduction.  It doesn't meet our 

     

           current standards today, and so therefore that 

     

           claim cannot be held. 

     

                     But also back in the '70s, it was thought

           to really, it was thought maybe this was the blood 

     

           that would be free of hepatitis.  And what we did 

     

           find was that it did reduce viral load, but it did 

     

           not eliminate the risk for those--for hepatitis. 

     

           And then also CMV, many of us years ago used to use

           CMV as a frozen blood, deglycerolized blood, as a 

     

           source of CMV-free cells. 

     

                     Some of the historical disadvantages of 

     

           using frozen blood is that it's been time-consuming, very 

     

           costly.  Up to now, it's been

           limited to 24 hours due to the open system.  And 

     

           while it reduces the viral load, it does not 

     

           eliminate the viral risk.  And also we have new 

                                                                     52 

     

           required tests that have become available.  So, 

     

           therefore, it does require that a cryo sample is 

     

           maintained to be able to retest those units. 

     

                     A little historic graph here is that

           frozen blood really became popular in the '70s, as 

     

           far as a lot of hospitals, local hospitals, blood 

     

           centers using it.  I refer back to my days at 

     

           Michigan State, back in the '70s, and our small 

     

           community of Lansing and East Lansing, Michigan.

           We had the American Red Cross with the frozen red 

     

           cell program, and Ingham Medical Center and also 

     

           E.W. Sparrow Hospital.  So three locations in that 

     

           one small area had frozen blood available. 

     

                     What happened, though, was towards the end

           of the '80s, when the DRGs started kicking in, the 

     

           hospitals found that this was very costly, and they 

     

           could not really support the cost of a frozen blood 

     

           program. 

     

                     You see my graph continues to go up

           because in the early '80s the military really got 

     

           into a process of thinking about, and what the 

     

           document was called, it was called Military Blood 

                                                                     53 

     

           Program 2004.  What would the blood community look 

     

           like in 2004?  Well, guys, we're one year away. 

     

           And one of the things that the military really 

     

           pushed back then was that we needed to have a

           frozen reserve available--pre-positioned, pre-tested in 

     

           strategic locations throughout the world. 

     

                     Also, throw in there that we have the 

     

           GMPs.  GMPs came on in the early '90s, and that may 

     

           have had some effect on the popularity of using

           frozen blood, also the Gulf War.  The Gulf War, we 

     

           had a lot of frozen blood available, but one of the 

     

           things was that it was not used that much because 

     

           we had plenty of time, and the liquid blood supply 

     

           was able to be put into place.

                     Then, 9/11 kicks in, 2001, and then we 

     

           start seeing another surge in interest with the 

     

           frozen blood, and both the military and the 

     

           American Red Cross and NIH have looked very 

     

           seriously and have purchased equipment to try to

           move for a closed system. 

     

                     Today, if you look at the frozen blood 

     

           that's available.  About 38 percent worldwide of 

                                                                     54 

     

           red cells, rare red cells, of the frozen blood 

     

           inventory poses 38-percent rare cells, about 60 

     

           percent is a reserve by the military, and that's 

     

           not only the U.S. military, but other NATO

           countries such as Belgium and the Netherlands, and 

     

           then 2 percent is actually autologous. 

     

                     So is the concept of strategic frozen 

     

           blood reserves still viable after 30 years?  Well, 

     

           my answer to that is, yes, but re-engineering is

           needed.  I think in the conversion of moving my 

     

           slide to the hide drive here, it sort of got messed 

     

           up, and you see some of my points early, but let me 

     

           just walk you through some of my points. 

     

                     Re-engineering was needed.  Boy, putting

           in a hard drive really messed this up, so bear with 

     

           me. 

     

                     You need to be able to freeze all 

     

           anticoagulants and additive solutions.  Currently, 

     

           the device that has been cleared, which was cleared

           back in May of 2001 by the Food and Drug 

     

           Administration, was a closed system for Haemonetics 

     

           based on CPDA-1 red cells frozen within six days 

                                                                     55 

     

           and also stored at minus 80 degrees Centigrade. 

     

                     Subsequently, upon thawing, those cells 

     

           are washed and then an additive solution, AS-3 is 

     

           added to them, and because it's a closed system, it

           would be 14 days. 

     

                     The current problem is that the 

     

           requirements that the company built the device on, 

     

           and also did the clinical studies, was based on 

     

           what the military was using at that time.  And the

           military was using CPDA-1. 

     

                     Now, this is where I have a disagreement, 

     

           and again this is my personal view, and please take 

     

           it as  personal view, but this is my personal view 

     

           as a problem that is currently being brought before

           the FDA is that, once you take a unit of red cells 

     

           that are six days old and you remove the additive 

     

           solution, and you add glycerol through a process to 

     

           get to a 40 percent, then that's a glycerolized red 

     

           cell.  And yet there has been a requirement to go

           back and to test all anticoagulants and all 

     

           additive solutions to ensure that the quality is 

     

           there and also that the survival times are 

                                                                     56 

     

           comparable.  So that's where the manufacturers are 

     

           at the present time--are going back to qualify the 

     

           other anticoagulants and additive solutions. 

     

                     Another issue that is currently being

           brought is the whole issue of temperature because 

     

           of the original studies were presented to the FDA 

     

           at minus 80, however, the CFR and the American 

     

           Association of Blood Bank standards say minus 65 or 

     

           colder.  And so the FDA is requiring the

           manufacturer to go back and to qualify that 

     

           temperature, also. 

     

                     We also need a closed system, which the 

     

           new system that I'll show you in a few minutes 

     

           does.  A closed system, from the very beginning,

           from adding the glycerol to removing the glycerol, 

     

           it needs to be automated, it needs to be simplified 

     

           for minimal training.  Again, keep the kiss system 

     

           in place, keep it as simple as possible.  Reduce 

     

           the solutions.

                     One of the things that we learned in the 

     

           military was that, you know, when you're aboard 

     

           ship, you can't have a lot of fluids, and the whole 

                                                                     57 

     

           top deck of the two hospital ships is primarily for 

     

           fluids, for supplies.  And so if you can reduce the 

     

           amount of solutions that you have, you can move 

     

           your army or your sailors better.

                     The storage conditions.  I already 

     

           mentioned mechanical freezers.  The CFR and the 

     

           AABB currently say minus 65 or colder, but the 

     

           hang-up right now with this closed system is minus 

     

           80.

                     Reduce breakage.  Dr. Valeri had an 

     

           excellent article this last I think it was March, 

     

           in Transfusion, that showed, with the Merryman 

     

           method, with the stericon bag, that the breakage 

     

           was very high, as opposed to the PVC, and Dr.

           Valeri strongly recommends the PVC bag, the Baxter 

     

           PVC bag, that is qualified at minus 80. 

     

                     One of the things that I would, and I'll 

     

           show you in some of my recommendations, is that 

     

           when you have extended storage, you reduce the need

           to be able or to have to move frozen blood.  You, 

     

           the logistics change, the logistics now change to a 

     

           deglycerolized red cell that you could ship as you 

                                                                     58 

     

           normally would ship a unit of packed red cells or 

     

           whole blood at 4 degrees or a temperature of 1 to 

     

           10 degrees Centigrade in the shipping. 

     

                     The extended dating for the post-thawed

           shelf life.  Again, with AS-3, documentation has 

     

           been 14 days, although there have been studies that 

     

           show that could even go out to 21 days or even 

     

           longer. 

     

                     And then my pet peeve is that many times

           when people have frozen reserves, they ignore this 

     

           last principle, and that is integrating it into 

     

           normal, routine use.  If you integrate it in, you 

     

           get the hospitals, you get the physicians, you get 

     

           the technicians used to using it.  This is the ACP-215, 56

           pounds.  It looks like very many of the 

     

           other devices that Haemonetics has on the market. 

     

                     On the left-hand side is a shaker, and on 

     

           the right-hand side is a printer that will record 

     

           all of the critical information that takes place

           during the process.  It tries to keep in mind all 

     

           of the requirements for the GMP and record those 

     

           data points. 

                                                                     59 

     

                     This is a set-up with the glycerol.  The 

     

           glycerol is hanging on the side, and it gets mixed 

     

           to what the military uses as a primary collection 

     

           bag, and this would be the 800 ML PVC bag.

                     I know yesterday there were a few 

     

           questions on the productivity for glycerolization--the 215 

     

           well-glycerolized red cells within 11 

     

           minutes.  You could do four units per hour, and the 

     

           only solution that you use is glycerol.  Now, the

           thing that you do not understand here and is not 

     

           clear from the picture is that I mentioned in one 

     

           of my earlier slides that the requirement was to 

     

           reduce solutions, and in order to reduce the 

     

           solutions, again, trying to make things simplified

           on the other end, when you want to deglyce the unit 

     

           of red cells is that you need to remove the 

     

           supernatant glycerol.  So there is an additional 

     

           step here of spinning the red cells down, removing 

     

           the supernatant glycerol and getting the hematocrit

           back to a 60-percent volume. 

     

                     If you reduce that supernatant glycerol, 

     

           then, on the other side, when you deglyce, then you 

                                                                     60 

     

           can use only two solutions, the 12-percent sodium 

     

           chloride, and the .9 .2-percent sodium chloride to 

     

           remove the glycerol and then your AS-3 for an 

     

           additive solution.

                     The procedure time for deglycerolization 

     

           is about 45 to 60 minutes, depending on the size of 

     

           the unit.  A larger unit will be going a little bit 

     

           longer.  It takes I think, for a rough estimate, we 

     

           heard this yesterday about one hour.  There's one

           kit involved, and there's three solutions--re-agents, I 

     

           should say. 

     

                     I apologize for the color on this.  It was 

     

           all black, and I don't know what happened in the 

     

           transfer, but the protocol, if we look at an 8-hour

           shift, you could glycerolize 20 to 24 units.  To 

     

           deglyce one person per machine, and that's just, I 

     

           should just say one machine is 20 to 24 and 5 to 6. 

     

           For 16 hours, you could go 40 to 48 for 

     

           glycerolization and deglyce 10 to 12.

                     Now, as was mentioned yesterday, if you 

     

           had multiple devices, one person could operate 

     

           quite a few devices.  And the process is that if 

                                                                     61 

     

           it's going to take 45 minutes to 60 minutes to run, 

     

           you could set it up, start it, and move on to the 

     

           next device and set the process going. 

     

                     So let me ask you, strategic reserve, is

           it a pipe dream or is it reality?  And one of the 

     

           things I just would like to add, and again please 

     

           remember that my comments are my comments and not 

     

           recommendations from anybody else, other than Jerry 

     

           Holmberg, but I would have to say, as far as the

           task force, the comments that Karen mentioned 

     

           yesterday, I think that a better approach would be 

     

           to have a, I shouldn't bipartisan, but a 

     

           pluralistic approach, I should say a pluralistic 

     

           approach to the reserve, a pluralistic approach

           being liquid blood and also frozen blood. 

     

                     When you have an emergency, you don't want 

     

           to be collecting blood at that time because it's 

     

           going to take you hours, days to get it completely 

     

           tested.  You don't want to, you want to be able to

           immediately get the blood off your shelf and get it 

     

           to where it's needed. 

     

                     The frozen blood, as was mentioned 

                                                                     62 

     

           yesterday by Commander Bartley, is a stop gap, and 

     

           it is to back-fill the needs of the local 

     

           facilities.  I think strategic reserves are 

     

           necessary for our seasonal shortages, such as

           holidays.  We all, this last year, we had some, 

     

           here in the D.C. area, had some tremendous 

     

           snowstorms.  I bought a snow-blower the 1st of 

     

           February, and I used it for three major snowstorms, 

     

           and I thought I left that when I left Bowling Green

           and Michigan State. 

     

                     And by the way, I think Bowling Green is 

     

           worse than Michigan State, as far as the amount of 

     

           snowfall because at Bowling Green you get the 

     

           drifting.

                     [Laughter.] 

     

                     DR. HOLMBERG:  You know, illnesses we all 

     

           face ever year, we face the colds and the flus and 

     

           things that come up.  So I think that strategic 

     

           reserve is a great way to sort of take out the

           valleys in our blood supply. 

     

                     I think that it's needed for both local 

     

           and national disasters.  I hear all the time people 

                                                                     63 

     

           saying, well, you know, in Oklahoma City or in 

     

           Kansas City or in New York, New York, with the 

     

           Trade Centers, you know, they didn't really use 

     

           that much blood because of the casualties.  Well,

           you know, that's unfortunate, and big disasters 

     

           like that, yes, there's going to be a lot of 

     

           casualties.  But from time to time there is going 

     

           to be that local need for a surge in the blood 

     

           supply, and there's going to be a surge--there's

           going to be a need to backfill that surge. 

     

                     The strategic reserve I believe is needed, 

     

           again, for homeland security, in addition to local 

     

           and national disasters, and also as we face this 

     

           year emergent pathogens such as SARS--and West Nile

           has been with us for a few years--I think it would 

     

           help even in taking care of those kinds of 

     

           situations. 

     

                     Again, my personal opinion, but what is 

     

           needed?  I think we need a strategic national plan.

           And this may be heresy to my colleague sitting over 

     

           here in the blue uniform, but I strongly believe 

     

           that there should be a strategic complement to the 

                                                                     64 

     

           military system.  The military system, we need to 

     

           have a ready reserve within the military at all 

     

           times.  That does not mean that from time to time 

     

           the civilian sector, which all of us are taxpayers,

           could not, should not be hindered from going to 

     

           that reserve and saying, hey, look, we need blood, 

     

           let's move some of the inventory and work that. 

     

                     The whole idea is keeping it going, making 

     

           sure that the total defenses of our country are

           met, and the first priority is to the military, but 

     

           I say secondary responsibility is to the civilian 

     

           sector. 

     

                     We need strategic locations.  I don't 

     

           think that we're talking just one or two locations.

           We're not talking the military has two locations, 

     

           one outside of San Francisco, the other one at 

     

           Maguire in New Jersey, which is Philadelphia and 

     

           New York City.  I think that 16 is probably 

     

           unmanageable, but I think that some strategic

           locations with a workable number, on the coasts, on 

     

           both coasts, and also in the mid would be very 

     

           beneficial. 

                                                                     65 

     

                     I also agree with Dr. Gilcher, and that is 

     

           that the reserve--I think we should look towards 

     

           Group O blood and having those reserves available 

     

           for and eliminating any potential problems in a

           disaster of Group O mismatches and just work with 

     

           the Group Os, both positive and negative. 

     

                     The next comment that I would like to 

     

           raise, as was mentioned the other day, the 10,000 

     

           units came up as a target level.  That was sort of--I think

           that was speculation or just a guess.  But 

     

           we do need to come up with target levels.  What 

     

           could we be able to have available, both liquid and 

     

           frozen, to be able to move to strategic locations? 

     

           And remember again that in 9/11, we did not have

           our air traffic.  And that created a major problem. 

     

           So we have to make sure that we do have target 

     

           levels and we also have strategic locations set up. 

     

                     Also, I would strongly recommend that 

     

           instead of sitting on a frozen reserve and let it

           just sit there, I think that you need to constantly 

     

           be rotating it and replenishing it.  I think one of 

     

           the problems that the DOD had early on was that 

                                                                     66 

     

           they collected a large bolus of blood back in the 

     

           early 1990s for frozen inventory and then the ten 

     

           years came and without the subsequent replacement. 

     

           And I think we all know that criticism there, but

           it's an idea that you have to constantly be 

     

           replacing your frozen inventory. 

     

                     So I'll conclude with questions that you 

     

           might have for me. 

     

                     DR. PENNER:  Jerry, just a quick question,

           because this hasn't been handled, but I'm presuming 

     

           the information is there.  Red cell survival in the 

     

           frozen products now with the present additives is 

     

           comparable to what we would see in most cases with 

     

           the liquid blood, and the other thing would be the

           oxygen delivery of the frozen blood once 

     

           reconstituted. 

     

                     DR. HOLMBERG:  Well, as far as--the FDA 

     

           does have a requirement for red cell survival, and 

     

           that must be the 70 percent or 75 percent--the 75

           percent.  And so, you know, there will be a little 

     

           bit lower red cell survival than with fresh blood, 

     

           if you were using fresh blood. 

                                                                     67 

     

                     Now, as far as--but, still, any 

     

           anticoagulant or additive solution has to meet that 

     

           requirement for the expiration period of time.  The 

     

           2,3-DPG and the ATP levels, if you collect this at

           day six and you freeze those red cells, the levels 

     

           of ATP and 2,3-DPG are maintained at those--in the 

     

           frozen state. 

     

                     DR. PENNER:  As I recall, though, the 70 

     

           percent, is that 24 hours, wasn't it?

                     DR. HOLMBERG:  Seventy-five percent, 24 

     

           hours later, 75 percent of the red cells must be in 

     

           circulation. 

     

                     DR. PENNER:  We never really checked the 

     

           survival time, half-life, 25 days, something like

           that, so--and that data is around someplace, but it 

     

           never was focused on as whether the cells really 

     

           survived 48 hours or 72 hours. 

     

                     DR. HOLMBERG:  That's a good point, and I 

     

           would direct you to the article by Dr. Valeri.  It

           appeared July 2001 in Transfusion, and I know that 

     

           the most recent study that the American Red Cross 

     

           and Haemonetics is doing is looking specifically at 

                                                                     68 

     

           that, not so much from an FDA requirement but for 

     

           publication purposes to be able to put that in a 

     

           publication. 

     

                     To answer your question, I don't have that

           data right off the top of my head. 

     

                     DR. PENNER:  Okay.  And maybe one other 

     

           question if I can.  That is, outdating on a 

     

           contingency, what would your feeling be to extend 

     

           outdating for liquid blood under certain

           circumstances, an emergency use, to 47 days, to 50 

     

           days, to 60 days?  We know that at 42 days 

     

           everything doesn't dissolve, that the red cells are 

     

           still red cells, and we've got plenty of data that 

     

           show that if you extend it on out, you lose

           something.  But you don't lose everything.  You 

     

           still have an oxygen delivery system. 

     

                     DR. HOLMBERG:  Well, I would caution you 

     

           there, and you just hit a nerve with me; that is, I 

     

           think it's wrong to manage an inventory based on 42

           days, primarily because although the ATP levels--or 

     

           I should say although the 2,3-DPG levels will come 

     

           back within 24 to 48 hours to the normal level, the 

                                                                     69 

     

           problem is that if you have an acute situation and 

     

           you have trauma patients, do you really want to be 

     

           pumping them with that kind of blood, or do you 

     

           want to give them fresher blood that has more

           readily available oxygen offload capability? 

     

                     And so my question is that, again, I would 

     

           frown against going beyond the 42 days, extending 

     

           that.  I think that we need to manage our donors 

     

           and manage our inventories so that we're working

           with a shorter inventory. 

     

                     DR. BRECHER:  Andy? 

     

                     DR. HEATON:  Yes, I have some comments on 

     

           blood storage.  The new additives have very high 

     

           post-transfusion recoveries of 42 days.  They run

           about 85 percent, between 80 and 85 percent.  And 

     

           as for the DPG issue, DPG has a half-life, once you 

     

           collect the unit, of about ten days.  So at six 

     

           days you've lost 50 percent of your 2,3-DPG.  The 

     

           reality is it's regenerated with a half-life of six

           hours when it's been transfused, and there's 

     

           absolutely no evidence that long-stored blood 

     

           doesn't transmit oxygen.  There are many other 

                                                                     70 

     

           factors of oxygen offloading and onloading that 

     

           would suggest that even long-dated additive stored 

     

           blood will be quite effective, even in a casualty 

     

           situation.

                     So I don't see that there's a quality 

     

           issue here.  It's really a matter of just recording 

     

           the integration of the new additives with the old 

     

           frozen storage solutions and getting that on the 

     

           record.

                     DR. BRECHER:  Jeanne? 

     

                     DR. LINDEN:  Jerry, could you educate as 

     

           to what's involved with the validation of the 14-day shelf 

     

           life for the other additives and 

     

           temperature conditions and so forth?  And did I

           understand you correctly that such studies are 

     

           underway for the presently used additive solutions? 

     

                     DR. HOLMBERG:  Yes.  Studies have just 

     

           been completed for AS-1 and AS-3 at the various 

     

           temperature ranges.  The AS-5 is currently in the

           process, waiting on the military, and the funding 

     

           for that, I believe, to study that. 

     

                     What is required to complete those studies 

                                                                     71 

     

           has been to be able to prove at two different 

     

           temperature ranges, at both a 70 plus or minus 5 

     

           and at an 80 plus or minus 5, to make sure that the 

     

           range of, you know, minus 65 or colder based on the

           minus 80 is equivalent and that there is no problem 

     

           with that.  Also, in-vivo survivals are required 

     

           along with red cell quality parameters. 

     

                     I think that answers your question. 

     

                     DR. BRECHER:  Jay?

                     DR. EPSTEIN:  Are you also studying use of 

     

           rejuvenation solutions to permit delayed freezing 

     

           with the system? 

     

                     DR. HOLMBERG:  Currently I am not.  I know 

     

           that the Red Cross is looking at a pilot study, but

           I can't elaborate any more on that. 

     

                     DR. BRECHER:  Keith? 

     

                     DR. HOOTS:  Just a logistical question in 

     

           terms of disaster relief and that sort of thing. 

     

           You had suggested that you'd use frozen supply to

           replenish, just as the military proposed, the acute 

     

           liquid supply that was used for the immediate 

     

           management.  How do you foresee the coordination to 

                                                                     72 

     

           occur?  For instance, if there's a major disaster 

     

           in New York, and Philadelphia immediately ships X 

     

           percent of their available supply to New York to 

     

           provide the second wave of supply, who should be

           responsible then for freeing up the frozen supply 

     

           to replenish Philadelphia?  That's one of the 

     

           things I guess, when you're talking about how to 

     

           fit this whole thing together, is this something 

     

           where it would just be--you would just requisition

           it because there was a need?  Or should there be 

     

           some supervisory planning group that says, okay, 

     

           fine, can Philadelphia release X thousand units 

     

           and, therefore, we immediately within 24 hours 

     

           could use the frozen supply?

                     DR. HOLMBERG:  Well, I agree with you.  I 

     

           think that there needs to be a guidance, some sort 

     

           of group or consortium coming together, whether 

     

           that is mandated by the government or just on the 

     

           volunteer or the blood agencies out there.  And I

           think the first big step is the task force that 

     

           Karen mentioned.  And I think that it would have to 

     

           be worked out with agreements.  Ideally, if 

                                                                     73 

     

           Philadelphia had their own frozen inventory, they 

     

           would dip into that and start replacing that. 

     

                     Now, as far as who covers the cost, I 

     

           think we need to work--those are issues that need

           to still be worked out. 

     

                     DR. HOOTS:  But I understood you to say 

     

           that you thought 16 depot sites were probably too 

     

           many.  So, logistically, you might be talking about 

     

           eight around the U.S.  So, presumably, if you

           really were talking about a depot system, then 

     

           Philadelphia might be a site, but in that sense it 

     

           wouldn't belong just to Philadelphia. 

     

                     DR. HOLMBERG:  No.  And, again, that goes 

     

           along with my concept of the civilian and the

           military working together. 

     

                     You know, I would view a kind of a concept 

     

           like that that it would actually be--it would 

     

           really be--the primary goal, the primary objective 

     

           is our armed forces, but secondary would be our own

           internal security.  And working out of that 

     

           inventory, and whether it's, you know, six places 

     

           or eight places, there may be a requirement to 

                                                                     74 

     

           backfill Philadelphia with liquid blood for a 

     

           period of time until they could get their deglyce 

     

           done. 

     

                     But I firmly believe that during a

           disaster is also not the time to be collecting 

     

           donors.  I think you need to be redirecting some of 

     

           your energy in other locations. 

     

                     COLONEL SYLVESTER:  I'd just like to make 

     

           a comment.  I think some of what Jerry is talking

           about and other people alluded to already exists. 

     

           There is much communication between the military 

     

           and the AABB, the ABC, the ARC, and we have at 

     

           times, when necessary, shared our inventory.  We 

     

           purchase from them, and then we'll turn around and

           supply them when we have excess and they're short. 

     

           That occurs now.  So I don't want the panel to 

     

           think that our inventory is never touched by 

     

           anybody else.  We do rotate our inventories in and 

     

           out and share them when necessary, as happened

           after September 11th, because we did have the ASWA 

     

           at Maguire, which was driving distance to New York 

     

           City.  We were ready to push whatever was needed at 

                                                                     75 

     

           Maguire forward into New York City.  It just wasn't 

     

           needed.  But it was stationed there and ready to be 

     

           put on, and we do the work through the task force 

     

           and we do the work informally in our coordination

           with the other agencies. 

     

                     DR. BRECHER:  If there are no other 

     

           questions or comments, we'll take a break until 

     

           10:15. 

     

                     [Recess.]

                     DR. BRECHER:  Okay, if we can take our 

     

           seats? 

     

                     We're going to allow one other company rep 

     

           to make a comment.  Steve Binion I believe wanted 

     

           to make a comment from the previous talks from

           Baxter. 

     

                     MR. BINION:  Thank you, Dr. Brecher and 

     

           the Committee.  Just very quickly, two comments as 

     

           a follow-up to the industry comments earlier. 

     

                     I did want to just bring to the

           Committee's attention that from the standpoint of 

     

           new technologies related to potential improvement 

     

           in availability of blood products, in addition to 

                                                                     76 

     

           apheresis systems for collection of red cells on 

     

           the market by other manufacturers, Baxter does 

     

           produce an ALYX apheresis system.  This is a mobile 

     

           system which is available for simultaneous

           collection of two units of leukoreduced red cells, 

     

           with a total collection time of 20 to 30 minutes. 

     

                     And then just a quick follow-up to the 

     

           commentary regarding blood pack unit manufacturing 

     

           capabilities and supply, Baxter does maintain

           multiple redundant manufacturing plants and 

     

           capabilities, and, in fact, our total capacity is 

     

           sufficient to supply the current U.S. market 

     

           requirements in the range of 15 to 20 million blood 

     

           pack units per year.

                     So I just wanted to add those comments to 

     

           the record from the standpoint of manufacturers. 

     

           Thanks. 

     

                     DR. BRECHER:  Okay.  Thank you, Steve. 

     

                     We'll now move into the public comment

           portion.  Are there any public comments? 

     

                     [No response.] 

     

                     DR. BRECHER:  If not, we're going to move 

                                                                     77 

     

           to the--oh, I'm sorry. 

     

                     MS. O'DAY:  I'm Miriam O'Day, and I'm here 

     

           on behalf of the alpha one community and the immune 

     

           deficient community.

                     DR. BRECHER:  Pardon me, ma'am.  Just a 

     

           minute.  Is this about the HOPPS thing or-- 

     

                     MS. O'DAY:  It is. 

     

                     DR. BRECHER:  Okay.  We're not there yet. 

     

                     MS. O'DAY:  Okay.

                     DR. BRECHER:  We're going to talk about 

     

           HOPPS a little bit later.  We just want to do the 

     

           discussion from what's already happened. 

     

                     MS. O'DAY:  Okay.  My apologies. 

     

                     DR. BRECHER:  Then we'll open it up again.

                     MS. O'DAY:  Thank you. 

     

                     DR. BRECHER:  Okay.  If there are no 

     

           comments about the previous discussions--I'm sorry 

     

           I didn't clarify that--what I'd like to do is 

     

           discuss two things.  One is what has already ben

           discussed or presented in the meeting about supply, 

     

           reserves, et cetera, and there's already been one 

     

           motion that there may not be any resolutions we 

                                                                     78 

     

           want to make.  And then I want to just move on to 

     

           an update over the question of the Dr. Carmona 

     

           letter and the question of recombinant factors. 

     

                     Let's just first deal with the question of

           do we need to have a resolution or do we just need 

     

           to take this as information and then go on to other 

     

           meetings to expand and get further feedback from 

     

           the interorganizational task force as to what their 

     

           status is, et cetera.  Mark?

                     MR. SKINNER:  During the brief Committee 

     

           discussion earlier, I had two questions I wanted to 

     

           ask, and the second one I didn't ask.  And it came 

     

           up, I think, in two different presentations 

     

           yesterday, and I think it's a piece of information

           that at least would be helpful to me as a consumer. 

     

                     The discussion was around when there are 

     

           new tests that are developed after the products are 

     

           frozen.  I think the statement was made that, with 

     

           the authorization of the physician, they could use

           a non-tested product, like when the West Nile virus 

     

           was implemented.  I didn't hear anywhere in that 

     

           context under what conditions the physician can use 

                                                                     79 

     

           it, if it was emergency only, or if the consumer 

     

           was ever informed that they were using it, if it 

     

           could be used on a routine basis, you know, after 

     

           you had given your general assent.  But I think we

           need to probe that area a little bit if we're using 

     

           products that have not been tested with the latest 

     

           tests. 

     

                     DR. BRECHER:  Anybody want to respond? 

     

           Celso?

                     DR. BIANCO:  I can try, Mark.  There are 

     

           routines established in all blood centers, 

     

           collecting facilities, that involve an emergency 

     

           release, and this occurs regularly with an 

     

           extremely rare unit of blood that is being stored

           for many years when other tests come.  And it's 

     

           going to be--there are several levels.  The first 

     

           level is obviously the notification and acceptance 

     

           of that unit by the hospital and the physician that 

     

           needs that unit.  And that physician, in

           conjunction with the patient, will obtain an 

     

           informed consent, will then discuss.  Frequently 

     

           it's not even a question of informed consent about 

                                                                     80 

     

           the patient.  Those units are used in extremis. 

     

           And so it's the family of the patient actually that 

     

           ultimately will be--it's like a life-and-death 

     

           decision that will lead to something like that.

                     But, actually, in all FDA guidances that 

     

           you will find in all materials, there is always a 

     

           small chapter, a small paragraph that will discuss 

     

           what kind of labeling--that unit that doesn't 

     

           conform to the current specifications, how it

           should be labeled and what the requirements for an 

     

           emergency release. 

     

                     DR. BRECHER:  Karen? 

     

                     MS. LIPTON:  I also just wanted to add 

     

           that under the AABB standards there's a section on

           it called emergency release for what we call non-conforming 

     

           product, and that would require that you 

     

           get the--that you inform the physician.  Now, you 

     

           know, as to whether the physician goes back and 

     

           says something to the patient is really between the

           physician and the patient.  In most cases, though, 

     

           once you go to emergency release, the physicians 

     

           aren't accepting the blood, anyhow.  So it's--you 

                                                                     81 

     

           know, it would really have to be dire circumstances 

     

           before they would do that. 

     

                     I think your question, though, Mark, also 

     

           goes to this question of how do you rotate

           inventory when we're introducing a new test.  And 

     

           that is generally something when we're introducing 

     

           a new test that we do discuss with the FDA, and a 

     

           lot depends on really the significance of the test, 

     

           whether you would go back and test all of your

           inventory.  There are different circumstances with 

     

           West Nile.  I think when we were talking about not 

     

           so much the testing but even some of the questions, 

     

           some of the issues related to whether there really 

     

           was any different risk as of the day we started

           testing or not.  But testing inventory is 

     

           generally--it actually is something that's always 

     

           addressed as a new test comes up as to whether 

     

           that's something that needs to be done. 

     

                     DR. BIANCO:  And, actually, just to

           complete what Karen said, very appropriately, it is 

     

           that for the most important tests introduced in the 

     

           last 15 years, I would say, there was always an 

                                                                     82 

     

           attempt by the testing facilities to test them 

     

           within the first day or two, notify the hospitals 

     

           to hold their inventories, not to transfuse during 

     

           that period until they could replace the inventory

           in the hospital with a tested inventory. 

     

                     MR. SKINNER:  I think just the issue that 

     

           I was trying to get to was whether there was a 

     

           difference between an emergency situation or 

     

           whether they could be routinely put back into the

           supply with just the doctor's assent.  And it 

     

           sounds like what we're talking about is the 

     

           emergency situation.  So that wasn't clarified in 

     

           either of the comments yesterday, and maybe that 

     

           was just information that was assumed.  But I

           wanted to-- 

     

                     DR. BRECHER:  Yes, West Nile virus 

     

           testing, of course, has been somewhat of an 

     

           exception because it was a seasonal illness, and so 

     

           it wasn't felt that we had to go back and test the

           prior inventory.  But I can tell you, for example, 

     

           we had a patient with six antibodies.  We searched 

     

           the whole country for units of blood, and the 

                                                                     83 

     

           patient needed a liver transplant.  And some of the 

     

           only units we could identify in the country were 

     

           collected last summer and were not tested for West 

     

           Nile virus.

                     We were prepared to use those if we needed 

     

           to.  The patient actually didn't make it long 

     

           enough to get the liver transplant.  But it was an 

     

           extreme situation. 

     

                     Other questions or comments?  Is it the

           Committee's feeling that we do not need to have a 

     

           resolution that comes out of the presentations made 

     

           so far in this meeting? 

     

                     DR. BIANCO:  I may disagree with Karen 

     

           that we don't need--it's not necessary--it doesn't

           have to be called a resolution, but I think that 

     

           marching orders to the disaster task force to 

     

           address the issue and come to us within a certain 

     

           reasonable period of time. 

     

                     MS. LIPTON:  We could certainly do that.

           I mean, they're going to do it no matter what this 

     

           Committee does.  So if they'd like to say we 

     

           encourage your--you know, support your efforts, but 

                                                                     84 

     

           it was--it's in the process, and it's not going to 

     

           stop. 

     

                     DR. BRECHER:  Right, and we anticipate an 

     

           update in the January meeting.

                     Yes, Chris? 

     

                     MR. HEALEY:  I'm neither in favor nor 

     

           opposed to a resolution per se, but the one comment 

     

           that I heard repeatedly yesterday was the need for 

     

           Federal funding for a reserve if there indeed is

           one created.  So that might be the basis upon which 

     

           to carry something. 

     

                     DR. BRECHER:  Well, I think until we have 

     

           a firm plan as to what kind of reserve, I think 

     

           that may be premature.  I think that would be the

           intent of the Committee, but we need to know 

     

           exactly what it is that we want to encourage. 

     

                     Okay.  Mat? 

     

                     DR. KUHNERT:  Being new to the Committee, 

     

           I saw there was a history of this issue being

           discussed in the past and that there was in the 

     

           past a need to develop systems for monitoring, and 

     

           now it seems there are multiple systems for 

                                                                     85 

     

           monitoring.  So the only thing that I think would 

     

           be wise to urge is to have one system, or at least 

     

           if there are different systems, that they have 

     

           clearly different purposes.  So I'm not sure if

           that's something the Committee can do to urge, but 

     

           it just seems with all these different systems 

     

           there is some need to integrate them. 

     

                     DR. BRECHER:  Mac? 

     

                     CAPTAIN McMURTRY:  If I may, I'm not

           really prepared to talk about the monitoring. 

     

           There's stuff going on.  I just wanted to let you 

     

           know that the idea that had been out there for a 

     

           while, which was to look at the current DHHS system 

     

           to have it analyzed to see how accurate it was, how

           relevant it was, that analysis is ongoing.  We have 

     

           gotten a couple of the deliverables.  Those are 

     

           sort of ricocheting around in the Department right 

     

           now.  No action has been taken, but we're 

     

           anticipating it.  But it's a little premature to be

           saying what that action is going to be.  But the 

     

           thought is to consolidate what the Department has. 

     

                     DR. BRECHER:  Maybe we can ask for an 

                                                                     86 

     

           update as to what the status is at the next 

     

           meeting. 

     

                     CAPTAIN McMURTRY:  It would be mature at 

     

           that point.

                     DR. BRECHER:  John? 

     

                     DR. PENNER:  I agree, just from political 

     

           aspects, that maybe not making a statement until 

     

           we're ready to come up with something solid and 

     

           concrete would be better than delivering a lot of

           small resolutions along the way, which then will be 

     

           diluted out. 

     

                     DR. BRECHER:  And we can set a precedent 

     

           that we don't have to have a resolution. 

     

                     Lola?

                     DR. LOPES:  I see a connection between the 

     

           monitoring and the problem that was discussed a 

     

           little yesterday of identification of individual 

     

           units.  It seems like if we can get to the point 

     

           where units are bar coded, that monitoring could be

           linked in a single system so that it would occur 

     

           automatically any time a unit moved from inventory 

     

           to another place, came into the system, it would 

                                                                     87 

     

           all be done at once. 

     

                     I think this is something that is worth 

     

           hard consideration because I think that that in 

     

           some ways might be simpler to do than the kind of

           monitoring that we do with human reports. 

     

                     DR. BRECHER:  We have a very fragmented 

     

           system, and it's a huge system.  There are some 

     

           countries that do a much better job of tracking 

     

           that maybe we can get some further information

           about in the future.  But they tend to be a 

     

           fraction of the size of our system. 

     

                     Karen? 

     

                     MS. LIPTON:  I wanted to mention that all 

     

           the units--they are bar coded, but I think what

           you're talking about is a single, and there is a 

     

           system that has been implemented in some places, 

     

           but not all, and it's the 128 ISBT, which would 

     

           assign a unique code to every single unit and 

     

           product.  And that is something that has--it's been

           on hold.  It is not as simple as you could imagine, 

     

           because to make something that would work for 

     

           everyone would require everyone's computer systems 

                                                                     88 

     

           to be able to handle this.  And that is, frankly, 

     

           the huge bar to this because changing a computer 

     

           system in a blood center is--it's a very regulated 

     

           function, and it's something that just--it just

           takes time. 

     

                     So we're aware of it.  I think it's 

     

           something that could contribute to it.  It's a huge 

     

           financial commitment.  It's also from many blood 

     

           centers requires a tremendous commitment of

           resources to change.  And we've said this before. 

     

           This is a very fragile industry, and we don't just 

     

           have--you know, you pick your priorities.  And I 

     

           think the sad truth right now is that this is not 

     

           the top priority given some of the other things.

           If we had a different reimbursement system, if we 

     

           had something that said this was very important, it 

     

           could work. 

     

                     So, as I said, I think it's out there.  I 

     

           think it's a matter of resources, and it's a matter

           of priorities. 

     

                     DR. BRECHER:  That was a good choice of 

     

           words:  "a bar to bar coding." 

                                                                     89 

     

                     Mac? 

     

                     CAPTAIN McMURTRY:  I'd like to comment 

     

           once again on the monitoring issue.  As Karen said, 

     

           it's a very fragmented system, and what we have

           found, when you go from a pilot test of nine sites 

     

           to 29 sites to 5,000 hospitals, and then another 

     

           however many community blood collection centers 

     

           there are, the computer systems are so different 

     

           across the spectrum that coming up with any kind of

           a monitoring system is going to be very difficult. 

     

                     DR. BRECHER:  Well, it certainly wouldn't 

     

           be an automated system.  You probably would have to 

     

           input at the Internet level daily. 

     

                     Jay?

                     DR. EPSTEIN:  I just want to come back to 

     

           the issue of making recommendations.  I tend to 

     

           agree that I may be premature for us to make 

     

           additional recommendations at this meeting, 

     

           especially given the history that we've repeatedly

           made recommendations in the area. 

     

                     On the other hand, I think that there's a 

     

           core issue where the Committee could provide a 

                                                                     90 

     

           useful service to the Department by coming to 

     

           closure, and that's on the question of the need for 

     

           what Jerry Holmberg called a strategic national 

     

           plan.  And I think it's one thing to call for, you

           know, studies of the issue and to call for support 

     

           for development, but the central question, it seems 

     

           to me, is:  Do we want/need a strategic national 

     

           plan?  And what is the government's role in that? 

     

                     I think that it's a bigger question than

           the way we've approached the issue in the past. 

     

           There have been many times when the question has 

     

           been raised who should manage blood in emergencies. 

     

           I remember more than a decade ago that the same 

     

           question was asked in the development of what is

           currently the FEMA plan, and, you know, we've 

     

           revisited it in the wake of various natural 

     

           disasters, and then we've been revisiting it in the 

     

           mind-set of counterterrorism. 

     

                     And each time the answer has come around

           to, well, industry can take care of this.  And 

     

           that's okay, but I think that what we need to ask 

     

           is:  Are the right things happening?  And is there 

                                                                     91 

     

           a more directive role needed by government?  Or 

     

           even is it just a question of financing? 

     

                     And I think that the role of government in 

     

           this remains unclarified, the necessary role of

           government in this remains unclarified.  And I 

     

           think that although the existing efforts within the 

     

           AABB Interorganizational Task Force are notable and 

     

           commendable, it bears some examination whether 

     

           we're getting the thing that we want done.  And

           what are the obstacles?  And is there a barrier 

     

           based on the current relationship with the Federal 

     

           Government?  In other words, are there some things 

     

           missing that should be there? 

     

                     So I just kind of think that what we're

           really dancing around is a core issue, which is the 

     

           role of government, and that we need to come to a 

     

           point of advising on that. 

     

                     DR. BRECHER:  Karen? 

     

                     MS. LIPTON:  I agree with you, Jay.  I

           don't think the time is now, though, because I 

     

           think for us to make recommendations about the role 

     

           of government or not, when we don't even understand 

                                                                     92 

     

           what we're dealing with.  I do think that at a 

     

           point when, you know, private industry could come 

     

           back and say, well, this is what we've come up 

     

           with, and then you can say, all right, what are the

           whole--you know, is there a better way to do this? 

     

           Will this satisfy?  What are the purposes? 

     

                     I think we need something concrete to deal 

     

           with, and, you know, to sort of start right now and 

     

           to make a suggestion, well, we think someone should

           study national strategic reserves would frankly 

     

           make me--or a national strategic plan would make me 

     

           very nervous, because it has to be, you know, built 

     

           on a system that we know we can handle.  And at 

     

           least when we come back from the disaster task

           force--and we're going to be very honest about what 

     

           we think the barriers are.  And if some of the 

     

           barriers are we're too fragmented and somebody 

     

           needs to step in here, I think it will be pretty 

     

           apparent.

                     DR. BRECHER:  Jay? 

     

                     DR. EPSTEIN:  Well, I wasn't trying to 

     

           advocate recommendations now, so I agree with you, 

                                                                     93 

     

           Karen.  But I think the implication of what you're 

     

           saying is that the Committee ought to ask the AABB 

     

           Interorganizational Task Force to come back and 

     

           present its current thinking.

                     DR. BRECHER:  Right.  We have already said 

     

           that they were going to--you may have been out of 

     

           the room when we did that. 

     

                     I think Jay raises an interesting question 

     

           about what is the role of government, and maybe

           it's a bigger question, not just for emergencies 

     

           but what should the role of government be in 

     

           managing the blood supply on a daily basis.  And 

     

           that may be something the Committee could visit at 

     

           some point.

                     Celso? 

     

                     DR. BIANCO:  I certainly--I want to 

     

           express a certain concern about the question.  I 

     

           think that the difficulties that we have been 

     

           having in shortages and issues of this kind, they

           exist.  And I think that many of the reviews and 

     

           studies that have been done have shown that the 

     

           entire system is underfinanced.  It is not a 

                                                                     94 

     

           question of management of the system. 

     

                     Whenever we find the resources, we get the 

     

           donors, and actually I must say that while some 

     

           areas cry a lot that we don't have the blood, we

           don't have the blood, but we recovered even from 

     

           the substantial donor loss that we had since last 

     

           year with multiple deferrals, including the vCJD 

     

           deferrals, that they total about 10 percent of our 

     

           donor base.  And it was very serious.

                     We have been able to address shortages 

     

           that were caused by natural disasters and other 

     

           disasters, and we hear Dr. Gilcher every time, 

     

           beautiful systems and the beautiful ways he has 

     

           been able to deal with it.

                     Yes, I'd like it to be discussed, but I'd 

     

           like us to think of the role of government as a 

     

           supportive, probably some coordination, 

     

           facilitating communication, but mostly supportive. 

     

           I think that the blood banking community has shown

           that they dealt with a lot of difficult situations, 

     

           and with that, the patients have blood. 

     

                     DR. BRECHER:  Paul? 

                                                                     95 

     

                     DR. HAAS:  I think the question of private 

     

           sector versus government, as always, is very 

     

           difficult.  I hope I'm not misconstruing your 

     

           words, Karen, but having industry decide what it

           can do and then ask where the help is is a 

     

           different question than saying there's an 

     

           interactive relationship and we start out the 

     

           process thinking in terms of where the interaction 

     

           takes place.

                     I don't know how you start that.  Someone 

     

           has got to come up with the first step, which is 

     

           maybe what the task force is doing.  But if 

     

           government is always what comes in to plug the 

     

           holes, the probability, I think, is that the

           government will do that poorly because it wasn't 

     

           part of the integrated approach to things.  And so 

     

           somehow we have got to be meshing the two 

     

           constantly. 

     

                     DR. BRECHER:  Karen, does government have

           a seat in the Interorganizational Task Force? 

     

                     MS. LIPTON:  Yes.  The FDA and the CDC are 

     

           on tier one. 

                                                                     96 

     

                     DR. EPSTEIN:  And the Department. 

     

                     MS. LIPTON:  Excuse me? 

     

                     DR. EPSTEIN:  And the Department. 

     

                     MS. LIPTON:  And the Department, that's

           right.  HHS, Jerry Hauer.  So there is definitely 

     

           an opportunity for the government to play a key 

     

           role in this as we deliberate in terms of what we 

     

           think the roles and responsibilities and needs for 

     

           the government.

                     I mean, the one thing I will tell you is 

     

           that, having worked with HHS during these times of 

     

           deliberation, they're not so much in a command and 

     

           control mode right now.  They want systems to work. 

     

           But everybody's got their hands full, and I think

           they're really looking for and working with a lot 

     

           of private-government partnerships.  It's more 

     

           along the FEMA line, you know, where the rubber 

     

           hits the road is in the local communities, not 

     

           sitting up in Washington, D.C.

                     I think, again, I would encourage us as a 

     

           first step to let this group come back and have HHS 

     

           and FDA and CDC sitting at the table, and then if 

                                                                     97 

     

           it just doesn't look rational or if we want to pass 

     

           it on up to HHS and say, well, maybe you want to 

     

           take a look at this, but here's just some 

     

           background thinking, I think that's fine.

                     DR. BRECHER:  Other questions or comments? 

     

                     DR. BIANCO:  I just want to support what 

     

           Karen said.  I didn't want to sound negative about 

     

           what I said.  I just wanted to express concern. 

     

           And this task force has been working in a simply

           spectacular way.  I couldn't say anything less than 

     

           that.  It has been always there, everybody has 

     

           contributed tremendously, and it includes not only 

     

           the blood banking--the collection facilities and 

     

           the government, but also manufacturers.  And so it

           is the entire--as Jeff Miripol was saying this 

     

           morning, the entire supply chain is there.  And 

     

           that's very, very important. 

     

                     DR. BRECHER:  Okay.  If there are no 

     

           further comments, I think we can move on to discuss

           the issue of one of our prior recommendations.  As 

     

           many of you recall, in January of this year the 

     

           Committee made a recommendation that--I'm going to 

                                                                     98 

     

           just hit the highlights, where we recommended that 

     

           the CMS carrier manual provisions regarding 

     

           reimbursement for hemophilia clotting factors, that 

     

           it includes outdated terminology such as "heat-treated

           variety" and "non-heat-treated variety" 

     

           clotting factors; and that it was requested that 

     

           the terminology be updated. 

     

                     The Committee also wished to reaffirm at 

     

           that time its previous recommendation regarding

           recombinant clotting factors and recommended to the 

     

           Secretary that the Secretary direct CMS to promptly 

     

           revise the manual provisions regarding 

     

           reimbursement for hemophilia clotting factors, to 

     

           remove all insurance barriers to recombinant

           terminology. 

     

                     This led to a response from Dr. Carmona, 

     

           who was the Acting Assistant Secretary at the time, 

     

           whereby he wrote us in April, wrote the Committee 

     

           regarding "your recommendation about reimbursement

           for recombinant clotting factors.  I asked NHLBI 

     

           for an evidence-based review of the effectiveness 

     

           of recombinant factor versus native or monoclonal 

                                                                     99 

     

           factor.  NHLBI reported that its initial review 

     

           found no studies that showed a definite advantage 

     

           of one over the other." 

     

                     Then, the last, he said he would recommend

           to the Centers for Medicare & Medicaid that they 

     

           study the cost-effectiveness of recombinant 

     

           clotting factor to determine if the language 

     

           contained in its carrier manual should be modified--which is 

     

           not quite, I think--it was not quite the

           intent of the original resolution. 

     

                     This led to some consternation on the part 

     

           of a variety of players:  the National Hemophilia 

     

           Foundation, ABC, AABB, et cetera.  So that Mac 

     

           McMurtry, myself, Art Lawrence, and Dr. Beato, we

           all got together in June to discuss this.  And this 

     

           led to a second letter from Dr. Beato, which is 

     

           included in your package, and maybe we should take 

     

           a minute to allow people to read that, if they 

     

           haven't read it already.

                     [Pause.] 

     

                     DR. BRECHER:  Okay.  I'd like to open this 

     

           topic for discussion by the Committee.  Jeanne? 

                                                                    100 

     

                     DR. LINDEN:  Well, I just have a question. 

     

           Do we know who wrote this?  Because people at this 

     

           level in my experience never write their own 

     

           letters, and it looks like the other one was

           written by Mac. 

     

                     I mean, if we knew who wrote it, then we 

     

           could find out better the intent, rather than 

     

           perhaps overinterpret or misinterpret a few words 

     

           here.

                     DR. BRECHER:  I think it's fair to say 

     

           that the content reflects input from a variety of 

     

           sources to Dr. Beato, who then incorporated this 

     

           into a letter that she felt comfortable signing. 

     

                     Is that political?

                     CAPTAIN McMURTRY:  Yes. 

     

                     DR. BRECHER:  Is the Committee satisfied 

     

           with this response?  I think that is the first 

     

           question.  Jeanne? 

     

                     DR. LINDEN:  Well, in follow-up to that,

           can you give us a little bit more information about 

     

           the discussions at this meeting and, you know, the 

     

           language about "while remaining fiscally 

                                                                    101 

     

           responsible," what that is intended to mean? 

     

                     DR. BRECHER:  HHS felt that their mandate 

     

           is to be fiscally responsible and that they cannot 

     

           direct CMS to pay for, for example, a product that

           was out of the ballpark in terms of cost.  They 

     

           have to be fiscally responsible to the citizens of 

     

           the U.S.  And, therefore, they felt that for drugs--and they 

     

           consider this a drug--they have to look 

     

           at this in the bigger cost-effectiveness picture,

           although they are mindful that there are other 

     

           ramifications of this particular issue, and that is 

     

           where they--in the second paragraph, the Department 

     

           talks about their being acutely aware of the 

     

           concerns of the hemophilia community and they're

           mindful of the lost generation due to HIV and HCV. 

     

                     I would be curious what the hemophilia 

     

           community feels about this letter.  Mark, maybe you 

     

           could comment. 

     

                     MR. SKINNER:  I would be happy to comment,

           and my comments are not on behalf of NHF or any of 

     

           the hemophilia organizations.  But I did author--I 

     

           shouldn't necessarily say "author," but I did carry 

                                                                    102 

     

           the original resolution. 

     

                     The letter that we received back, and 

     

           certainly read in companion with the letter to Dr. 

     

           Katz, I think is appropriate for where we are now.

           There certainly remain issues, and the letters 

     

           highlight the issues that we've talked about on 

     

           this and others, that there's a lot of economic 

     

           issues that spread the gamut.  And whether we 

     

           debate those points in terms of the economics and

           the priority and what does and doesn't deserve 

     

           reimbursement, on this point this isn't the place. 

     

                     I think the important thing about these 

     

           two letters together is the strong safety 

     

           statement, which was not in the original response,

           which was very gratifying to see that affirmed, the 

     

           commitment to address the outdated language, which 

     

           was the essence of the original resolution.  And, 

     

           of course, we recognized that that has to go 

     

           through a process.

                     And then I think equally importantly is I 

     

           interpret these that the Committee's original 

     

           recommendations which gave rise to the 

                                                                    103 

     

           identification of this barrier in the CMS language, 

     

           which we were seeking removal of, remain intact; 

     

           that they have not refuted the Committee's original 

     

           recommendations and said recombinant shouldn't be

           made available.  They've talked about the 

     

           importance of the therapies.  They recognize the 

     

           economic costs.  They recognize the safety. 

     

                     So I think on balance, when you read it in 

     

           context with the full debate, it's a reasonable

           response at this time, but it clearly highlights 

     

           there's challenges and there are still issues that 

     

           this Committee needs to address. 

     

                     DR. BRECHER:  Keith? 

     

                     DR. HOOTS:  Just to add to that, I agree

           with Mark.  I think probably the most important 

     

           sentence is the second one:  "There was never any 

     

           intent to discourage the use of recombinant..." 

     

                     I think regardless of what happens 

     

           economically down the road, I think this sentence

           can be brought back to say, since discouragement 

     

           can come in any form, including economic 

     

           discouragement, to remind anyone that HHS' own 

                                                                    104 

     

           record is saying they did not mean to discourage 

     

           recombinant. 

     

                     DR. BRECHER:  Now we'll take a public 

     

           comment.

                     MS. HAMILTON:  Jan Hamilton, Hemophilia 

     

           Federation of America.  I agree with what Mark said 

     

           and the other comments, too. 

     

                     I do want us to be cautious, though, 

     

           because it may not have been the intent to

           discourage payment for recombinant.  However, as we 

     

           all know, the states are in a tremendous economic 

     

           bind right now, and if that letter had gotten into 

     

           any of the Medicaid systems, we could have been 

     

           torpedoed, because we're already fighting that on

           many state levels right now where they're not 

     

           wanting to pay for recombinant product. 

     

                     And I can understand it wasn't the intent, 

     

           but I think we still need to be careful, very, very 

     

           careful and very, very much in a monitoring state

           to see that our feelings about safety are carried 

     

           through to the proper levels and that there's 

     

           education on those levels. 

                                                                    105 

     

                     When we talk about economics, if you add 

     

           up the economic impact of what we went through to 

     

           get recombinant product and the lost generation and 

     

           the lawsuits and the Ricky Ray money and all of

           that, it's far more than any difference in paying 

     

           for recombinant therapy is.  And I think that we 

     

           really have to take that into consideration. 

     

                     DR. BRECHER:  I think this Committee has 

     

           gone on record multiple times in support of

           recombinant factor, and I don't think-- 

     

                     MS. HAMILTON:  We appreciate that. 

     

                     DR. BRECHER:  And I don't think the 

     

           Committee has any intent of stepping back from 

     

           those recommendations.  However, we can make those

           recommendations, and HHS can choose to accept them, 

     

           ignore them, or countermand them. 

     

                     In this case, I think on balance this is a 

     

           letter of support for our recommendations where 

     

           they do not wish to discourage the use of

           recombinant factor. 

     

                     Lola? 

     

                     DR. LOPES:  Just a little question about 

                                                                    106 

     

           how the system works.  In the states that are not 

     

           paying for recombinant, does that mean that a 

     

           person who wants to use the recombinant gets 

     

           nothing, or do they get what would have been paid

           for the plasma-derived product? 

     

                     DR. BRECHER:  Could you answer at the 

     

           mike?  Otherwise, it will not go into the record. 

     

                     MR. SKINNER:  While Jan is walking up, I 

     

           think the practical effect is that because you're

           talking about Medicaid patients, they really have 

     

           no other options.  So they're forced to accept what 

     

           the government would provide for.  Whether they 

     

           just receive the differential and pay the 

     

           difference out of pocket, I don't know.  They

           probably couldn't and still qualify for Medicaid if 

     

           they have those kinds of resources. 

     

                     DR. LOPES:  But if someone else could come 

     

           up with the differential, are we talking about the 

     

           whole price or just part--

                     MS. HAMILTON:  Well, yes, if somebody else 

     

           could come up with the differential, they could. 

     

           But if you think about it, if a patient is on 

                                                                    107 

     

           Medicaid, they can't come up with the difference. 

     

           You know, just like every patient who's on Medicare 

     

           they can't really come up with the 20 percent 

     

           either.  You can come up with 20 percent of a

           lesser product, but not of these products. 

     

                     DR. LOPES:  The reason I'm asking this is 

     

           because this is a case where it's clear that one 

     

           product is much superior to the older form of the 

     

           product.  And so the decision is being made that

           this is not a sort of vanity product or one-- 

     

                     MS. HAMILTON:  No. 

     

                     DR. LOPES:  It's being made purely on the 

     

           fact that it costs a lot.  But we do pay for other 

     

           treatments that cost a lot if they're based on

           other technologies, like, you know, liver 

     

           transplants cost a lot, and yet there is no problem 

     

           about paying for liver transplants. 

     

                     MS. HAMILTON:  And the thing about that, 

     

           too, is the decision on what kind of product they

           get then ultimately is not being made by the 

     

           patient and the physician.  It's being made by 

     

           whoever is paying for it. 

                                                                    108 

     

                     DR. LINDEN:  It's my understanding with 

     

           Medicare and Medicaid that they cannot balance bill 

     

           the patient for additional things that aren't 

     

           covered, other than established copays.  So I think

           the Medicaid patient basically might in that 

     

           situation you're describing only have access to the 

     

           plasma-derived product.  I don't think they can 

     

           say, oh, but I want recombinant because I have this 

     

           other payer to add additional funds.  I don't think

           that legally can happen. 

     

                     So I just don't want to leave a 

     

           misimpression.  I believe that's the answer to your 

     

           question.  They would just have limited access to 

     

           certain types of products.

                     DR. BRECHER:  Chris? 

     

                     MR. HEALEY:  We're lucky to have a 

     

           representative from CMS here.  I wonder if he could 

     

           elucidate without putting him on the spot too much. 

     

                     DR. BRECHER:  Dr. Bowman?  Welcome to the

           Committee. 

     

                     DR. BOWMAN:  Thank you.  I'm not very 

     

           familiar with the regulatory issues for the 

                                                                    109 

     

           Medicaid balance billing issues, which this 

     

           question was addressing.  I don't believe--I think 

     

           Jeanne is correct.  I don't believe that there's 

     

           any provision under the standard Medicare program

           for any type of balance billing. 

     

                     DR. BRECHER:  What about availability in 

     

           terms of the fraction that is recombinant versus 

     

           derived from plasma?  Will this cause--is there 

     

           enough plasma-derived factor?  So there's an

           availability--the answer I'm getting is that 

     

           there's not enough plasma-derived factor currently 

     

           in the market to meet the needs of hemophilia, and 

     

           so there comes a question of what can you purchase. 

     

                     Keith?

                     DR. HOOTS:  There would not be enough 

     

           plasma-derived Factor VIII in the present market. 

     

           If everyone who was on recombinant were converted, 

     

           I mean, that's--there's no question about that. 

     

           There would be the potential to ramp up production

           if that were the case.  But, again, as I said last 

     

           time, the implications go far beyond the United 

     

           States.  This is a worldwide market, so it's not 

                                                                    110 

     

           something where you could just say, oh, well, that 

     

           would be what would happen.  It would be one of 

     

           those expanding entropy problems if that were to--you know, 

     

           if someone were to try to undertake that

           experiment. 

     

                     Furthermore, I think it probably would 

     

           have then cascading--as Mark talked about earlier 

     

           this morning, it would have cascading effects in 

     

           the other direction to things like IVIg and things

           that drive other plasma collections and stuff. 

     

                     So I don't even think that is in the realm 

     

           of availability possible, at least in the present 

     

           milieu of production.  It would require expanding a 

     

           lot of production facilities that don't presently--that are

           not presently online, to put it that way. 

     

                     DR. BRECHER:  Larry? 

     

                     MR. ALLEN:  Well, I've been hesitant to 

     

           bring up this issue about perspective or perception 

     

           again.  This letter does leave the door open, in my

           perspective, in terms of if there was some reason 

     

           there was an increase in the cost of, say, 

     

           recombinant, for whatever the reason.  It seems to 

                                                                    111 

     

           me that the door has been left open for there to be 

     

           some other people excluded from getting the type of 

     

           drug or treatment that they need. 

     

                     That concerns me because although they're

           saying they understand what's happened in the past, 

     

           this issue of remaining fiscally responsible leaves 

     

           a big perception in a lot of people's eyes that if 

     

           one thing--if something does develop and the cost 

     

           changes, that they're going to be a lot more people

           that are going to be excluded from buying and using 

     

           this product.  And the mere fact that, as was 

     

           mentioned earlier, this is not a choice of the 

     

           patient or the doctor, this is a choice, once 

     

           again, of the insurance company or the people who

           are actually paying the bills, then I'm concerned 

     

           about that. 

     

                     I'm also concerned about the number of 

     

           patients who may want to use it but cannot because 

     

           they're in a state right now that won't pay for it.

                     DR. BRECHER:  I think that it's fair to 

     

           say that the Committee is concerned about that as 

     

           well. 

                                                                    112 

     

                     Chris? 

     

                     MR. HEALEY:  Just a comment.  I know we're 

     

           talking about some disaster planning today, and 

     

           there's no doubt it would be a catastrophe if

           recombinant weren't available and everyone had to 

     

           switch to plasma-derived therapies.  There aren't 

     

           enough on the market today or facilities available 

     

           to meet the demand that exists.  But I think our 

     

           efforts might be equally well directed at making

           sure that doesn't occur, and I think that is a 

     

           possibility, that we can make sure it doesn't occur 

     

           through outreach with the payors, through outreach 

     

           with CMS and through working with our congressional 

     

           representatives and so forth.

                     So it's a disaster of a different ilk than 

     

           bioterrorism or other things like that, and I think 

     

           it's something that we do have an opportunity to 

     

           influence. 

     

                     DR. BRECHER:  Yes?

                     MS. HAGOPIAN:  I'm Judy Hagopian, and I speak only for myself 

    		at this committee meeting.

    	

    	I'm with HRSA, Health Resources and Services 

     

           Administration on the Maternal Child Health Bureau, 

                                                                    113 

     

           and I'm the Director of the National Hemophilia 

     

           program, and we've been hearing from consumers and 

     

           tracking this issue, and one of the main goals for 

     

           our federal agency is to ensure equal access to

           quality care.  I think the concern that I see 

     

           possibly happening is that there is going to be two 

     

           different standards of care, and that those who do 

     

           no have sufficient dollars are not going to get 

     

           access to what MASAC considers to be standard of

           care. 

     

                     So what appears to be happening is that 

     

           there really could be two different levels, or 

     

           standards of quality of care.  So I just wanted to 

     

           share that since we represent all vulnerable

           populations. 

     

                     MR. ALLEN:  Any options that you could 

     

           come up with that-- 

     

                     MS. HAGOPIAN:  I don't have any options at 

     

           this point, but I know that we certainly are very

           eager to collaborate with CMS and bring together 

     

           various individuals to let them know how we 

     

           perceive things and what we--how we perceive the 

                                                                    114 

     

           impact could be.  And we're very eager, very much 

     

           so, and we'd certainly try to be responsive to CMS 

     

           whenever they seek our opinion. 

     

                     MR. ALLEN:  Just so I understand, you are

           saying you're hearing from patients who cannot get 

     

           the product that they and their doctor choose to 

     

           use? 

     

                     MS. HAGOPIAN:  What we're seeing is that 

     

           with some of the Medicaid proposed changes,

           patients will not be able to access recombinant. 

     

           It's definitely true what this person said over 

     

           there.  I mean, for whatever reason, that is the 

     

           reality and will be the reality.  We don't have--I 

     

           can't represent HRSA and say we have a position.

           I'm just telling you what I hear and what I see. 

     

                     DR. BRECHER:  Chris then Mark. 

     

                     MR. HEALEY:  One of the major ways that 

     

           states limit access is through a vehicle that's 

     

           called prior authorization, where you have to get

           prior approval for administration of the therapy. 

     

           One of the major ways that states could limit 

     

           access is through this prior authorization process. 

                                                                    115 

     

           I know that a lot of the stakeholders, including 

     

           industry,  including NHF and other organizations, 

     

           HFA and others, have been very active at the state 

     

           level, lobbying and advocating against including

           blood clotting factors and other plasma therapies 

     

           from these prior authorization processes.  So we 

     

           can get an exemption and a carve-out from these 

     

           prior authorizations so there won't be any delay in 

     

           access to the therapy, there won't be any major

           constraints on access to the therapy. 

     

                     One success that was recently obtained 

     

           through a collaborative effort was up in Minnesota 

     

           where there was a wholesale carve-out of blood 

     

           clotting factors from the prior authorization

           requirements.  I think there are six or seven 

     

           states now that carve out clotting factors or blood 

     

           component products in general.  So there's still a 

     

           lot of work to be done but there has been some 

     

           progress made.  And I know there's a lot of

           outreach to various stakeholders to try and 

     

           collaborate to get that done across the board. 

     

                     DR. BRECHER:  Mark. 

                                                                    116 

     

                     MR. SKINNER:  Shifting back a little bit, 

     

           kind of what's been a theme of some of my comments 

     

           and discussions that I've had with some of you, if 

     

           we went back to look at this kind of as a global

           issue, because the plasma therapies are really 

     

           different than the blood, we're looking at a global 

     

           market where products move and we're looking at 

     

           global manufacturers.  I think understanding the 

     

           consequences of these impacts globally, the ripple

           effects back to the U.S., might actually help drive 

     

           other arguments to the safety of the economic issue 

     

           in terms of just the capacity to make these 

     

           decisions.  I've suggested a couple times looking 

     

           at the plasma issue and looking at it in relation

           to blood and what the global market dynamics are, 

     

           what the impacts, the benefits, and kind of the 

     

           constraints that are presented, and how we perhaps 

     

           ought to really be looking at the plasma market and 

     

           the plasma therapies in the U.S., and not look at

           them just simply as a U.S. reimbursement structure, 

     

           but to understand the economics.  It's beyond just 

     

           the reimbursement.  We really need to have a better 

                                                                    117 

     

           understanding of the global dynamics of the market. 

     

                     If we do that, then that's really part of 

     

           our role as an education process, and devising a 

     

           secretary, and that gives us perhaps a stronger

           basis and another argument that maybe we haven't 

     

           used to date, as we talked about the availability 

     

           of both the recombinant therapies, but all the 

     

           other advances in technology that have come forward 

     

           in the plasma field.

                     DR. BRECHER:  Other comments, questions? 

     

                     [No response.] 

     

                     DR. BRECHER:  I think we could move on to 

     

           the question of HOPPS, and Pierre, I think there 

     

           will be some resolutions coming from the Committee.

                     DR. BIANCO:  Mark? 

     

                     DR. BRECHER:  Yes, Celso? 

     

                     DR. BIANCO:  What I see is that in the 

     

           schedule it's for 1:00 p.m.  So for instance, Jim 

     

           McPherson that will speak for ABC is not here.  I

           don't know who Red Cross would be speaking, and I 

     

           don't know.  Karen? 

     

                     MS. LIPTON:  Well, actually, the person we 

                                                                    118 

     

           were going to have is presently speaking at CMS. 

     

           So we actually have a substitute speaker. 

     

                     DR. BRECHER:  Why don't we go to lunch, an 

     

           early lunch.

                     MR. HEALEY:  If you did want to make some 

     

           progress on the topic, we were going to request 

     

           that there be an opportunity to present some of the 

     

           plasma issues and how HOPPS impacts them.  We do 

     

           have a brief presentation ready to go, and Julie

           Birkofer, your favorite star, is ready to do it. 

     

           So-- 

     

                     DR. BRECHER:  All right, Julie.  You're up 

     

           to bat, and then we'll go to lunch.  Thank you. 

     

                     MS. BIRKOFER:  Sorry I didn't have this

           teed up.  I was going to do it at the lunch break. 

     

                     DR. BRECHER:  That's okay.  We're used to 

     

           this. 

     

                     [Laughter.] 

     

                     MS. BIRKOFER:  Maybe we do want to go to

           lunch while we wait. 

     

                     [Laughter.] 

     

                     DR. LINDEN:  I just have a sort of 

                                                                    119 

     

           gratuitous suggestion while we're waiting.  There's 

     

           been a lot of problem with identifying who's who. 

     

           Can we next time maybe have name tags that are more 

     

           block letters and not so difficult to read?

                     CAPTAIN McMURTRY:  I've gotten that 

     

           comment also.  I think we need to make the tent 

     

           cards more legible. 

     

                     DR. BIANCO:  It's the aging of the 

     

           Committee.

                     [Laughter.] 

     

                     DR. LOPES:  I wanted to make a suggestion 

     

           too, since we've got a few extra minutes.  It seems 

     

           that we've had, coming from lots of different areas 

     

           over the last two days, curiosity about--expressions--and we

           don't know how it works--about 

     

           how markets, regulation, innovation and safety come 

     

           together in this area, and I just wonder if this 

     

           might be a topic for one of our meetings. 

     

                     DR. BRECHER:  Interestingly enough, there

           is an Agenda Subcommittee, and we did get together 

     

           after the close of business yesterday, and market 

     

           issues, market forces was probably the highest item 

                                                                    120 

     

           on our list of possible new topics. 

     

                     [Pause.] 

     

                     DR. BRECHER:  To begin your talk, maybe 

     

           give a little background to everybody as to what

           exactly HOPPS is, since you're to be the first 

     

           speaker on the topic. 

     

                     MS. BIRKOFER:  Okay, Dr. Brecher.  I'd be 

     

           happy to. 

     

                     My name is Julie Birkofer.  I'm the

           Director for Health Policy for the Plasma Protein 

     

           Therapeutic Association, PPTA, and we are very 

     

           appreciative of the Committee to allow us to share 

     

           with you our views on this Medicare reimbursement 

     

           methodology.  I am not a reimbursement expert by

           training.  Since being at PPTA October 2001, I have 

     

           learned a lot, and one of the things I've learned 

     

           is that the outpatient prospective payment system, 

     

           PPS, is a system that was put in place by Congress 

     

           through the budget reconciliation in the mid '90s,

           late '90s, and it was further improved in BIPA. 

     

                     The intent of PPS is to be responsive to 

     

           the Medicare Trust Fund and to assure the viability 

                                                                    121 

     

           of the trust fund into the future.  The intent of 

     

           PPS is to group, bundle, lump therapies, biologics, 

     

           vaccines, high-tech, drugs into categories.  One of 

     

           the issues that the plasma protein therapeutic

           industry has been very active on is assuring that 

     

           our therapies are paid and maintained in separate 

     

           APC or ambulatory payment classifications.  Again, 

     

           all of our approaches in Medicare and in the state 

     

           strive to express the unique critical life-saving

           nature of our therapies, and the fact that they 

     

           cannot be bundled or clustered or lumped--and the 

     

           new term of art is "functional equivalents"--that 

     

           these therapies, because of the unique nature and 

     

           the critical access points to the user communities,

           need to have adequate reimbursement. 

     

                     So HOPPS is a system that is an annually 

     

           rule-making process that CMS issues a proposed 

     

           rule, and the intent is to, on an annual basis, 

     

           ratchet down and control cost.  There is pain

           across the board.  There are rarely any winners. 

     

           One of the first questions I asked my consultant 

     

           when the proposed rule came out August 6th, is, I 

                                                                    122 

     

           said, "Are there any winners," because that's one 

     

           of the first things that our stakeholders are 

     

           interested in, and the answer was no.  The oncology 

     

           category got a little better treatment, but again,

           drugs, devices, biologicals, high-tech.  It also 

     

           has a system called a pass-through, which is a 

     

           dedicated pool of money where CMS placed these 

     

           high-tech drugs and devices, biologics that they 

     

           weren't quite sure how to price.

                     When HOPPS first came in in 2000 the rates 

     

           were based on manufacturer-reported pricing.  '01 

     

           was the first year that the payment system used 

     

           actual claims data, and this caused a lot of bumps 

     

           and reverberations in the market because of some of

           the inaccuracies and data problems.  And as you all 

     

           who are experts more than me in this area can 

     

           appreciate, it is very complex and very difficult 

     

           to do claims-based data collection from hospitals 

     

           across the United States.

                     CMS is trying to perfect their data 

     

           analysis in their claims system, and this year the 

     

           proposed rule for 2004 that again was just 

                                                                    123 

     

           released, of course when I was on vacation the 

     

           first week of August, is based on 2002 claims data. 

     

           So you have a little lag in your data, and you also 

     

           have some problems in the accuracies of the data.

                     As you can imagine, hospital claims, 

     

           billing clerks, it's kind of like, the way I boil 

     

           it down, garbage in, garbage out.  If you have 

     

           errors in the fundamentals of the billing level 

     

           within the hospital, for example, these are all

           infused drugs.  If they only bill for the infusion 

     

           code and not for the drug or the therapy as well, 

     

           then your claims data will not reflect the cost of 

     

           the drug, and this is what we are finding, and this 

     

           is where PPTA has engaged consultants and

           economists to analyze this claims data, and I think 

     

           we're about ready for the presentation, so we will 

     

           be on script in a second. 

     

                     Basically, the comment period is 60 days. 

     

           The final rule will likely come out November 1.

           And we will then launch into a more aggressive 

     

           strategy.  We're now going to go on screen and now 

     

           you will see repetition. 

                                                                    124 

     

                     By overview, PPTA is a standard-setting 

     

           and advocacy organization.  We represent the 

     

           world's leading manufacturers of plasma protein 

     

           recombinant analog therapies, and as the Committee

           discussed earlier, the global nature of our 

     

           industry as well as the economic viability of the 

     

           industry.  We coordinate strategic outreach to our 

     

           stakeholder organizations, Congress and the 

     

           administration.

                     Again, this is the time frame and it's an 

     

           annual process.  The issues that we are primarily 

     

           focusing on are rates and classification, 

     

           classification meaning blood and blood products 

     

           categories, pass through, new technologies.  The

           impact on our therapies is, you know, people 

     

           wonder, well, we have small populations.  For 

     

           example the Alpha-One community has 6,000 

     

           diagnosed.  Well, that's 6,000 total population. 

     

           38 percent of that 6,000 are Medicare eligible.

           Immune Deficiency Foundation, you have 

     

           approximately 50,000 people that have diagnosis of 

     

           PIDD, primary immune deficiency disease, 12 percent 

                                                                    125 

     

           of that population.  And for hemophilia the numbers 

     

           are even smaller in Medicare.  People wonder why. 

     

           Well, not to be crass, but the sad fact of the 

     

           matter is that disabled you cover, but there are

           not a lot of people over 65.  Times have changed 

     

           the effectiveness of our therapies, but again, you 

     

           don't have large populations. 

     

                     People wonder, well, why do you care about 

     

           HOPPS?  Well, we care because Medicare, as you all

           know, is a model system, and the rates and the 

     

           strategies and the tactics that they impose on 

     

           paying for our therapies, private insurers--you'll 

     

           see Cigna and Aetna modeling their payment 

     

           structures.  And so for that, PPTA has actively

           worked with our plasma and recombinant users 

     

           community to assure that the rates assure access. 

     

           We firmly believe that access directly links to 

     

           availability of full choice, all products 

     

           available, and that that links to safety.

                     As you all discussed earlier, as Chris 

     

           noted, it would be a disaster, quote, unquote, of a 

     

           different magnitude, but a large magnitude if the 

                                                                    126 

     

           full range of recombinant and plasma drive 

     

           therapies were not available.  And just to note, 

     

           the core therapies that we're focusing on are the 

     

           IVIG, the Alpha-One proteinase inhibitor and the

           blood clotting factors. 

     

                     I can't stress enough the unique life-saving 

     

           nature of the therapies, and you know, 

     

           people wonder, you know, why are the rates so 

     

           important, and why as an industry are we concerned

           that these rates are adequate, and you know, aren't 

     

           you making enough?  Well, what you have to 

     

           appreciate is that these therapies are manufactured 

     

           in a very complex and constantly evolving process 

     

           with constantly increasing regulatory requirements.

           We are very, very different than our brethren in 

     

           the pure pharmaceutical industry.  These therapies 

     

           are life-sustaining.  They treat chronic and often 

     

           primarily genetic diseases.  There are no 

     

           alternatives.  There are no generics available.

           These are must-haves.  Without these therapies, 

     

           people, their lives are impacted, and I'll leave 

     

           those arguments to my colleagues in the consumer 

                                                                    127 

     

           and in our stakeholder organizations.  I think they 

     

           can best deliver those messages. 

     

                     IVIG, just to give you a quick overview, 

     

           the permanent APC is maintained, and this is

           important again because we were not bundled into an 

     

           infusion category.  The issue here is 

     

           classification.  As you recall in the May Advisory 

     

           Committee, you all expressed a resolution on blood, 

     

           on IVIG, that the therapy should be put into the

           blood and blood products category, defined as a 

     

           blood and blood product.  It is, with all due 

     

           respect to Dr. Bowman, ludicrous to me as a policy 

     

           person, that CMS does not recognize IVIG as a blood 

     

           product.  HHS has CMS and FDA underneath its

           umbrella.  FDA defines IVIG as a blood product and 

     

           a biologic.  CMS, for some reason, has a different 

     

           view, and will not recognize IVIG as a blood 

     

           product.  However, it does recognize, blood, blood 

     

           products, including hemophilia factor.  Hemophilia

           blood clotting factor, as we all know, can be 

     

           plasma derived or recombinant.  The new technology 

     

           recombinant does not include any proteins.  

                                                                    128 

     

           Therefore, the new technology clotting factors are 

     

           not necessarily as pure a blood product as IVIG. 

     

           IVIG is 100 percent solely plasma derived. 

     

                     From a policy perspective your resolution

           and report language that was put in by the Labor, 

     

           HHS Subcommittee on Appropriations, the House 

     

           Subcommittee, mirrored your recommendation that CMS 

     

           include IVIG in the classification, blood and blood 

     

           products.  Naturally, part of our advocacy strategy

           in the next 60 days will be to meet with CMS and to 

     

           further make an attempt to enlighten them that IVIG 

     

           is a blood product. 

     

                     With regard to blood clotting factors, the 

     

           rates are inadequate to sustain access.  We

           realize, and we understand, that again it's an 

     

           annual intent to ratchet down costs.  For example, 

     

           plasma-derived Factor VIII had a 10 percent 

     

           reduction, and recombinant Factor VIII also had a 

     

           10 percent reduction.  Can the companies sustain

           this?  Perhaps.  Again, the economic viability of 

     

           the industry is at stake.  Those of you that look 

     

           at the plasma protein industry may be aware that 

                                                                    129 

     

           we've had some consolidations, that there's been 

     

           some layoffs, there's been some reductions.  And 

     

           our industry isn't unique, the entire economy is 

     

           suffering.

                     The point is that again these rates have 

     

           to be adequate to sustain access and it all links 

     

           availability and safety. 

     

                     The Alpha One proteinase inhibitor was 

     

           really, I think, one of the major tragedies of this

           proposed rule.  It was an unexpected event.  Again, 

     

           noting in this rule, nothing in HOPPS, rather, is 

     

           forever.  In this annual rule-making process things 

     

           change.  In 2003 the final rule exempted Alpha One 

     

           proteinase inhibitor from HOPPS and put it into a

           cost-based system.  This year, because of political 

     

           pressure, other groups, other disease states, 

     

           trying to get their therapies exempt from HOPPS, 

     

           banged on the door and instead of shutting the door 

     

           to those other groups, CMS in turn rescinded the

           exemption for the Alpha One and the other three, 

     

           quote, unquote, true orphans, because again, CMS 

     

           defines an orphan drug different than the FDA.  

                                                                    130 

     

           It's kind of a little bit more of that disconnect 

     

           in definitions going on.  We firmly believe that 

     

           the rate that is proposed is inadequate to sustain 

     

           access.  Reasonable cost for this population, the

           vulnerability, the fragile population, we feel 

     

           should have been given time to determine the impact 

     

           on that community. 

     

                     So in conclusion, we are keeping our eye 

     

           on October 6, the comment period on the proposed

           rule.  We have already begun the process of working 

     

           with our stakeholders.  We are already in the 

     

           process of engaging members of Congress to write 

     

           letters and to work with us in lobbying CMS to 

     

           hopefully enlighten them on some of these crucial

           issues to the plasma and recombinant user 

     

           community.  And again, what will give us 

     

           credibility, as it did last year when we were 

     

           successful in having CMS recognize the Alpha One, 

     

           what made us successful is, as an industry, we

           really stepped up and did some data collection and 

     

           analysis that focused on the inaccuracies of the 

     

           claims data.  Again, in April to December '02 time 

                                                                    131 

     

           frame, it is not a robust enough data set. 

     

                     So that is where PPTA, that's our opinions 

     

           and our take on HOPPS, and November 1, final rule, 

     

           and hopefully if we're given the opportunity to

           update you all at your next meeting, we'll have a 

     

           better story. 

     

                     I thank you very much. 

     

                     DR. BRECHER:  Thank you, Julie. 

     

                     Comments or questions from the Committee?

                     Keith? 

     

                     DR. HOOTS:  Presumably these HOPPS rates 

     

           are based on the preceding year's outpatient 

     

           reimbursement rates; is that right?  It's not based 

     

           on hospital rates; is that correct?

                     MS. BIRKOFER:  It's based on hospital 

     

           claims data from the preceding year.  So for this 

     

           '03 proposed rule, CMS is using April 2002 to 

     

           December 2002 actual hospital claims data that they 

     

           take, they aggregate, and then in house they

           manipulate and apply methodologies and formulas to 

     

           get the rates. 

     

                     DR. HOOTS:  And why, since they've been 

                                                                    132 

     

           paying on fee-for-service for these products, I 

     

           mean reimbursement per product, outpatient wise, 

     

           did they choose to inpatient data to arrive at 

     

           outpatient reimbursement?  Because you've alluded

           to one of the major issues which is particularly 

     

           germane, and I provide you actual personal 

     

           experience, where inpatient billing is far, far 

     

           less accurate for products of rare disease like 

     

           hemophilia, because again, you pointed out very

           astutely, that the people doing that are also 

     

           billing for cabbage(?) procedures and stuff, and 

     

           this is not something they know anything about.  By 

     

           contrast the billings that are done say for home 

     

           care companies are likely to--since that's their

           literal bread and butter--are much more likely to 

     

           be accurate and reflective than are inpatient data. 

     

                     Then of course the other thing is that 

     

           there are problems in terms of how they're used, 

     

           because they may be used quite differently in an

           inpatient than in an outpatient setting, so it 

     

           seems to me that that's a disconnect that at least 

     

           for the longer term might need to be suggestively 

                                                                    133 

     

           addressed, particularly since annually it's going 

     

           to be updated.  But if they're going to do it, they 

     

           ought to do it the right way it seems to me. 

     

                     Secondly, in terms of--do they

           specifically, for instance, for IVIG, when they are 

     

           looking at those claims data, do they limit 

     

           themselves to a very specific DRG for reimbursement 

     

           to determine rates, and how accurate do you feel 

     

           those determinants are?  We all know, for instance,

           that IVIG may be used for everything from ITP to 

     

           primary immune deficiency, but clearly, if the 

     

           impact is on reimbursement for immune deficiency, 

     

           it's in that context that the data should be 

     

           collected.

                     MS. BIRKOFER:  Thank you, Dr. Hoots.  Your 

     

           point on IVIG, last year when we looked at the 

     

           data, we did not drill down into the ICD9 code. 

     

           This year when we look at it we are going to have 

     

           our consultant pull the entire 279 series.  That

           will hopefully bring to bear data for PIDD only, 

     

           and that is, our concern and our interest is to 

     

           assure that the IVIG that is used to treat chronic 

                                                                    134 

     

           disease is accurately and adequately reimbursed. 

     

                     With respect to the disconnect in the 

     

           inpatient and outpatient, I appreciate your 

     

           comment.  I totally agree.  And Shannon Penberthy

           and I have spoken on that, and I know Shannon 

     

           Penberthy, who represents the NHF in town, is going 

     

           to be very deeply digging into that, and we will 

     

           work and support her in that effort.  So I thank 

     

           you for that.

                     DR. BRECHER:  Additional comments, 

     

           questions? 

     

                     DR. PENNER:  Just one quick.  There still 

     

           is only one source of supply for the Alpha One; is 

     

           that correct; the German company?

                     MS. BIRKOFER:  Actually, sir, just 

     

           recently within the past month, our member 

     

           companies, we've had two new entrants into the 

     

           Alpha One marketplace. 

     

                     DR. PENNER:  So there is a little

           competition there and maybe resources? 

     

                     MS. BIRKOFER:  It will be starting up, 

     

           yes.  Yes.  We're delighted with that. 

                                                                    135 

     

                     DR. BRECHER:  Okay, thank you, Julie. 

     

                     Miriam, you want to make your comment now? 

     

                     MS. O'DAY:  Thank you.  I'm Miriam O'Day, 

     

           and I'm here on behalf of the Alpha One community,

           the Alpha One Foundation, Alpha One Association, 

     

           and immune deficient IVIG consumers. 

     

                     Really, Julie gave you the full overview 

     

           of what happened.  In terms of IVIG our biggest 

     

           concern is that this Advisory Committee did pass a

           resolution, sent a clear message to CMS.  Congress 

     

           echoed that message by picking up the language in 

     

           report language to CMS under their appropriations 

     

           bill, and requested that we be placed in blood and 

     

           blood products.

                     The effect of that really is that if there 

     

           are reductions in cost to the pool, we have a 

     

           dampening effect.  So there's only a certain 

     

           percentage that they can take us down, and we hope 

     

           that that would help to ensure access.

                     I'm really reporting back to the 

     

           Committee, echoing to you that CMS has not heeded 

     

           the call that you gave them.  We're not asking for 

                                                                    136 

     

           action today, but we want you to know that that's 

     

           the status of IVIG. 

     

                     In terms of Alpha One, as you heard from 

     

           Julie, the proposed ruling is horrible.  We find

           ourselves in the same situation that we were in 

     

           when the proposed rule came out in '02.  We know 

     

           that these are populations that are widely 

     

           dispersed, that have low utilization in the 

     

           hospitals.  Again, we're very grateful to be

           working with the industry on this because they do 

     

           the technical review, they purchase the claims 

     

           data, they parse the claims data, and we're looking 

     

           forward to them drilling down into the ICD9 codes 

     

           because we think that we'll identify additional

           flaws in the data. 

     

                     So for us, again, we're not asking for 

     

           action from the Advisory Committee today.  We're 

     

           just here to tell you that all of the support that 

     

           you gave us in the past and the wins that we have,

           have now been pulled out from underneath us, and 

     

           we'll be working hard to try to reverse this rule 

     

           with CMS, and we may be here again in the fall when 

                                                                    137 

     

           we see the final rule, to tell you that we had a 

     

           terrible outcome, and at that point we'll be asking 

     

           for action. 

     

                     But it's a terrible situation for these

           communities, particularly for the Alpha One 

     

           community.  As you've got more product into the 

     

           marketplace, you may have less access due to 

     

           reimbursement.  So thank you. 

     

                     DR. BRECHER:  Thank you, Miriam.

                     If there are no further comments or 

     

           questions, why don't we adjourn for lunch, and be 

     

           back at 12:30 or thereabouts. 

     

                     [Whereupon, at 11:35 a.m., there was a 

     

           luncheon recess.] 

                                                                    138 

     

                                AFTERNOON SESSION 

     

                                                           [12:39 p.m.] 

     

                     DR. BRECHER:  Okay.  We're going to resume 

     

           our discussion of HOPPS.  Our next presentation is

           going to be from the American Association of Blood 

     

           Banks. 

     

                     MS. WIEGMANN:  I'm going to try to modify 

     

           the version of the statement I made earlier this 

     

           morning, and I believe that we've passed out a

           written statement to you, and I will try to 

     

           summarize since you all have--many of you have seen 

     

           me before, since this seems to be a recurring 

     

           problem, the annual payments that CMS is proposing 

     

           for hospital outpatient services, in particular for

           blood programs under this HOPPS program. 

     

                     This year we are particularly troubled 

     

           that once again the payments that CMS is proposing 

     

           for blood products are, in fact, being reduced 

     

           while we know that in reality the cost of blood

           continues to increase as we have new safety 

     

           advances introduced.  I'm going to use red blood 

     

           cells, leukoreduced red blood cells, as one 

                                                                    139 

     

           example. 

     

                     In 2004, CMS is proposing to pay 30 

     

           percent less than what leukoreduced blood cells 

     

           cost in actual figures in 2001.  I'm using 2001

           figures because that's the last annual data that we 

     

           have on national-based hospital acquisition costs, 

     

           and those are drawn from the NBDRC's last biennial 

     

           survey. 

     

                     Under that survey, hospitals paid on

           average $155 for a unit of leukoreduced red blood 

     

           cells, whereas now CMS in 2004 is proposing to pay 

     

           $107.  Clearly, this is inadequate. 

     

                     A similar problem is seen in most all of 

     

           the blood products across the board.  For instance,

           platelets concentrate, CMS is proposing to pay 32 

     

           percent less than what we believe the actual cost 

     

           was in 2001, again, using the figures from NBDRC's 

     

           biennial survey. 

     

                     So given these low figures, we at AABB

           propose that the problem is, again, because CMS is 

     

           using inadequate hospital claims data, and at your 

     

           last meeting we heard of the problems that 

                                                                    140 

     

           hospitals have in accurately billing for blood. 

     

           AABB is trying to address this problem by going out 

     

           on the road and educating hospitals about how to 

     

           appropriately bill for blood.  We have issued our

           reimbursement guide, which we hope will help in 

     

           this effort.  And, in addition, we're actively in 

     

           conversations with CMS about how to improve their 

     

           guidance documents. 

     

                     But since those efforts will all take a

           number of years to reach our goal of improving 

     

           hospital data, we propose that in the interim CMS 

     

           go to a system under which they'll pay for blood 

     

           products based on a reasonable cost basis rather 

     

           than under the APCs which they're currently using

           and under which they have to draw from their 

     

           inadequate existing cost data. 

     

                     So AABB continues to appreciate the 

     

           support of this Committee in pointing out the 

     

           problems that we as a community are facing in the

           reimbursement arena, and we would urge you to urge 

     

           the Secretary to have CMS address this problem 

     

           before the outpatient rule is finalized and goes 

                                                                    141 

     

           into effect in January 2004. 

     

                     Thank you. 

     

                     DR. BRECHER:  Thank you. 

     

                     Any comments or questions?

                     DR. PENNER:  Just in view of our similar 

     

           discussions at the last meeting, I checked with two 

     

           of my hospitals that were not submitting any 

     

           information whatsoever on blood costs because it's 

     

           all bundled and they didn't care and they didn't

           think there was any need for it.  So I don't know 

     

           how they're getting these figures from areas around 

     

           the country as to what the actual costs are when 

     

           many of them are not submitting them. 

     

                     MS. WIEGMANN:  Right, and, in fact, as I

           think it was maybe pointed out during the last 

     

           meeting, CMS itself noted in an inpatient rule a 

     

           couple years ago that in 1997, only 48 percent of 

     

           hospitals billed for blood using appropriate cost 

     

           centers.  So, obviously, this is a problem, and our

           answer to that is we're trying to reach out to the 

     

           hospitals to fix that and make them cognizant of 

     

           the fact that they need to bill for blood because 

                                                                    142 

     

           all of this is a prospective payment system; and 

     

           although it may not affect what they're being paid 

     

           this year, down the road it's going to make a 

     

           difference on how blood is paid for.

                     Here in the outpatient setting, which we 

     

           know is not nearly as significant as the inpatient, 

     

           but it is something, and it's important that we 

     

           have as accurate of reimbursement figures as 

     

           possible; and then also in the inpatient arena,

           where we know most of our attention is, that the 

     

           DRGs that use the most blood are accurately 

     

           recalibrated in the future to take into account the 

     

           rising costs of blood. 

     

                     So, yes, we're hearing the same issue,

           and, you know, it's just an uphill battle in trying 

     

           to make hospitals see why this matters.  And many 

     

           of them are, you know, turning to us, I think, 

     

           increasingly to try to get some help on this 

     

           complicated matter.

                     DR. BRECHER:  Chris? 

     

                     MR. HEALEY:  Teresa, that was really my 

     

           question.  I don't know if this is more appropriate 

                                                                    143 

     

           for you or for Dr. Bowman or whom, but whose 

     

           responsibility is it to teach people about the 

     

           proper way to submit claims?  I don't know the 

     

           answer to that?

                     MS. WIEGMANN:  You know, I would argue 

     

           that it's many of our shared responsibilities.  It 

     

           was funny.  I was just at a CMS Advisory Committee 

     

           this morning, and the Chair of that committee, 

     

           troublingly to me, to the group said, well, he had

           some reservations about whether hospitals even read 

     

           CMS guidance documents. 

     

                     Well, I would argue that they do, and so 

     

           it's important on one level to have the agency 

     

           issue clearer guidance, but at the same time we in

           the community have responsibilities.  We at AABB 

     

           are trying to reach out to our hospital members to 

     

           work with them in getting a grasp of the issue. 

     

           And then blood centers also can play a role in 

     

           helping to explain to some of their hospital

           consumers how this all works. 

     

                     DR. BRECHER:  Keith? 

     

                     DR. HOOTS:  Just a comment about 

                                                                    144 

     

           unforeseen consequences of this kind of slippery 

     

           slope, and you kind of alluded to it in terms of--and so did 

     

           John, in terms of the bundling, kind of 

     

           not even unbundling.  I think particularly

           institutions that are focused on providing care to 

     

           Medicaid and Medicare patients are so used to just 

     

           kind of getting hit and hit and re-hit and trying 

     

           to just survive, particularly academic institutions 

     

           and that sort of thing.

                     Each time it doesn't look like much 

     

           compared to the time before, but if you take a 

     

           subset of individuals like hypertransfusion for 

     

           sickle cell or something like that, where they're 

     

           coming in once a week--I mean once every two or

           three weeks to get hypertransfused, and you've got 

     

           half a dozen of them, suddenly--you know, a $30 

     

           loss to a service doesn't look much, but you 

     

           multiply it, even for small numbers, and suddenly 

     

           you get--what happens is the unintended consequence

           of people who are having to try to make ends meet 

     

           saying:  Why are we taking care of these patients? 

     

           Why don't we send them across the street? 

                                                                    145 

     

                     And even if they do traditionally take 

     

           care of Medicaid patients, they may say, well, this 

     

           could go to the county hospital, which then moves 

     

           it one step down.  They keep getting hit.

                     And it's a real problematic issue that's 

     

           hitting all of our institutions that are public 

     

           supported, whether they be universities that are 

     

           tax-based or medical schools or county hospitals. 

     

                     But there's this movement--and we were

           talking a little bit over lunch about this, of 

     

           cherrypicking, the ones who have the most 

     

           discretion about which patients they see will 

     

           clearly say opt out of Medicaid or Medicare, and 

     

           they'll move it down one step.  And there may be

           then a distribution that's traditionally allowed it 

     

           to be spread out.  But then when the hit starts 

     

           being amplified, then it goes down to the very 

     

           lowest common denominator into the one institution 

     

           or the few institutions that have nowhere else to

           send the patients.  And those institutions then get 

     

           really problematically hit. 

     

                     I think that's one of the things we can't 

                                                                    146 

     

           necessarily address in this Committee, but I think 

     

           we just need to keep all of these things in mind, 

     

           that it's more than just a $30 increment that gets 

     

           accounted against an entity.  It really does

           amplify, and the consequences are usually 

     

           unforeseen down the road. 

     

                     DR. BRECHER:  Lola? 

     

                     DR. LOPES:  I know that with our 

     

           university hospital, someone is watching literally

           pennies on things like pencils and notebooks in 

     

           their purchasing systems.  For biologics and other 

     

           expensive medical equipment, products, is no one 

     

           watching?  Why do we care more about a penny on 100 

     

           pencils than about these changes?

                     DR. HOOTS:  Primarily, I think, in all 

     

           true form--and, again, it's an evolving system, but 

     

           I think one of the reasons is that institutions are 

     

           committed by and large by their charter and mission 

     

           to do certain things.  But there comes a time when,

           if they can't break even, they don't exist. 

     

                     So up until the point that they hit that 

     

           essentially point of no return, their mission 

                                                                    147 

     

           demands that they continue to take care of these 

     

           patients, even if they lose more and more money in 

     

           the process. 

     

                     And so it's a very insidious sort of

           thing.  It doesn't happen in a year.  It probably 

     

           doesn't happen in a decade.  But if you look at 

     

           what has happened across the country with 

     

           institutions like the ones I'm alluding to that are 

     

           usually tax-supported, they are--this past year

           large academic institutions have been laying off 

     

           large amounts of infrastructure first, staff 

     

           second, and, finally, faculty.  And all that does 

     

           is mean that now they don't have the faculty to 

     

           take care of some of these patients, even if they

           were to walk in the door.  So then they have a 

     

           moral justification for saying, well, we can't take 

     

           care of them, we're going to send them down the 

     

           street or across town or across the state or across 

     

           the country.

                     MS. WIEGMANN:  And I would add to that, 

     

           representing hospital transfusion services, that is 

     

           the issue that we do hear; that our members are 

                                                                    148 

     

           hearing from their hospitals, you're a cost center, 

     

           and why do you costs keep going up and up and up? 

     

           And we try to explain it's because our product is 

     

           getting safer and safer and that is our duty to our

           patients, to provide them with the safest possible 

     

           unit. 

     

                     But, you know, your fear--I don't think we 

     

           have any hard data on it yet, but the fear is that 

     

           ultimately you're going to reduce the staff, you

           know, and we would argue that then you're going to 

     

           end up in a circle of problems, you know, potential 

     

           other blood safety problems of patients getting the 

     

           wrong unit, et cetera. 

     

                     DR. LOPES:  I'd just say it seems like at

           our hospital people are tuned to the big new 

     

           machines that cost more, obviously, but give better 

     

           results.  It's because blood is such a small price 

     

           thing that we don't see easily, I think, that the 

     

           reimbursement issue is a very important one for

           buying a better service.  I'm sure they're getting 

     

           reimbursed for all the new big technologies we 

     

           have, or better reimbursed. 

                                                                    149 

     

                     MS. WIEGMANN:  It depends on the 

     

           technology, probably, but yes. 

     

                     DR. BRECHER:  I think what happens, Lola, 

     

           is they examine the reimbursement at the time they

           bring in that new technology, and then over time 

     

           the reimbursement ratchets down, and then they're 

     

           stuck losing money on that technology, too. 

     

                     MS. WIEGMANN:  So, in fact, for instance, 

     

           with blood, this year, you know, they say at CMS

           they're giving us some special treatment by only 

     

           reducing our payments by 10 percent.  How does that 

     

           square with reality?  It just doesn't.  And that's 

     

           a 10-percent reduction from what they already pay, 

     

           which is already lower, far lower than we in

           reality know what a unit of blood costs. 

     

                     DR. BRECHER:  Okay.  Paul? 

     

                     DR. HAAS:  This is a little bit 

     

           tangential, but I think it's come up before, and 

     

           it's important that even when institutions start

           trying to pay attention to the so-called 

     

           cost/benefit, it's not at all unusual for the 

     

           benefit--the cost to be absorbed, say, in the blood 

                                                                    150 

     

           area, and the benefit is--maybe the patient has 

     

           gone home.  And that doesn't get calculated. 

     

           That's not in the hospital revenue sheet. 

     

                     DR. BRECHER:  Certainly there is cost

           shifting and blood is part of the infrastructure, 

     

           and we're going to have patients that we can 

     

           operate on now, we'll make money. 

     

                     Okay.  Thank you, Teresa. 

     

                     Now we'll hear from America's Blood

           Centers, ABC. 

     

                     MR. MacPHERSON:  You want me? 

     

                     DR. BRECHER:  Yes, you. 

     

                     MR. MacPHERSON:  I'm going to take a 

     

           slightly different tack and show you something that

           most of you have never seen before, and hopefully 

     

           you'll enjoy it.  Sometimes something you haven't 

     

           seen before isn't enjoyable. 

     

                     I'm going to first echo Teresa's comments 

     

           only because--or mainly because it's a problem

           we've been struggling with for the last three 

     

           years.  And, indeed, it wasn't two years ago, I 

     

           think, that the blood organizations met with CMS 

                                                                    151 

     

           and they admitted that they didn't have the data on 

     

           which to base their APC rates, DRG increases.  And 

     

           we said the data exists.  We said between ABC and 

     

           Red Cross' data, you have 95 percent of the world

           in terms of cost to hospitals.  Why don't you use 

     

           that data?  And they said, well, we can't use 

     

           industry data. 

     

                     So I would urge this Committee, if it does 

     

           nothing else, to urge the Secretary to take the

           industry data and independently verify it and then 

     

           use that data as a more realistic basis, rather 

     

           than us complaining to CMS that their proposals 

     

           don't make any sense and CMS says, well, all we're 

     

           doing is reflecting what the hospitals are telling

           us in their billing tapes.  And as has already been 

     

           said, the hospitals have no incentive--at least 

     

           they don't think they have an incentive, certainly 

     

           in the short term, to correctly code the data 

     

           because they see this as such a long-term issue,

           and with the way money is appropriated these days 

     

           to Medicare and Medicaid, it's done in huge 

     

           amounts, on a bundled basis, based on what the 

                                                                    152 

     

           hospitals' costs are.  And then the hospitals have 

     

           to figure out how to use it. 

     

                     But what I want to do is I wanted to show 

     

           you a few things that, as I said, you probably have

           not seen before, and hopefully you'll find it 

     

           interesting because I think it puts this whole 

     

           issue in perspective. 

     

                     This is the same slide that Scott Caswell 

     

           showed, so I'm not going to show it again.  I think

           you all have the handouts for this.  This just 

     

           tells you who we are. 

     

                     Okay.  For the last 20-some years, we have 

     

           been collecting the fees that our members charge 

     

           our hospitals and tracking that information on an

           annual basis, do it all perfectly legally and 

     

           within antitrust guidelines.  And we've never 

     

           shared this information until about two years ago 

     

           when MedPAC, sort of the investigative arm or the 

     

           research arm of CMS, asked us for our data.  And so

           we began to put some trend data together for their 

     

           purposes, and that's what I want to show you today. 

     

                     This data is collected yearly.  It's 

                                                                    153 

     

           pricing as of September 1st.  We get--over 90 

     

           percent of the members participate every year, and 

     

           we actually--the data that I'm going to show you is 

     

           based upon a uniform database over the last 20

           years. 

     

                     The data is provided--we have provided 

     

           this data to other organizations before, but as I 

     

           said, I'm not sure you've ever seen it so I'm going 

     

           to show it to you.

                     This is probably the guts of it, and I 

     

           know it's hard to see.  But if you look, it goes 

     

           from 1984 to 2002.  Now, it gets sort of confusing 

     

           at--oops.  There we go.  It gets sort of confusing 

     

           at this end, but let me just explain this line

           first. 

     

                     This is the price of vanilla red cells, if 

     

           you will, over the last 20 years.  And what it 

     

           shows is that the increases were pretty low--and 

     

           I'll talk about that in a few minutes when I show

           you another graph.  But what we've superimposed on 

     

           this are major, if you will, safety measures that 

     

           have been implemented during that period of time.  

                                                                    154 

     

           And despite the implementation of all these tests 

     

           over the years, what you're seeing is increases, up 

     

           until recently, in the neighborhood of less than 5 

     

           percent per year, which is kind of--which is,

           frankly, at or below the rate of inflation, which 

     

           I'll show you in a minute. 

     

                     Then you see this huge spike over the last 

     

           couple of years.  A lot of this is related to NAT, 

     

           quite honestly, and a lot of it is related to, if

           you will excuse the expression, catch-up.  Because 

     

           during this period especially, blood centers, both 

     

           Red Cross and ABC members, were losing money.  And 

     

           what I don't have a graph of and what I--we don't 

     

           have that database put together yet, but what we

           probably can show you at some point in the future 

     

           is actually the cash reserves or some other markers 

     

           for blood centers, for our members, over the last 

     

           20 years during this same period.  And what you 

     

           would see is that their reserves decreased

           dramatically during this period of time. 

     

                     So some of this increase, at least for the 

     

           ABC members--I can't speak for anybody else, but 

                                                                    155 

     

           we're half the country--is related to, if you will, 

     

           frankly, catch-up, trying to staunch the losses and 

     

           to make up for it.  But a lot of it is related to 

     

           HIV NAT and some accumulated expenses that we

           didn't account for, HCV lookback, et cetera. 

     

                     This graph is kind of interesting because 

     

           now we've been tracking leukoreduced blood for the 

     

           last few years because that, of course, has become 

     

           more and more of an important product for our

           members.  In fact, it's about 50 to 60 percent at 

     

           this point.  I think it's about 60 percent. 

     

                     You'll interestingly note the gap between 

     

           the cost for regular red cells and leukoreduced is 

     

           narrowing.  As it becomes more and more a common

           product and as the learning curve goes away of 

     

           trying to ramp up, you'll see that narrowing, and 

     

           at some point probably the differential will be 

     

           fairly small if this product--if the vanilla red 

     

           cells continue to exist.

                     I won't even explain the green and the 

     

           yellow lines because it is sort of--it's something 

     

           new that we're tracking.  Just sort of ignore it 

                                                                    156 

     

           because it really is proportionally the same as 

     

           here.  What it does show, though, is that if a 

     

           blood center supplies 80 percent of a hospital's 

     

           needs, their price is significantly lower, about 20

           percent lower, than the hospital that cherrypicks. 

     

           And that's just so that the blood centers can plan 

     

           much better in terms of what the needs are, and the 

     

           full-service hospital will pay a lower price than 

     

           the hospital that just does ad hoc shipping.  So

           these graphs are the list pricing. 

     

                     The next graph shows this data in a 

     

           different way, and this is probably hard to see the 

     

           numbers, but, again, they're in front of you.  This 

     

           shows you for the period of 1996 to '97, that the

           purple line is the consumer price index for health 

     

           care; the yellow line is the--I'm sorry, the green 

     

           line, which you can't see, except--I'm sorry.  The 

     

           yellow line is the producer price index for 

     

           hospitals, and that's another measurement of health

           care inflation.  And then the red line, which you 

     

           see here--but you don't see here because it's zero--is the 

     

           average red cell price increase for that 

                                                                    157 

     

           year period, from this period to that period.  And 

     

           so, again, you'll see that it was relatively flat. 

     

           And if you go back--as I said before, it is very 

     

           flat.  And then in the last few years for the

           community blood centers, the price--the average 

     

           increases have been in the neighborhood of over 10 

     

           percent.  And this is 18.4 percent between 2001 and 

     

           2002.  And with West Nile virus and some other 

     

           improvements, that increase is probably going to be

           only slightly less for this past year when we 

     

           collect that data. 

     

                     There are regional differences, of course. 

     

           The most expensive blood in the country on the 

     

           average is Hawaii and California, neck and neck

           with the Southwest area.  The cheapest area in the 

     

           country is in the Northwest, interestingly.  That's 

     

           an artificial number, though, however, because most 

     

           of the blood centers in the Northwest also manage 

     

           the blood supply and do the hospital transfusions.

           And so their costs are bundled in very often with 

     

           the fact of not only providing the blood to the 

     

           hospital but actually running the hospital blood 

                                                                    158 

     

           transfusion service.  But they are the lowest-cost 

     

           area, followed by the Southeast. 

     

                     So the average cost to collect and 

     

           process--now, let's put that in perspective.  Those

           are the charges.  The average cost to collect, 

     

           process, test, and distribute one unit of whole 

     

           blood is about $200 right now.  That's what the 

     

           cost is.  The majority of that cost is put onto the 

     

           red blood cell.  Additional costs are recovered on

           the plasma, both for that used for transfusion, 

     

           which is about half the plasma that's made, and the 

     

           other half is plasma for further manufacturing. 

     

           And then random platelets, if they are made, that's 

     

           another phenomenon that has caused the increase to

           red cells over the years, is because at one time 

     

           the average whole blood collection was turned into 

     

           three products:  a platelet, a plasma, and a red 

     

           cell. 

     

                     Well, over the years, the majority of

           platelets now are provided as pheresis platelets, 

     

           which have their own cost entirely, and so the 

     

           blood centers don't have random platelets anymore 

                                                                    159 

     

           on which to load costs on.  So cost has shifted to 

     

           the red blood cells, which is another reason for 

     

           that big shift that you've seen in the last few 

     

           years, because there have been--most blood centers--the

           majority of blood centers, not most, have 

     

           switched entirely to pheresis platelets, or at 

     

           least the majority of the platelets that they 

     

           provide. 

     

                     And cost increases for 2003 will include,

           as I mentioned already, West Nile virus testing, 

     

           added recruitment costs to replace donors lost by 

     

           variant CJD deferrals, and, as Scott Caswell, my 

     

           associated, mentioned the other day, the impact on 

     

           that has been far larger than we actually thought,

           where the donors we're really losing are the repeat 

     

           good donors.  And so we're losing many more 

     

           donations a year than we're losing donors.  And 

     

           bacterial testing for platelets is going to have a 

     

           major impact over the next year or two.

                     The costs could double with pathogen 

     

           reduction technology.  We don't know where that is, 

     

           frankly, at this point in time.  It could be two 

                                                                    160 

     

           years away.  It could be five years away or more. 

     

           It's going to come eventually.  But based upon the 

     

           technologies that are in the works, that could 

     

           double the price of whole blood collection alone,

           not talking about anything else.  And certainly 

     

           we'll keep doing testing because these technologies 

     

           are not foolproof. 

     

                     Now, double red cell collections could 

     

           help stabilize costs for a short period of time,

           and supply certainly, and it's estimated that about 

     

           20 percent of collections could be doubled.  But 

     

           that takes a lot of investment, different ways of 

     

           collecting blood, and the logistics are a bit 

     

           difficult.  You have to have better trained staff

           than just to do simple phlebotomies.  So that will 

     

           take a while to implement, but that will help give 

     

           us sort of, if you will, a one-time break in terms 

     

           of cost rises and perhaps supply problems. 

     

                     Now, as I mentioned before, this entire

           database is available to CMS for verification, and 

     

           we've said that before, and I know Red Cross has 

     

           the same figures we do.  And CMS could take that 

                                                                    161 

     

           and have it independently verified and use that as 

     

           the basis for their reimbursements. 

     

                     We're willing to collect any other data 

     

           that CMS might want.  We can get it, at least on

           the blood center basis.  The hospital is a little 

     

           bit more difficult.  On the other hand, we have 

     

           about 20 members who are also the hospital 

     

           transfusion services, so at least we could get a 

     

           sampling of what those costs are.

                     As I mentioned, we represent about half 

     

           the blood supply, but we're also in 45 states, so 

     

           geographically it's a good database, distribution 

     

           as well.  And along with the Red Cross data, as I 

     

           mentioned, it should be used to help to determine

           the APC and the DRG market basket updates. 

     

                     Last, I wanted to thank Jane Starkey, who 

     

           some of you know, for putting together this data 

     

           and the slides.  She does a remarkable job in lots 

     

           of things, including writing the newsletter, which

           you may be familiar with. 

     

                     Thank you. 

     

                     DR. BRECHER:  Jim, thank you.  That was a 

                                                                    162 

     

           very complete data set.  In fact, I'd encourage you 

     

           to publish it somewhere.  I think a lot of people 

     

           would be interested in seeing that. 

     

                     Questions or comments?  Ron?

                     DR. GILCHER:  Jim, your data is as of 

     

           September 2002. 

     

                     MR. MacPHERSON:  Correct. 

     

                     DR. GILCHER:  And, in fact, new fee 

     

           increases have been put in place probably by most

           blood centers as we speak.  Do you have an idea of 

     

           what that average percentage increase has been for 

     

           this year 2003-2004? 

     

                     MR. MacPHERSON:  For our members, our 

     

           understanding is that it's in the nature of around

           15 percent. 

     

                     DR. GILCHER:  Fifteen? 

     

                     MR. MacPHERSON:  Fifteen.  But there's a 

     

           large disparity because what we saw last year, even 

     

           though there was an average of an 18- or 19-percent

           increase, some only raised their fees 3 percent and 

     

           some raised their fees as much as 30 to 40 percent. 

     

           It all depends where they were in the cycle 

                                                                    163 

     

           sometimes, but we're going to see a 15-percent 

     

           increase. 

     

                     One figure I didn't put on there--and I 

     

           don't know if it's important--is that the spread

           between the first quartile and the third quartile, 

     

           if you know math--I don't, but if you know 

     

           statistics--is only about $40.  So although the 

     

           range is big, the actual spreads in cost are pretty 

     

           narrow.

                     But costs are continuing to increase, and 

     

           West Nile virus is a very good example.  It costs a 

     

           lot in terms of infrastructure to get ready for 

     

           that test, and although maybe the test itself only 

     

           costs about seven or eight bucks to implement per

           donor, or per donation, if you think about it, that 

     

           alone is about 4 percent of an increase to the cost 

     

           of blood--or cost of collection. 

     

                     DR. BRECHER:  Lola? 

     

                     DR. LOPES:  Sorry for what is a really

           ignorant question.  From the public perception, the 

     

           Red Cross is a major national charity.  That means 

     

           it collects a lot of money other than for products 

                                                                    164 

     

           it sells.  I don't think of blood centers like the 

     

           Mississippi Valley Center in our region as a 

     

           charity collecting money. 

     

                     Are there cost differentials between the

           Red Cross and the other nonprofit centers that 

     

           come-- 

     

                     MR. MacPHERSON:  I don't think I want to 

     

           answer the question as you've posed it. 

     

                     DR. LOPES:  Okay.

                     MR. MacPHERSON:  But I'll answer it a 

     

           different way.  Red Cross and ABC members have been 

     

           on cost recovery for blood and not having 

     

           charitable subsidies for probably since the early 

     

           1970s or late 1960s when United Ways were

           recognizing that the cost of blood was so expensive 

     

           that they couldn't keep up.  I come from Rochester. 

     

           I started my blood banking career in Rochester, New 

     

           York, at the Red Cross, and in 1968, 100 percent of 

     

           the blood supply was covered by United Way fees.

           By 1975, it was total cost recovery. 

     

                     MR. MacPHERSON:  There really is not much 

     

           difference in that.  Now, Mississippi Valley Blood 

                                                                    165 

     

           Center and all of our members are not-for-profit 

     

           501(c)(3) organizations, and a lot of them do 

     

           fundraising, but not to subsidize the price of 

     

           blood, but to do buildings, to do equipment

           acquisitions, to do research, to do special 

     

           programs.  So not to subsidize operations. 

     

                     DR. BRECHER:  Ron? 

     

                     DR. GILCHER:  I want to get back to my 

     

           point, Jim.  I had asked you the question for a

           reason, and that is really for our Committee 

     

           members to realize that the number that you saw up 

     

           here is you need to I think take an average of 10 

     

           percent.  I just calculated our blood center 

     

           increase, which went into effect August 1st.  It

           was a 12.9-percent increase on the processing fee 

     

           for a red cell, which included our single-unit NAT 

     

           testing for West Nile. 

     

                     But for the Committee members, I would 

     

           take that number that you saw, like the 154 on the

           leukoreduced red cell and add an additional 10 

     

           percent on to that, and that will put you into the 

     

           ballpark, I believe, of where we're going to be for 

                                                                    166 

     

           this coming year. 

     

                     MR. MacPHERSON:  It's a good point, Ron. 

     

           The other figure I didn't put in, and I'll just 

     

           mention, in 1990, the cost to collect a unit of

           whole blood was around $60, and as I mentioned last 

     

           year, the cost was around $200.  So, even if you 

     

           subtract inflation, you'll see some huge increases, 

     

           and many of them for or the vast majority of them 

     

           really are safety related or regulation related,

           one way or another. 

     

                     DR. BRECHER:  If there are no further 

     

           comments or questions, thank you. 

     

                     MR. MacPHERSON:  Thank you. 

     

                     DR. BRECHER:  Do we have a representative

           from the American Red Cross? 

     

                     MS. SULLIVAN:  Hi.  My name is Elaine 

     

           Sullivan, and I am the Director of Reimbursement 

     

           Policy at the Red Cross.  I'm here speaking on 

     

           behalf of the Red Cross today.  Obviously, I don't

           want to go through all of the information that both 

     

           Theresa and Jim have already shown you and talked 

     

           to you about.  We would support the comments of 

                                                                    167 

     

           both Theresa and the AABB, as well as some of the 

     

           comments that Jim has made. 

     

                     But what I would like to talk to the 

     

           Committee about is the fact that both--and bring to

           your attention--both in September of 2002 and again 

     

           in May of 2003, this Committee has recommended to 

     

           the Secretary and CMS, that the reimbursement of 

     

           blood products be based on a methodology that 

     

           recognizes fair and appropriate payment for blood

           and blood products, and we would urge the 

     

           Committee, again, today, during this comment period 

     

           on the outpatient PPS proposed rule, to once again 

     

           resurface those recommendations and have them 

     

           consider an alternative method of payment, rather

           than the hospital claims data. 

     

                     Our data also shows data that is similar 

     

           to Jim's as far as payment.  We have shared that 

     

           data with CMS.  CMS has told us their concerns with 

     

           using industry data, and one of those concerns is

           that they're concerned about overpaying some 

     

           hospitals and underpaying some hospitals, based on 

     

           using average or median data. 

                                                                    168 

     

                     One of the reasons why we, to the APC 

     

           panel this morning, as well as the AABB, have 

     

           recommended a reasonable cost carveout for blood 

     

           products out of the APC system is because an

           individual hospital will be paid their own 

     

           reasonable cost, and that satisfies one of CMS's 

     

           concerns with over- and underpaying hospitals based 

     

           on medians and averages. 

     

                     So I would encourage this Committee to

           take action, once again, during this comment 

     

           period.  The comment period closes October 6, but 

     

           also, at the same time, I just want to make sure 

     

           that the Committee understands that this is not an 

     

           unusual request to CMS.  CMS, last year, actually

           paid for orphan drugs through a reasonable cost 

     

           methodology simply because they did not feel that 

     

           the data was adequate to reflect the acquisition 

     

           cost of the product.  So it's not that we're asking 

     

           CMS to do something new that they haven't done

           before. 

     

                     So, with that, I will conclude my 

     

           comments, and I appreciate the Committee's time in 

                                                                    169 

     

           listening to our concerns. 

     

                     Thanks. 

     

                     DR. BRECHER:  Questions or comments? 

     

                     [No response.]

                     DR. BRECHER:  I think I'll open the floor 

     

           to, if there's any public comments on the question 

     

           of HOPPS, if anyone else wants to make a comment. 

     

                     MR. SKINNER:  Mr. Chairman? 

     

                     DR. BRECHER:  I'm sorry?

                     MR. SKINNER:  Shannon Penberthy, with Mark 

     

           Associates, wasn't here this morning when you 

     

           covered the other plasma folks-- 

     

                     DR. BRECHER:  Okay. 

     

                     MR. SKINNER:  And she wanted to make some

           brief comments. 

     

                     DR. BRECHER:  Okay.  Shannon? 

     

                     MS. PENBERTHY:  I know we're at the end of 

     

           the meeting, and so I'll ask the Committee's 

     

           preference.  I do have a PowerPoint that we could

           quickly put up or we could pass--you'd rather have 

     

           that? 

     

                     Sir, we are going to do it. 

                                                                    170 

     

                     [Pause.] 

     

                     MS. PENBERTHY:  I very much appreciate 

     

           this opportunity to talk about the impact of the 

     

           2004 HOPPS on clotting factor.  I know there were

           early presentations today when the Committee got a 

     

           bit ahead of schedule, so I will go through some of 

     

           the facts and get to the points we wanted to make 

     

           fairly quickly. 

     

                     This is very much a way a follow-up from

           the presentations that we had done in May to 

     

           further inform the Committee about the ways that 

     

           these products are reimbursed. 

     

                     Just a quick recap.  There are about 

     

           20,000 people in the United States with hemophilia.

           Five to seven percent are dependent upon Medicare, 

     

           about 1,100 persons, and we are uniquely recognized 

     

           in many of the Medicare payment systems.  We're the 

     

           only drug with a passthrough payment status in the 

     

           hospital inpatient setting, meaning that there's a

           separate reimbursement for clotting factor that's 

     

           used in a procedure for a person with hemophilia. 

     

                     We are one of the few self-administered 

                                                                    171 

     

           drugs covered under Part B, which allows our 

     

           persons with hemophilia to home infuse, self-infuse 

     

           at home.  And then, under HOPPS, we've been 

     

           recognized, rather than being bundled with other

           APCs for drugs or procedures, we do have separate 

     

           APCs for each of our classification of drugs.  It's 

     

           classified by the HCPCS or J Code. 

     

                     Hospital outpatient system.  The 

     

           prospective system implemented in August 2000

           replaced the previous cost-based system.  Last 

     

           year, was the first year that our products had been 

     

           truly in the prospective payment part of that.  We 

     

           had been allowed a 3-year period under the 

     

           passthrough category to allow for collection of

           data.  I'll tell you in a few minutes that didn't 

     

           really help us. 

     

                     The proposed rule last year would have 

     

           leveled reimbursement to 52 cents a unit for 

     

           virtually all of the products, regardless of

           whether they were plasma derived or recombinant, 

     

           which just would have had a devastating effect. 

     

                     We did respond, providing data that we 

                                                                    172 

     

           collected on hospital cost through our Hemophilia 

     

           Treatment Center networks.  And the final rule did 

     

           recognize the poor quality of the hospital billing 

     

           data and implemented a dampening effect to limit

           reductions.  So, for 2003, we were limited to 

     

           reductions of no more than 15 percent. 

     

                     The current Year 2004 Rule, proposed 

     

           earlier this month, it provides more favorable 

     

           treatment for blood and blood products than other

           nonpassthrough drugs.  Other drugs that are in this 

     

           category can be reduced based on the reported cost 

     

           data by as much as 15 percent, plus a quarter of 

     

           the difference between what the 2003 payment was 

     

           and what the 2004 payment would have been if they

           used the reported data.  So we will have some drugs 

     

           in that category, the broad category of 

     

           nonpassthrough drugs, that could be reduced by as 

     

           much as 20/30 percent. 

     

                     Blood and blood products, collectively,

           were given special recognition, with a 10-percent 

     

           dampening effect.  So we should all be very 

     

           excited.  We were only cut by 10 percent.  It could 

                                                                    173 

     

           have been much worse.  And as I say, still net 

     

           decreases. 

     

                     We're going to see how this chart looks. 

     

           So these are the rates, 2003 versus 2004.  As you

           can see, pretty much a uniform about 10-percent 

     

           reduction for all but our you'll see J-7193. 

     

           That's the Factor IX monoclonal products, which are 

     

           like the mid-grade product, if you will, for those, 

     

           and those actually receive a 5-percent increase.

                     Our concerns.  I gave you actually two 

     

           pieces of paper, and on this one, which was our 

     

           summary that we provided to the community of the 

     

           rule, the last page shows actually the data that 

     

           CMS reports using in aggregate form, and you'll see

           that the coefficients of variation for our products 

     

           range from, based on their own analysis, between 

     

           almost 6,000 and almost 120,000 for your 

     

           coefficient variations, which means this is really 

     

           reliable stuff they're using here.

                     Our volume is low in HOPPS.  About six 

     

           million units were reimbursed between April and 

     

           December of 2002, which is the time period they're 

                                                                    174 

     

           using, the hospital cost data, and I'll explain 

     

           that. 

     

                     Overall, Medicare, according to GAO, in 

     

           2001, paid about $105 million for clotting factor

           used in the home.  Similarly, the inpatient volume 

     

           were much higher than this.  People with hemophilia 

     

           typically don't go to the outpatient services for 

     

           their care.  They're infusing at home before they 

     

           go in for a procedure, if they've got an outpatient

           scheduled surgery.  They're making arrangements, 

     

           even though you're not always supposed to do this, 

     

           to bring factor with them.  But, by and large, 

     

           we're not seeing a lot of people get reimbursed 

     

           here.  Nevertheless, it's concerning, the rates

           that they want to put in place and the way that 

     

           they continue to intend to do it. 

     

                     We have to go back to remembering that 

     

           HOPPS is intended only to reimburse hospitals for 

     

           only about 80 percent of their cost in the

           Outpatient Department.  The rule, in compiling the 

     

           relative values by which they determine the rates, 

     

           applies an average pharmacy markup.  It doesn't 

                                                                    175 

     

           apply, I would say, to blood and to blood products. 

     

           They've got everything from aspirin with 1,000-percent 

     

           markup to our products, which we assume 

     

           hospitals have a relatively low markup for.

                     Overall, with the rates that I showed you 

     

           earlier in the presentation, we don't have serious 

     

           access problems at this point, but certainly if we 

     

           continued to have 10-percent or 15-percent 

     

           reductions every year, I would say the rates that

           are proposed for 2004 are getting pretty close. 

     

                     We intend to respond to this rule, given 

     

           that we're now about six weeks out from when that 

     

           is due.  Again, by collecting hospital-cost data 

     

           through our Hemophilia Treatment Center network,

           we've asked for data by brand, we've asked for 

     

           volume by brand or by HCPC Code. 

     

                     We had, I know a couple of times the 

     

           question has come up about CMS's refusal or 

     

           reluctance to take industry data.  We participated

           in the call that they held last week on HOPPS, and 

     

           they do provide specific instructions about the 

     

           data they'd like to see from industry-owned 

                                                                    176 

     

           devices, but they only, for us, say they'd like to 

     

           see more data. 

     

                     So I asked the question should we presume 

     

           that for the data they'd like to see for blood and

           blood products that it look a lot like geographical 

     

           variation, et cetera; the characteristics of the 

     

           data they asked for, for devices, and the answer 

     

           was, yes.  So we are going by that in preparing our 

     

           comments and seeking this data.

                     We will provide comments.  We're going to 

     

           make those available to our communities, so they 

     

           can also respond.  And we also were seeking 

     

           collaboration with other organizations.  To the 

     

           extent that clotting factor is included in the

           category of blood and blood products, we all need 

     

           to be cognizant of the recommendations that we're 

     

           making and the impact they could have on the other 

     

           products, as long as CMS is continuing to treat us 

     

           all the same.

                     Finally, future steps.  Looking ahead, 

     

           this is an annual process you're going to have to 

     

           go through.  And we are seeking to partner with 

                                                                    177 

     

           others to improve the accuracy of hospital cost 

     

           reporting and billing.  We feel that that's 

     

           absolutely crucial, not only in getting the right 

     

           data for CMS to be able to make decisionmaking, but

           I think, more importantly, for hospitals to fully 

     

           recover the costs that they should be recovering 

     

           for these products, which doesn't always occur and 

     

           results in the spiraling effect that some of the 

     

           other Committee members spoke about earlier.

                     Our proposals in the last few days about 

     

           trying to collectively come together to better 

     

           survey hospital-cost data, I was fascinated with 

     

           the data that ABC has. 

     

                     And we've actually been reluctant for

           clotting factor to, at this point, request 

     

           exemption from the Prospective Payment System, to 

     

           be reimbursed on a reasonable cost basis because 

     

           the data is so bad. 

     

                     I'd be glad to answer any questions that

           you have. 

     

                     DR. BRECHER:  Karen? 

     

                     MS. LIPTON:  Not really a question, but I 

                                                                    178 

     

           just wanted to let people know that in terms of 

     

           trying to help hospitals better bill for this, 

     

           we've been talking with the National Hemophilia 

     

           Foundation about revising our billing guide out so

           that it can include some sort of modular 

     

           information on the plasma products, also. 

     

                     MS. PENBERTHY:  AABB has done a wonderful 

     

           guide, and so we are looking forward to that 

     

           partnership.  We think it would be very helpful.

                     DR. BRECHER:  Chris? 

     

                     MR. HEALEY:  Shannon, I just wanted to 

     

           temper maybe your enthusiasm a little bit about 

     

           your slide, I think it's number six, where you say 

     

           "provides more favorable treatment for blood and

           blood products."  We heard earlier that IVIG still 

     

           isn't included in CMS's definition of a blood and 

     

           blood product-- 

     

                     MS. PENBERTHY:  Right. 

     

                     MR. HEALEY:  So we consider that a major

           oversight, just to remind the Committee of that 

     

           point. 

     

                     DR. BRECHER:  John? 

                                                                    179 

     

                     DR. PENNER:  What was the Factor VIIa, at 

     

           least prescribed on what unit basis, in your table 

     

           there?  The recombinant VIIa. 

     

                     MS. PENBERTHY:  In the table that CMS

           provided? 

     

                     DR. PENNER:  Yes, just I notice that 

     

           1,000--the 83 or something like that, that's per 

     

           what? 

     

                     MS. PENBERTHY:  Oh, that is per, I'm

           sorry, that product is packaged in 1.2 micrograms. 

     

           So that would be per 1.2 micrograms.  You're right. 

     

           The other products are in international units. 

     

           That product is treated differently. 

     

                     DR. PENNER:  So it's unrelated, but it is

           allowed to be at least identified separately, based 

     

           on that. 

     

                     MS. PENBERTHY:  Yes. 

     

                     DR. PENNER:  And then the other issue, I 

     

           thought there was something about pharmacies, on

           the  blood products that we have, being allowed for 

     

           Medicare and Medicaid at 3-percent addition to the 

     

           cost of the product.  How does that-- 

                                                                    180 

     

                     MS. PENBERTHY:  For Medicaid, particularly 

     

           if you're participating in one of the 340(b) 

     

           programs, if you're a treatment center that is 

     

           participating in that program, you're allowed only

           to bill at acquisition, and then whatever the usual 

     

           customary state-dispensing fee is, which normally 

     

           is quite nominal because they're thinking of a 

     

           prescription of pills or aspirin or antibiotics, 

     

           rather than a very expensive product that requires

           extensive inventory management costs, special 

     

           shipping and storage cost.  So, for Medicaid, for 

     

           those products, that dispensing fee, it barely 

     

           scratches the surface. 

     

                     We've had some states that have recognized

           that and put in place different reimbursement 

     

           mechanisms for the dispensing fee part, if you 

     

           will.  I think Dr. Hoots wants to say something 

     

           because he's one of those states. 

     

                     DR. HOOTS:  I can tell you that, in Texas,

           it doesn't matter.  We can ship a month's supply of 

     

           factor, which might be 15,000 units, net cost 

     

           $12,000 or so, and we'll get reimbursed $200 above 

                                                                    181 

     

           that. 

     

                     DR. PENNER:  I think this holds true, and 

     

           I didn't know if this was being addressed as a 

     

           major problem, inasmuch as it really curtails any

           of the Medicaid programs that we have for the 

     

           patients who have hemophilia or are requiring some 

     

           of these blood products in large quantities because 

     

           it's, from the pharmacy standpoint, they'd just as 

     

           soon not bother with it.

                     MS. PENBERTHY:  Absolutely.  There are, 

     

           right now, and CMS has another rule that wasn't 

     

           discussed here that would make revisions to average 

     

           wholesale price reimbursement, and one of the 

     

           proposals is that a 5-cent per unit administration

           fee would be added to the reimbursement rate for 

     

           clotting factor. 

     

                     As part of the Medicare prescription drug 

     

           bill being debated in Congress, both the House and 

     

           Senate proposals have provisions that would ask for

           a study of what that administration fee for 

     

           clotting factor should be.  Again, that's only for 

     

           Medicare, but we could hope that if something was 

                                                                    182 

     

           implemented, it would help us making our case 

     

           better to the states.  There's a lot of work to be 

     

           done in state Medicaids in this area. 

     

                     DR. BRECHER:  Jeanne?

                     DR. LINDEN:  Could you please explain a 

     

           little bit more, so I can understand, this table on 

     

           the third page of your white handout, not the 

     

           slides, the columns that are headed "minimum cost, 

     

           maximum cost, mean cost, median cost," could you

           please explain what those mean.  I'm having trouble 

     

           making sense of them. 

     

                     MS. PENBERTHY:  Sure.  This came from the 

     

           Medicare rule that was issued on HOPPS earlier this 

     

           month.  And it's their reported minimum cost that

           was reported to them for, that was billed, if you 

     

           will, by a hospital versus maximum cost, looking at 

     

           all of the claims. 

     

                     DR. LINDEN:  For a patients' entire stay, 

     

           everything they used?

                     MS. PENBERTHY:  Well, this is hospital 

     

           outpatient, so we presume that they came in and had 

     

           a service and then left.  So this would be, yes, 

                                                                    183 

     

           during that stay.  And so when they look at the 

     

           billing, the cost reporting they receive from the 

     

           hospitals; for example, J7190, the Factor VIII 

     

           plasma-derived product, the lowest cost that they

           received a bill for was remarkably 17 cents, and 

     

           the maximum cost was $2,600, which would have been--probably 

     

           more reflect a full infusion. 

     

                     DR. HOOTS:  Can I comment?  Go ahead. 

     

                     DR. LINDEN:  I mean, I'm still not clear.

           Somebody used .3 of a unit, and the mean, I mean, 

     

           this is not per unit?  This is total cost?  This is 

     

           still not making sense. 

     

                     DR. HOOTS:  No, it doesn't. 

     

                     MS. PENBERTHY:  This is why I don't want

           to use the data. 

     

                     DR. HOOTS:  And that's precisely what I 

     

           think Shannon is trying to say.  Clearly, the 

     

           $2,000 per unit is not true.  I mean, no one could 

     

           get that past anything.  That clearly is $2,000 for

           an infusion.  So the coders don't have a clue about 

     

           this.  This is why it's so problematic.  The 

     

           hospital coders, that's what I was trying to say 

                                                                    184 

     

           earlier, to them, a unit may be a box because they 

     

           don't, again, these are people who are trained to 

     

           just like at ICD9s and put down a number, and this 

     

           is not anything like within their spectrum of

           expertise, and so that's why they get these weird 

     

           numbers. 

     

                     MS. PENBERTHY:  Medicare guidelines 

     

           dictate that you bill to the nearest 100 units, but 

     

           that you bill per unit, and if you infuse 957

           units, you bill 957 of that code at this per-unit 

     

           price. 

     

                     DR. BRECHER:  Shannon, on that same table, 

     

           look at Factor VIII, this is for 512 days of 

     

           billing or infusion?  What are the days and what

           are the units column supposed to represent? 

     

                     MS. PENBERTHY:  The days would, because 

     

           it's an outpatient service, in my mind, that's 

     

           representing what was reported as the number of 

     

           claims.  We almost could equate that into the

           number of claims they had.  Again, it depends on 

     

           how they billed, but they're trying to tell us that 

     

           there were 512 patient days in which a hospital 

                                                                    185 

     

           billed for that code. 

     

                     DR. BRECHER:  That doesn't seem like very 

     

           many days. 

     

                     MS. PENBERTHY:  There's low volume of this

           product in the hospital outpatient department.  In 

     

           terms of the units, that was the number of units 

     

           that, in the aggregate, was billed between April 

     

           and December 2002 for that code--assuming that 

     

           someone didn't bill one unit for the $2,600.

                     DR. HOOTS:  Yes, it's really convoluted, 

     

           and most of this outpatient/inpatient, that's why, 

     

           I mean, really, hospital outpatient is going to be 

     

           emergency center, and a lot of that, I mean, the 

     

           billing there, as you well know, is very

           problematic to begin with.  Some of it may also be 

     

           outpatient use in day surgeries, although that's 

     

           not very common, except for the mildest form of 

     

           hemophilia surgeries, and essentially that's it. 

     

                     So this doesn't really represent much of

           anything, in terms of the outpatient use of this 

     

           product, which is, clearly, as Shannon said, at 

     

           home. 

                                                                    186 

     

                     MS. PENBERTHY:  Other questions? 

     

                     DR. BRECHER:  Okay.  Thank you, Shannon. 

     

                     MS. PENBERTHY:  Thank you very much for 

     

           your time.

                     DR. BRECHER:  Members of the Committee, 

     

           what are we going to do about this?  What is the 

     

           Committee's feeling?  In the past, we have made 

     

           resolutions that have encouraged CMS to use actual 

     

           costs.

                     Karen? 

     

                     MS. LIPTON:  I think it's appropriate 

     

           because it is a comment period, and if we don't 

     

           weigh in during a comment period, then we might not 

     

           as well weigh in at all.  I don't know that we know

           exactly how to solve the problem, and we've had two 

     

           suggestions, and I'm not even sure how different 

     

           they are, you know, to use the Red Cross and the 

     

           ABC data or to just base it on reasonable cost, but 

     

           I think it's something along those lines, and I

           think it's fairly urgent.  I mean, if it weren't so 

     

           sad, it would be laughable, but it's, you know, 

     

           it's really, it's really disturbing. 

                                                                    187 

     

                     DR. BRECHER:  Jerry? 

     

                     DR. SANDLER:  This is my first time as a 

     

           member of this Committee, and I'm affronted by the 

     

           way the government is treating this issue.

           Hospitals are in desperate financial straits. 

     

           Reasonable proposals are being made by reasonable 

     

           people, supposedly, that say it's costing us $200. 

     

           Look, here's the bill for what the transfusions are 

     

           costing for people that you are supposed to be

           paying for, and you are not going up, you're going 

     

           down? 

     

                     I mean, this is absolutely outrageous, and 

     

           I think that we should, in very plain language, 

     

           write to the Secretary and explain to him, in very

           plain language what a terrible job his department 

     

           is doing. 

     

                     DR. BRECHER:  Mark? 

     

                     MR. SKINNER:  I hadn't read these before, 

     

           but I was re-reading the comments that Shannon

           submitted in her written comments, and in there it 

     

           states, CMS acknowledges the poor quality of the 

     

           hospital data for blood and blood products. 

                                                                    188 

     

                     And I'm wondering if we could just pick up 

     

           on the theme and say we agree with them and that, 

     

           therefore, if they think their data is flawed, we 

     

           certainly have said that, and if it continues to be

           flawed, as they acknowledge, then it shouldn't be 

     

           used.  I mean, if that's actually in their written 

     

           comments that they acknowledge that their data is 

     

           inadequate, then I don't know how they could 

     

           justify using it.

                     DR. BRECHER:  Jay? 

     

                     DR. EPSTEIN:  I'm somewhat out of my depth 

     

           in this subject area and also not a voting member 

     

           of the Committee, but I'd like to read a candidate 

     

           statement that I think the Committee could provide,

           and I think it falls to the Committee management 

     

           whether it's appropriate or not appropriate for the 

     

           Committee directly to respond to CMS in the comment 

     

           period. 

     

                     So, putting that aside for the moment, the

           language I would propose is that: Whereas, 

     

           declining Medicare and Medicaid reimbursement for 

     

           blood products and plasma derivatives threatens 

                                                                    189 

     

           both the stability of the nation's blood system and 

     

           individual patient access to medically necessary 

     

           therapies, the Committee recommends that the 

     

           Secretary direct CMS to reexamine its framework for

           cost reimbursement in this product area and provide 

     

           for passthrough reimbursement as an interim measure 

     

           based on actual costs. 

     

                     DR. BIANCO:  That's it.  We can go home. 

     

                     [Laughter.]

                     DR. BRECHER:  We have a motion.  Do we 

     

           have a second? 

     

                     MR. SKINNER:  I make the motion. 

     

                     DR. HOOTS:  Second. 

     

                     DR. BRECHER:  Actually, I think the

           wording is actually quite good, Jay.  And I don't 

     

           think putting it on the screen right now is going 

     

           to add very much. 

     

                     DR. PENNER:  I think we'd all have to 

     

           support, from what we've heard today, that there's

           a need for this sort of proposal to urge a 

     

           reevaluation. 

     

                     I think we've dealt with this, though, in 

                                                                    190 

     

           the past on a couple of occasions, and I don't know 

     

           if it is superimposed onto previous 

     

           recommendations.  We might want to explore that, 

     

           but at any rate, I think it needs to be addressed

           again now because we're at a level of urgency that 

     

           needs the attention. 

     

                     DR. BRECHER:  Keith? 

     

                     DR. HOOTS:  Perhaps we could handle that 

     

           ex post facto by saying, having a preamble

           "whereas" statement that says: Whereas, our 

     

           recommendation such and such, and such and such, on 

     

           such and such a date, have addressed this issue 

     

           previously, we wish to reaffirm. 

     

                     DR. BRECHER:  You know, I think that could

           be covered in the cover letter that I, as Chair, 

     

           write. 

     

                     DR. HOOTS:  That's good, yes. 

     

                     DR. BRECHER:  Yes, Karen? 

     

                     MS. LIPTON:  I am not the expert in this,

           and Theresa just said to me, the one thing is that 

     

           the word "passthrough" has a technical meaning--it 

     

           doesn't mean anything to me--and so she said base 

                                                                    191 

     

           it on actual cost instead, rather than using a 

     

           technical term.  And I don't, once again, we're 

     

           getting into this area where-- 

     

                     DR. BRECHER:  Can we use the word

           "passthrough," Dr. Bowman? 

     

                     DR. BOWMAN:  The problem for you, if you 

     

           use the word "passthrough," as some of you can 

     

           probably allude to, that passthrough doesn't 

     

           necessarily guarantee at all that you're going to

           get reimbursed at the acquisition cost that you're 

     

           trying to achieve for the providers and the 

     

           facilities that you're concerned about. 

     

                     MS. LIPTON:  Would you have a 

     

           recommendation for words, even though you can't

           vote, and you probably don't even want to 

     

           participate? 

     

                     [Laughter.] 

     

                     DR. BRECHER:  But that's off the record, 

     

           right?

                     [Laughter.] 

     

                     DR. BOWMAN:  No.  We do appreciate the 

     

           opportunity to participate with your Committee, 

                                                                    192 

     

           actually, and we appreciate that you've extended 

     

           for us to be here.  I can't recommend anything, 

     

           certainly at this time, because of the comment 

     

           period with the current outpatient rule, but I

           would just phrase it in more plain language to just 

     

           reflect what you really want and not try to use 

     

           terms like passthrough because there are probably 

     

           any number of instances where passthrough has not 

     

           resulted in total reimbursement for the total cost.

                     DR. BRECHER:  I think we have to be 

     

           crystal clear.  I think we have stumbled in the 

     

           past with our very complicated wording.  So 

     

           whatever we say, let's keep it simple and clear. 

     

                     MS. LIPTON:  Well, then is it the actual

           acquisition cost of the hospital for these?  I 

     

           mean, I don't-- 

     

                     DR. PENNER:  You might want to, the actual 

     

           costs, and then there has to be at least some 

     

           handling or management or cost that's added on,

           which ordinarily is added on in any of the hospital 

     

           activities.  So that has to be at least accounted 

     

           for in some way. 

                                                                    193 

     

                     MS. LIPTON:  So it could be an actual cost 

     

           of acquiring and providing these. 

     

                     DR. PENNER:  Yes.  I think that would 

     

           provide enough so it would be reasonable.

                     DR. LINDEN:  So would you accept that 

     

           friendly amendment to your nonmotion? 

     

                     DR. EPSTEIN:  Yes, indeed.  I actually put 

     

           passthrough in quotes because I was very 

     

           uncomfortable.

                     MR. SKINNER:  Mr. Chairman, the one thing 

     

           that, and maybe I'll see it when I actually read--it's a 

     

           little small--is I don't recall Jay reading 

     

           anything that related to the need for enhanced data 

     

           collection.  I mean, the whole aspect of training

           and the importance of hospitals being helped to 

     

           understand how to do it, and CMS recognizing the 

     

           importance of that from their side, I don't know 

     

           where that role, whether we want to be placing 

     

           blame or responsibility for that.

                     DR. BRECHER:  Or the use of industry data. 

     

                     MR. SKINNER:  Right.  The data piece that 

     

           I don't think, whether that's mixing two messages 

                                                                    194 

     

           or whether that it's missing from there.  I don't 

     

           recall. 

     

                     DR. BRECHER:  We could recommend, as a 

     

           second clause, that CMS investigate or consider the

           use of verifiable industry data in setting their 

     

           rates.  I think that's going to be more reliable 

     

           than the hospital data for the time being. 

     

                     MR. SKINNER:  Could we add "or support 

     

           training" or "encourage"; is that a piece that I've

           heard people say is the importance of people 

     

           understanding how to bill? 

     

                     DR. BRECHER:  I think that the national 

     

           organizations are taking care of that.  I don't 

     

           think that we need to take that to the Secretary.

                     MS. LIPTON:  Well, but there is.  We have 

     

           asked for some clarification from CMS, and until we 

     

           get that guidance, I think we're all still going to 

     

           be in the dark here. 

     

                     MS. WIEGMANN:  I think that have been in

           one of your resolutions from last time.  If you 

     

           have the list of resolutions from last time, I 

     

           think that you included some provision about the 

                                                                    195 

     

           need for guidance at that point in time. 

     

                     MS. LIPTON:  Mark, do you have what we 

     

           read on that the last time? 

     

                     I hate to get technical, but when you

           finally get this, could you put it in like 14-point 

     

           bold? 

     

                     [Laughter.] 

     

                     DR. HOOTS:  Can we add didn't you say 

     

           actual cost for acquisition and dispersal or

           something like that, provision? 

     

                     MS. LIPTON:  And I said cost of providing 

     

           to the patient.  I don't know what--cost of 

     

           acquiring and-- 

     

                     DR. HOOTS:  Acquiring and providing the

           product, yes. 

     

                     [Pause.] 

     

                     DR. HOOTS:  Acquiring and providing the 

     

           product. 

     

                     [Pause.]

                     DR. HOOTS:  Acquiring and providing. 

     

                     DR. BRECHER:  I'm sorry, Jerry.  Go ahead. 

     

                     DR. SANDLER:  Rather than wordsmithing 

                                                                    196 

     

           this, I'd like to make two suggestions that go into 

     

           your cover letter.  I think this doesn't really 

     

           show the disparity in this, and I don't want to 

     

           touch this resolution because I think it's been

           very well written, but I think something that 

     

           points out that they're paying hospitals half of 

     

           what it's costing hospitals should be communicated. 

     

           As I read this, I don't get the sense of the 

     

           injustice that is being done, and I think the cover

           letter should communicate that. 

     

                     There's no time line.  They could blow us 

     

           off, like they have been for years, and I really 

     

           think that there should be some time line in the 

     

           cover letter that communicates that we would really

           like to be in touch because hospitals are losing an 

     

           awful lot of money on the people that they're 

     

           supposed to be paying for every single day. 

     

                     DR. BRECHER:  Mark? 

     

                     MR. HAAS:  Might it make some sense, to

           follow Jerry's point, to use as an example that 

     

           third page of Shannon's memo which is the CMS data 

     

           itself and which shows the disparity? 

                                                                    197 

     

                     DR. BRECHER:  Well, we can include that in 

     

           the cover letter.  I think I would do that, as well 

     

           as probably, if we could get a similar letter on 

     

           blood products, maybe AABB could provide that to

           us. 

     

                     MS. LIPTON:  We can put together something 

     

           from our testimony.  I know you just had slides, 

     

           Jim and Elaine, that we didn't see, but I'm sure we 

     

           could come up with some language that we'd like in

           there.  Does that sound good? 

     

                     DR. BRECHER:  Or a similar table. 

     

                     MS. LIPTON:  I'm sure we could come up 

     

           with a table. 

     

                     DR. BRECHER:  With the percentage drop and

           the old price, new price, et cetera. 

     

                     MR. HEALEY:  Mark, if it's appropriate, 

     

           I'd like to also offer data on IVIG as well and the 

     

           Alpha One. 

     

                     DR. BRECHER:  Yes.

                     MR. HEALEY:  Just roll in all of those 

     

           plasma therapies together. 

     

                     DR. BRECHER:  And if everyone could get me 

                                                                    198 

     

           that data in the next couple of days, that would be 

     

           helpful. 

     

                     MR. HEALEY:  Also, the question I had is 

     

           either in the cover letter or the language itself

           will we make reference to the 2004 HOPPS proposed 

     

           rule?  I mean, that's what's really driving this. 

     

           We might want to make them aware that we're-- 

     

                     DR. BRECHER:  Yes, I'll make that clear in 

     

           the cover letter that that's what we're referring

           to. 

     

                     Ron? 

     

                     DR. GILCHER:  As a point of clarification, 

     

           I discussed this with Jay, changing the word 

     

           "declining" to, "Whereas, inadequate and further

           reducing Medicare and Medicaid reimbursement" would 

     

           clarify declining. 

     

                     DR. BRECHER:  Yes.  So we're going to 

     

           change the word "declining" to "inadequate." 

     

                     DR. GILCHER:  Whereas, further inadequate

           and further reducing. 

     

                     DR. BRECHER:  Yes, inadequate and further 

     

           reducing. 

                                                                    199 

     

                     [Pause.] 

     

                     DR. LINDEN:  That's not really 

     

           grammatically correct. 

     

                     DR. GILCHER:  Yes.  And further reduction

           in-- 

     

                     DR. PENNER:  I think you better put 

     

           "inadequate" up front.  I think that hits it 

     

           better.  Don't let them dodge that. 

     

                     DR. LOPES:  I suggest "inadequate and

           still falling reimbursement rates." 

     

                     DR. BRECHER:  We're continually defining 

     

           it.  How about plummeting? 

     

                     [Laughter.] 

     

                     DR. BRECHER:  It sounds like people will

           be happy with "further reduction." 

     

                     Is everybody happy?  No?  What do you want 

     

           to-- 

     

                     "Whereas, inadequate and continually 

     

           decreasing."

                     [Pause.] 

     

                     DR. HEATON:  Why don't you move it to, 

     

           "Whereas, further reduction in already inadequate 

                                                                    200 

     

           Medicare/Medicaid--" 

     

                     DR. BRECHER:  Yes, that'll do it. 

     

                     DR. HEATON:  Because that's the key issue. 

     

           It's going down, and it was never adequate in the

           first place.  "--in already inadequate--"  That's 

     

           perfect.  Thank you. 

     

                     DR. SANDLER:  Would we want to get right 

     

           to the point and say that he directs the 

     

           Administrator of CMS, so that there's a little more

           focused accountability?  We've got him by his name. 

     

           He's the Secretary.  Now, we're going to CMS in a 

     

           bit of a blur, and it kind of slips away.  We could 

     

           just say, "Directs the Administrator of CMS."  We 

     

           know who we're talking about, who's got a job to

           do. 

     

                     DR. BIANCO:  I think it's unnecessary, 

     

           Jerry.  He's the boss.  I think the most important 

     

           part is I think, instead of refining this, is for 

     

           us to collect the data, as you suggested, so that

           the inadequacy becomes apparent. 

     

                     MR. SKINNER:  Mark, were we going to add a 

     

           reference to the data?  Because this says what we 

                                                                    201 

     

           want to happen, but it doesn't say at all why. 

     

                     DR. BRECHER:  I think I can cover that in 

     

           the cover letter that examples of the changing in 

     

           the reimbursement are illustrated in the

           accompanying tables.  The tables are self-evident. 

     

                     MR. SKINNER:  I guess what I'm saying is 

     

           this doesn't offer a solution.  To the extent that 

     

           there is a solution, better data, the solution is 

     

           here, pay the cost, but we don't say why.

                     DR. BRECHER:  Oh, I see. 

     

                     MR. SKINNER:  Maybe it's self-evident. 

     

                     DR. BIANCO:  I would support what Mark jus 

     

           said, in the sense that there are alternative 

     

           sources of data at the end.

                     DR. LOPES:  How about you say, "in this 

     

           product area, and, until better data are available, 

     

           provide reimbursement based on actual costs"? 

     

                     MR. HEALEY:  I think one thing to think 

     

           about, though, is, at the end of the day, the

           claims data, even if they are accurate and correct, 

     

           may not be the payment mechanism that you want to 

     

           follow for reimbursement.  I mean, there are a host 

                                                                    202 

     

           of different payment mechanisms out there.  There's 

     

           Medicare reform up on the Hill, so there are a lot 

     

           of different directions this could take by, you 

     

           know, locking ourselves in or at least proposing

           that it may lock us in, and I'm just not sure 

     

           that's where we want to be. 

     

                     DR. BRECHER:  Mark? 

     

                     MR. SKINNER:  I guess what I would say is, 

     

           and while I think we've identified the data issue,

           and I think it's the right thing to mention it, if 

     

           it goes in the cover letter, and if that really is 

     

           a part of what we want them to address, that cover 

     

           letter really doesn't become a part of the 

     

           permanent record.  I mean, what we continually

           publish is just the resolution part. 

     

                     So, if it's important for posterity that 

     

           the data issue stay with this recommendation, then 

     

           I think that it needs to be in here.  If we're open 

     

           to whatever solution they might come back with,

           then it's fine to leave it out.  But if data really 

     

           is the driver for this, it needs to be there for 

     

           posterity. 

                                                                    203 

     

                     MR. HEALEY:  The data is the problem, 

     

           right?  I mean, that's the problem we're facing 

     

           today. 

     

                     DR. BRECHER:  I think we need to keep our

           resolutions simple, clean.  If we start putting in 

     

           tables, I think we're going to trip over ourselves. 

     

                     Jay? 

     

                     DR. EPSTEIN:  I liked an earlier statement 

     

           along the lines that CMS be directed to consider

           using validated industry data in making these 

     

           determinations.  I'm not averse also to adding a 

     

           sentence higher up, recognizing the problem that 

     

           the current data set available to CMS is 

     

           recognizably flawed, but I do think that the

           recommendation per se should focus on the utility 

     

           of validated industry data. 

     

                     So I'd like to suggest we add a part. 

     

                     DR. BRECHER:  In that new paragraph 

     

           underneath that one, "Further, the Committee

           recommends that CMS utilize validated industrial 

     

           data regarding costs." 

     

                     MR. HEALEY:  It's really claims data, 

                                                                    204 

     

           right?  I mean, that's what you're getting at. 

     

                     [Chorus of noes.] 

     

                     MR. HEALEY:  Sorry.  Sorry.  I understand. 

     

                     DR. BRECHER:  Validated industrial cost

           data. 

     

                     DR. LOPES:  Is the industry then the 

     

           producer or the producer and the dispenser? 

     

                     DR. BIANCO:  In most cases, the industry 

     

           is the producer.  On occasion, it will be both, but

           the vast majority of the times it will be the 

     

           producer. 

     

                     DR. LOPES:  If we focus, though, on the 

     

           producers, will the hospitals be left out because 

     

           they're very important in this underreimbursement

           issue? 

     

                     DR. BIANCO:  I don't think so, Lola, 

     

           because ultimately the hospital is the one that 

     

           will now have the opportunity, if this resolution 

     

           is accepted, to build using the cost data that was

           generated that let's say the blood centers provided 

     

           or the manufacturer of IVIG provided. 

     

                     DR. PENNER:  But then they may just end up 

                                                                    205 

     

           with the cost of the product and the industrial 

     

           cost, and then when the bill is submitted, which 

     

           includes administration fee and other parts of it, 

     

           I don't think that's what we want to leave here.

                     DR. BIANCO:  I don't understand the 

     

           system, but I do understand infusion costs are 

     

           charged separately, aren't they? 

     

                     DR. PENNER:  No, they're sometimes 

     

           bundled.  You really can't be sure.

                     MR. HEALEY:  And that doesn't work at all 

     

           for the plasma and therapeutics industry because 

     

           the manufacturers are not selling directly to the 

     

           end user.  There are a variety of distribution 

     

           channels.  So my suggestion would be validated cost

           data.  Eliminate the word "industrial" and rely on 

     

           the appropriate sources. 

     

                     DR. BRECHER:  Jay? 

     

                     DR. EPSTEIN:  Perhaps we can bridge that, 

     

           if it's validated cost data obtainable from product

           manufacturers and distributors. 

     

                     DR. BRECHER:  Yes, that should do it. 

     

                     DR. EPSTEIN:  Now, that doesn't address 

                                                                    206 

     

           the hospital's administration costs.  We may want 

     

           to--but I think the thing that covers it is 

     

           manufacturers and distributors. 

     

                     DR. BRECHER:  So validated cost data

           available from-- 

     

                     DR. EPSTEIN:  Product manufacturers and 

     

           distributors. 

     

                     DR. BRECHER:  Keith? 

     

                     DR. HOOTS:  Yes, I think that's important,

           and I agree with what Chris said.  I think we want 

     

           to keep this statement discrete from the previous 

     

           statement. 

     

                     MS. WIEGMANN:  Just as clarification, for 

     

           the most part with blood components--I can't speak

           to derivatives--but you're mainly talking, 

     

           particularly in the outpatient, about just the cost 

     

           that the hospital pays for the blood product.  If a 

     

           hospital later does some processing to the product, 

     

           those costs will be incorporated under other lab

           fees and other processing or the transfusion itself 

     

           that are separate from the APC payments.  Cross-matching, 

     

           that has separate coding. 

                                                                    207 

     

                     DR. BRECHER:  Jeanne? 

     

                     DR. LINDEN:  I don't want to slow things 

     

           down by wordsmithing, but we heard that there was a 

     

           lot of problems with recombinant products, and I'm

           wondering whether plasma derivatives would be 

     

           interpreted as applying to recombinant products. 

     

           My recollection is the last time we came up with 

     

           some other term--I don't recall whether it was 

     

           plasma therapeutics or something that was more all

           inclusive that didn't imply only human plasma-derived 

     

           products. 

     

                     MR. HEALEY:  We said plasma therapies or 

     

           plasma-derived products and their recombinant 

     

           analogues in the past.

                     DR. BRECHER:  So go up.  Say that wording 

     

           again, Chris. 

     

                     MR. HEALEY:  You can say, "plasma 

     

           derivatives and their recombinant analogues." 

     

           We'll see how good your spell check is here.

                     DR. EPSTEIN:  I think we have one 

     

           superfluous "and" to delete, also.  It should say, 

     

           "blood products, plasma derivatives and recombinant 

                                                                    208 

     

           analogues." 

     

                     DR. LINDEN:  Except that the recombinant 

     

           analogues only apply to plasma derivatives and not 

     

           to blood components.

                     DR. EPSTEIN:  Are there any recombinant 

     

           cellular products?  I'm not sure what you're 

     

           saying, Jeanne. 

     

                     DR. LINDEN:  No, there aren't.  That's my 

     

           point.

                     DR. EPSTEIN:  That's why I put the comma. 

     

           "Blood products, and plasma derivatives and their 

     

           recombinant analogues," without a comma. 

     

                     DR. LINDEN:  If you leave the "and," yes, 

     

           okay.  I thought you were deleting it.

                     MS. LIPTON:  You need a comma the first 

     

           paragraph, third line up, "in the interim" comma. 

     

                     DR. BRECHER:  Let's read this from the top 

     

           to the bottom, shall we? 

     

                     "Whereas, further reduction in an already

           inadequate Medicare/Medicaid reimbursement for 

     

           blood products, and plasma derivatives and their 

     

           recombinant analogues--" is that an extra "and" in 

                                                                    209 

     

           there?  No.  "--threaten both the stability of the 

     

           nation's blood system and individual patient access 

     

           to medically necessary therapies, the Committee 

     

           recommends that the Secretary direct CMS to

           reexamine its framework for cost reimbursement in 

     

           this product area, and in the interim provide 

     

           reimbursement based on actual costs of acquiring 

     

           and providing the product." 

     

                     "Further, the Committee recommends that

           CMS utilize validated cost data available from 

     

           product manufacturers and distributors. 

     

                     DR. HOOTS:  A comma after "further." 

     

                     MS. LIPTON:  And do you want to say, 

     

           "Further, the Committee recommends that CMS be

           directed to utilize," since that's more consistent 

     

           with the-- 

     

                     DR. BRECHER:  Right.  So the second clause 

     

           would be, "Further, the Committee recommends that 

     

           CMS be directed to utilize validated cost data

           available from product manufacturers and 

     

           distributors. 

     

                     MR. HEALEY:  Is it redundant to, at the 

                                                                    210 

     

           very end there, "And distributors in arriving at 

     

           the actual cost of acquiring and providing the 

     

           product," directing them for what they need to do 

     

           to acquire the validated data?

                     DR. BRECHER:  I think it's implicit. 

     

                     Jay? 

     

                     DR. EPSTEIN:  I think products should be 

     

           plural at the end of the first paragraph. 

     

                     DR. BRECHER:  Oh, of providing the

           products. 

     

                     DR. EPSTEIN:  "Providing the products," 

     

           plural. 

     

                     DR. BRECHER:  Yes, at the end of the first 

     

           paragraph.

                     DR. EPSTEIN:  Last word in the first 

     

           paragraph. 

     

                     DR. BRECHER:  All right.  All in favor of--well, 

     

           let's see, does someone want to make a 

     

           motion to accept it?

                     Lola? 

     

                     DR. LOPES:  Move. 

     

                     DR. BRECHER:  Second? 

                                                                    211 

     

                     DR. BIANCO:  Second. 

     

                     DR. BRECHER:  Anyone want to be a third? 

     

                     [Laughter.] 

     

                     DR. BRECHER:  All in favor?

                     Thirteen in favor. 

     

                     All opposed? 

     

                     Any people not voting?  I didn't vote as 

     

           Chair, but--and the government representatives 

     

           don't vote.  That's right.

                     Okay.  So this is our motion.  I will read 

     

           it in its complete form one last time from the top 

     

           just to make sure it is in the transcript: 

     

                     "Whereas, further reduction in already 

     

           inadequate Medicare/Medicaid reimbursements for

           blood products, and plasma derivatives and their 

     

           recombinant analogues threatens both stability of 

     

           the nation's blood system, and individual patient 

     

           access to medically necessary therapies, the 

     

           Committee recommends that the Secretary direct CMS

           to reexamine its framework for cost reimbursement 

     

           in this product area and, in the interim, provide 

     

           reimbursement based on actual cost of acquiring and 

                                                                    212 

     

           providing the products." 

     

                     "Further, the Committee recommends that 

     

           CMS be directed to utilize validated cost data 

     

           available from product manufacturers and

           distributors." 

     

                     In the cover letter, I will also include 

     

           the charts illustrating the price decreases.  Is 

     

           there anything else that-- 

     

                     DR. HOOTS:  Yes, our previous

           recommendations. 

     

                     DR. BRECHER:  Oh, and references to our 

     

           previous recommendations. 

     

                     DR. HOOTS:  It is kind of a run-on 

     

           sentence.  You might want to--

                     DR. BRECHER:  It is a long sentence-- 

     

                     DR. HOOTS:  Cut it into two somewhere, but 

     

           you can wordsmith that. 

     

                     MS. LIPTON:  And make sure to reference 

     

           the proposed rule.

                     DR. BRECHER:  Okay.  We can do that and, 

     

           yes, we may split it into two sentences.  We'll 

     

           have to take a look at that. 

                                                                    213 

     

                     MS. LIPTON:  I didn't mean in the 

     

           resolution, I meant in the cover letter. 

     

                     DR. BRECHER:  In the cover letter, yes, 

     

           refer to the HOPPS 2004, yes.

                     Jay? 

     

                     DR. EPSTEIN:  I just want to come back to 

     

           Karen's point earlier that the comment period is 

     

           open now and that we want an action in the comment 

     

           period.  Of course, this recommendation to the

           Secretary is timely because the Secretary can act 

     

           at any point, but we do want a communication to go 

     

           to CMS during the open comment period, and I think 

     

           it would be appropriate for us to clarify with the 

     

           Committee management whether the Committee can

           directly respond to CMS. 

     

                     CAPTAIN McMURTRY:  Dr. Bowman, when does 

     

           the comment period end? 

     

                     DR. BOWMAN:  October 6. 

     

                     CAPTAIN McMURTRY:  This will go into the

           Secretary.  It will go almost straight from the 

     

           Secretary's office to CMS for CMS review.  For the 

     

           response that the Secretary will provide to Dr. 

                                                                    214 

     

           Brecher, CMS will have an opportunity to comment on 

     

           that review.  So they will see the comments right 

     

           away. 

     

                     DR. BOWMAN:  I wouldn't count on a

           communication like this going from the Secretary 

     

           down to the appropriate individuals for comments on 

     

           the OPPS proposed rule.  So it would probably be 

     

           advisable to send it directly to the address that's 

     

           listed in the Federal Register for the comments.

                     DR. BRECHER:  We can clarify with 

     

           management-- 

     

                     DR. BOWMAN:  Or at least send a copy, I'm 

     

           sorry. 

     

                     DR. BRECHER:  --whether we can cc this to

           the Exec Committee. 

     

                     DR. BOWMAN:  Instead of a formal comment, 

     

           just cc the cover-- 

     

                     DR. BRECHER:  Right.  We'll clarify 

     

           whether that would be acceptable to HHS.

                     Jay? 

     

                     DR. EPSTEIN:  Also, nothing prevents 

     

           Committee members acting as individuals from 

                                                                    215 

     

           commenting to the docket, and that's another 

     

           expeditious mechanism. 

     

                     CAPTAIN McMURTRY:  The fact is, in the 

     

           ethics statement I read yesterday--you all remember

           that, right? 

     

                     [Laughter.] 

     

                     CAPTAIN McMURTRY:  You can communicate 

     

           directly. 

     

                     DR. BRECHER:  Yes, we can.

                     DR. BOWMAN:  You may. 

     

                     DR. BRECHER:  Yes, you may. 

     

                     MS. LIPTON:  As the totally conflicted 

     

           person on this Committee, I'm just going to-- 

     

                     DR. BRECHER:  I want to know who's not

           conflicted on this Committee. 

     

                     [Laughter.] 

     

                     DR. BIANCO:  It would be very useful to 

     

           all of us to have a copy of the final version and 

     

           cover letter.

                     DR. BRECHER:  When the letter is ready to 

     

           go, I will e-mail you the text that I will be 

     

           sending out. 

                                                                    216 

     

                     DR. PENNER:  Can the Committee just 

     

           recommend that a copy of this be forwarded, all of 

     

           those who wish to could vote to agree, and 

     

           therefore that would be the same as adding a

           comment during the open comment period?  In other 

     

           words, we're verifying that all of us are-- 

     

                     DR. BRECHER:  Yes, I mean, I think it's-- 

     

                     DR. PENNER:  You intend to send this on to 

     

           them.

                     DR. BRECHER:  That would be one way of 

     

           getting it there, and I think it's legitimate that 

     

           I cc all of the Committee members the letter that 

     

           I'm sending to Secretary Thompson.  And so what you 

     

           do with that is at your discretion, but that would

           be one way of getting it to CMS. 

     

                     DR. LOPES:  But are you saying that you 

     

           might not necessarily send this to CMS directly, in 

     

           which case, certainly someone like me, who has no 

     

           ties to this community or axes to grind, might be

           deputized to send it as a member of the Committee? 

     

                     DR. BRECHER:  Not deputized. 

     

                     CAPTAIN McMURTRY:  The way I understand 

                                                                    217 

     

           the ethics rules is that you could take a copy of 

     

           this letter and as a private citizen send it. 

     

                     DR. LOPES:  Okay. 

     

                     DR. BRECHER:  Mark?

                     MR. SKINNER:  I'm wondering, and I don't 

     

           know if Jay can answer this question, but given 

     

           that so many of the recommendations in this 

     

           Committee relate to blood safety and obviously the 

     

           work of the FDA, I mean, isn't there precedent for

           that kind of communication from the committee, that 

     

           either you've carried back formally or informally 

     

           or have we ever sent anything directly to you from 

     

           the Committee at the same time it went to the 

     

           Secretary?  Certainly, individuals have carried the

           same message individually to the FDA.  So, I mean, 

     

           that's a common practice. 

     

                     DR. EPSTEIN:  Well, agencies sometimes 

     

           share their draft rulemaking with each other and 

     

           solicit prepublication comments.  Additionally,

           agencies are free to comment back to other agencies 

     

           in the open comment period.  Let me just say that 

     

           FDA is aware of this proposed rule, and we have 

                                                                    218 

     

           codified some of our thinking on its implications 

     

           to blood safety. 

     

                     Now, what you're saying is have we not 

     

           also at times received communications of that

           nature directly to the FDA, and the answer is, yes, 

     

           and certainly we're interested in those comments. 

     

           To the extent that you think it's FDA business, 

     

           it's certainly appropriate we comment to FDA. 

     

                     MR. SKINNER:  I wasn't referring to a

           specific example, just precedent in terms of how 

     

           the process might work on this issue as it related 

     

           to CMS. 

     

                     DR. EPSTEIN:  Well, I would say there is 

     

           no one-to-one link between a comment or a letter

           you sent to the FDA and what we might or might not 

     

           do, commenting on another agency's rulemaking, but 

     

           we're certainly interested in public comments that 

     

           would bear on blood safety. 

     

                     DR. BRECHER:  We are going to clarify with

           the administration whether they feel it is 

     

           appropriate for us to cc this letter to CMS, and if 

     

           we are told that we can do that, we will officially 

                                                                    219 

     

           do that. 

     

                     DR. BRECHER:  Chris? 

     

                     MR. HEALEY:  The question I have for Jay 

     

           is would it be appropriate for us to submit

           comments to FDA, urging you to work with CMS to 

     

           harmonize definitions of things like orphan drugs 

     

           and blood and blood products? 

     

                     DR. EPSTEIN:  Sure.  I would hope you'd 

     

           send the same letter to CMS.

                     When this is cc'd to the members of this 

     

           Committee, is it appropriate or can we, in some 

     

           way, get the appropriate address to CMS? 

     

                     DR. BRECHER:  It's in your packet. 

     

                     Okay.  If there are no further questions

           or comments, we can adjourn early.  Okay.  We're 

     

           done. 

     

                     [Whereupon, at 2:14 p.m., the proceedings 

     

           were adjourned.]