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Blood Safety Transcripts

DEPARTMENT OF HEALTH AND HUMAN SERVICES
ADVISORY COMMITTEE ON BLOOD SAFETY AND AVAILABILITY

NINTH MEETING

Volume II

Friday, August 27, 1999

9:08 a.m.

Hyatt Regency Capitol Hill

400 New Jersey Avenue, N.W.

Washington, D.C. 20001

P A RTICIPANTS

Members

Arthur Caplan, Ph.D.

Stephen D. Nightingale, M.D., Executive Secretary

Janice K. Albrecht, Ph.D.

Larry Allen

James P. AuBuchon, M.D.

Ronald Gilcher, M.D.

Edward D. Gomperts, M.D.

Jessie Goodman, M.D.

Fernando Guerra, M.D.

Paul F. Haas, Ph.D.

William Hoots, M.D.

Carolyn D. Jones, J.D., M.P.H.

Dana Kuhn, Ph.D.

Tricia O'Connor

Jane A. Piliavin, Ph.D.

John Walsh

Consultants

Richard J. Davey, M.D.

Ex Officio Members

Mary E. Chamberland, M.D.

Colonel Fitzpatrick

Paul R. McCurdy, M.D.

David Snyder, R.Ph., D.D.S.

Also Present:

Capt. McMurtry

C O NTENTS

AGENDA ITEMPAGE

Current Availability of Blood Products

(Continued) 4

Committee Discussion on Reimbursement Issues 6

Status of Hepatitis C Lookback 31

June 17, 1999 Guidance to Industry 32

Status of Direct Notification Efforts 44

Status of General Notification

Efforts 51

How Should Federally Mandated Blood Safety

Measures be Financed? 126

Advisory Committee Discussion and

Recommendations 150

Next Meeting 260

Adjournment 261

P R OCEEDINGS

CHAIRMAN CAPLAN: Good morning. I'd like to get us all to take our seats.

At the end of the day yesterday, which I think was about an hour ago, we were considering issues about reimbursement, and I have to rely here on Steve, but I think we heard everybody comment that wanted to comment on reimbursement issues.

DR. NIGHTINGALE: Well, let me then just ask for the record: Are there any members of the audience who did not have an opportunity to comment on this issue? Mr. Collins, which you like to comment at this time?

MR. COLLINS: Sure. Good morning. Again, my name is Patrick Collins. I'm with the National Hemophilia Foundation.

Just for the record, I would like to state that our foundation is in complete agreement with the presentations presented yesterday by Dennis Jackman of IPPIA, Anita Ducca of the American Red Cross, and Dr. Robert Weinstein with regard to the outpatient prospective payment system.

As you can imagine, we view that the $99 reimbursement for clotting factor is rather ludicrous. As Mr. Jackman pointed out yesterday, an average-size man with a head bleed could use approximately $3,500 in product during an emergency room stay. Anita Ducca of the American Red Cross also pointed out similar distortions for other plasma-derived products during an outpatient stay.

Moreover, this HCFA reimbursement policy would prove to be a disincentive for hospital pharmacies to stock clotting factor, immunoglobulin, Alpha 1 protease inhibitors, or any other plasma-derived product. As Dr. Hoots eloquently pointed out yesterday, there's an even greater concern about disincentives for hospitals to maintain staff for rare disorders and disincentives to treat these disorders on an outpatient basis.

I came into yesterday's meeting, and NHF did, wanting to endorse a pass-through for plasma-based therapies, their recombinant analogues, and alternative products, such as Stimate (ph), for instance, on an outpatient basis. So I would still call for that; however, as Dr. Weinstein pointed out yesterday, there needs to be a far greater examination into this whole process.

Just lastly, I'd like to praise IPPIA on this issue and state that due to the new leadership at IPPIA over the past couple of years, I think that improvement between consumers and the industry has increased hand over fist, and in a wicked sort of way, I guess MCHB also deserves to be congratulated in that they've gotten the Hatfields and the McCoys together where no one else seems to have been able to do so in the past. And I say that tongue in cheek, obviously.

Thank you.

CHAIRMAN CAPLAN: Thanks.

I guess I think that the next step is to open the floor for discussion by the committee on reimbursement issues. We basically have heard some pretty steady drumbeat about problems with bundling and rates that have been set in the home setting area for delivery of blood products therapies. So let me just open the floor and see if the committee wants to make some comments, and then we'll move and see if there's anybody who wants to make some resolutions.

MS. O'CONNOR: I have a question. Last night a discussion came up about the Balanced Budget Act and how there's a certain amount of money for medical care. And my concern here, while this certainly sounds like the perfect thing to do, is: Where will the money have to come from if this money gets paid out? Do we have an answer to that?

DR. HOOTS: Well, I think, first of all, this money is being paid out.

MS. O'CONNOR: It is now, right.

DR. HOOTS: OBRA '86, OBRA '93, it's being paid out now. As I alluded to yesterday, the problem is that the design of prospective payment systems may work very well for high-prevalence, low-cost diseases because the fluctuations are narrow and the range of individuals and institutions over which it can be balanced is broad. So, you know, you'll regress to a mean, and you'll get an okay.

But when you're talking about a low-prevalence, high-cost disease, and you throw in a lot of other complex factors, and then reach an artificially low reimbursement, I think what Dr. Weinstein said yesterday is absolutely right, which is that you save--if you do this and you actually get the services done for this at a cost loss to the providers, then that money just gets put back into the system to help pay for high-prevalence, low-cost disease. So you get better reimbursement for rhinorrhea. The patients, if institutions can afford to do it, take a huge it. And if there are institutions that take care of these diseases disproportionately--and that's the way we've set things up in this country because of tertiary care--then there are extreme high vulnerabilities because their losses will be great and their incentives to continue such care will be lost. Because it's revenue neutral. The total amount of money stays the same.

MS. O'CONNOR: Okay. But--

DR. HOOTS: They just pull it out of these expensive diseases and put it back into less expensive diseases.

MS. O'CONNOR: I understood that the actual pot was going down with the Balanced Budget Act. So that's not correct, then.

DR. HOOTS: It's supposed to be revenue neutral.

MS. O'CONNOR: Okay.

DR. GUERRA: Mr. Chairman?

CHAIRMAN CAPLAN: Fernando?

DR. GUERRA: I guess one of the things I haven't heard in this discussion, though, is the cost/benefit analysis that I think is so important to try to better justify some of the reimbursement levels that I think one can make a case for. I know from some of our experience, not necessarily with blood or blood products or some of the recombinant analogues, but with a very high cost item that is a relatively new monoclonal antibody that is used to prevent disease in at-risk, prematurely born infants with significant respiratory complications related to their prematurity and to the use of oxygen therapy, it was really doing a cost/benefit analysis that clearly demonstrated that the cost of $1,000 per dose in the time of five months over the course of the season for that cohort of carefully selected prematurely born infants, that the benefit was enormous.

And so using that sort of analysis, it was possible to work with the state Medicaid agency to certainly reimburse--granted, it was at somewhat of a discounted rate, but, still, it covered almost--at least 90 percent of the cost of that particular product, which is a very different ratio than what I saw proposed or yesterday that was shared with us.

So I wonder if some cost/benefit studies have been done, and maybe, Keith, you know about some of that, and whether or not one needs to make a stronger case for showing that these front-end investments ultimately provide some important benefits.

DR. HOOTS: If it's okay, I'll respond. There are efforts to do cost/benefit for a number of these. As you probably are well aware--and certainly in prematures it's even more graphic--cost/benefit versus cost/efficacy, there's an important discrimination there because longevity and survival are counted differently.

In some cases, in a crass sort of way, in a cost/benefit analysis, low survival is cost-beneficial. But, obviously, I don't think anyone, you know, anywhere in society would accept that as a cost/benefit. That just means it costs less, and the total amount of expenditure over a lifetime is low because a patient doesn't survive.

A perfect example would be severe combined immune deficiencies that Dr. Winkelstein was talking about yesterday. Before the advent of intravenous gamma globulin replacement and other augmentation in care, those patients rarely survived past age 3 or 4. So the cost to the health care system was relatively because they didn't have to pay it out over a lifetime.

In terms of cost--so that it was cost--you know, it was a cost/efficacy, low-cost/efficacy. But if they survive, you now have to factor in all the positive tangential things that are important, like the benefits to society of the person's survival and the productivity that they bring, and those are tougher to get at. But, yes, there are efforts, and I know because we do some for hemophilia. And the problem comes in convincing agencies of reimbursement that the savings over the lifetime that are projected are indeed--you're not talking about survival because it's hard for anyone to argue that you shouldn't survive. But when you're talking about saving, for instance, in hemophilia, the cost of a total knee replacement at age 27 and a second knee replacement at age 47 and trying to recoup the costs 25 years down the road, it's not quite so exciting to them because the cost/benefit and the cost/efficacy becomes in contrary to each other, without getting too arcane here.

But that's where we get to, but I think it's never anything but counterintuitive, I think, to say that if you can save morbidity, it's good. And if you look at the cost of doing that for rare, expensive--for these rare diseases, it's going to be high. But we've traditionally--not just we, but the whole world has decided that that's the right thing to do. And it's going to cost and it has cost a lot of money. The better we get, the better productivity outcome you get. But to actually prove it dollar for dollar is more problematic in the intermediate term than it is over the long term.

But, yes, those data are being obtained both here and in Europe for a number of these diseases, and I think there is now the ability, first and foremost, to cost account it. We know what it costs for some of these diseases, which we didn't know ten years ago. And we also now are working on trying to look at the benefit side of the equation, which is much more problematic because then you have to do a lot more projection and a lot more modeling.

MR. WALSH: With respect to A1PI, there has been substantial study, a seven-year longitudinal study, although not efficacy-based, that established that the rate of decline of FEV-1 and both morbidity and mortality were decreased with those patients on augmentation therapy. And, currently, there is a cost-of-illness impact study being undertaken funded by the Alpha 1 Foundation.

Additionally, I might say that based on the testimony presented yesterday by Dennis Jackman of the IPPIA, Anita Ducca of Red Cross, Nancy Buelow of Alpha 1, Tom Moran of IDF, there has been a considerable or overwhelming response to HCFA during the comment period, and Dr. Kuhn and I have consulted with both the Plasma Uses Coalition and the IPPIA as well as the Red Cross and have a resolution that we would like to put forward to the committee for consideration that I think capsulizes all of what was said yesterday and might be something the committee would like to put forward to the Secretary.

CHAIRMAN CAPLAN: Good.

MR. WALSH: Do we have an overhead, Mac? This would be the third overhead, biologic therapies resolution. This actually covers as broad a scope as possible without getting too carried away, but it's within the scope of the responsibilities of the committee with plasma-based therapies, recombinant analogues, and blood alternatives. And I passed out a copy to the committee, but it's basically, whereas the Advisory Committee on Blood Safety and Availability is dedicated to ensuring patient access to safe and effective plasma-based therapies, their recombinant analogues, and blood therapeutic alternatives; and whereas the committee recognizes that the proposed prospective payment system for hospital outpatient department services--"OPD services"--under the Medicare program may unduly restrict patient access to those therapies; and whereas the committee concludes that the exclusion of these therapies from the proposed prospective payment system will protect patient access, the Advisory Committee on Blood Safety and Availability hereby recommends that the Secretary of Health and Human Services exercise the existing statutory authority to exclude plasma-based therapies, their biotechnology analogues, and blood therapeutic alternatives from the definition of covered OPD services under the Medicare Hospital Outpatient Department Prospective Payment System.

The committee further recommends that the Medicare program separately reimburse for these therapies when furnished in a hospital outpatient department, including emergency room, on a reasonable cost basis.

I would like to put forward that as a resolution.

CHAIRMAN CAPLAN: Second?

DR. HOOTS: Second.

CHAIRMAN CAPLAN: Discussion? Jim?

DR. AuBUCHON: I'll just say briefly I support this. Would you accept an amendment to include--either to change the wording "plasma-based therapies" to "human-derived biologicals" or to include "human-derived biologicals" in the list of exclusions that you're including? The reason for that is that this seems to be directed primarily at plasma-based therapies, which I have no objection to, but I would like to see a bit broader scope to include other very expensive things that are provided to patients.

MR. WALSH: I would have no objection with adding it as opposed to substituting, yes. Who's my second?

DR. NIGHTINGALE: Keith.

Jim, would you state an amendment for the record?

DR. AuBUCHON: The amendment would be to include the words "human-derived biologicals" in front of the phrase "and blood therapeutic alternatives."

DR. NIGHTINGALE: A clarification for the record. Would that include whole blood?

DR. AuBUCHON: By my recollection, it would.

DR. NIGHTINGALE: Would that include platelets?

DR. AuBUCHON: Yes.

DR. NIGHTINGALE: And it would include other products derived from blood donations?

DR. AuBUCHON: Yes, for the record.

CHAIRMAN CAPLAN: Other comments? Discussion?

[No response.]

DR. NIGHTINGALE: Comments from the floor?

CHAIRMAN CAPLAN: Yes, actually, that's a reasonable thing to do. Any comments from the floor on this one since we have groups that have testified?

DR. NIGHTINGALE: If there is a comment behind the podium, it is not visible to either the Chair or the Executive Secretary. Would the commenter please approach the podium?

MS. LAUERHASS: Yes, I'm Theresa Lauerhass, and I'm speaking on behalf of the American Association of Blood Banks. This came up a little earlier than I thought it would because we had planned to address the committee on APC 369 later this morning. But I'm sure that we would support the resolution as amended by Dr. AuBuchon's revision.

MS. DUCCA: Are we still going to speak about 369 later?

CHAIRMAN CAPLAN: Yes.

MS. DUCCA: Okay. We'll reserve our broader comments on 369 for that time period. Thank you.

DR. NIGHTINGALE: I realize this puts you on the spot, but this is an open committee hearing. Would your organization have any comment at this time?

MS. DUCCA: Not at this time. We will comment later.

MR. JACKMAN: If I might, I just would like to comment that there are a number of efforts in other therapeutic areas to get this type of exemption because there are special needs, for instance, for oncology products. There's been a tremendous effort to try to carve-out oncology products, which may be in itself notable. But what we don't want to have happen is where they think we've taken care of the problem by taking care of oncology products. The problems with these therapeutics is that they are not on the radar screen. You're trying to put them on the radar screen and make sure that people understand that there are special needs here. So we would wholeheartedly support this resolution.

CHAIRMAN CAPLAN: One comment I might make, John, is that it seems to me--and I think we can wordsmith this later if you're comfortable with it. But on the justification in the second paragraph of this thing, "may unduly restrict patient access to those therapies," I suspect we also want to say something like, "to a group that is burdened or more vulnerable because of its small size and rarity of disease," or something like that. In other words, you go out and tell legislators, they're going to restrict access to therapies, sometimes they care and sometimes they don't. But the problem here is that, as Keith was saying, this mechanism of payment structure is better when it's a broader-based population and you can get to an average. When it's rare diseases, relatively rare diseases, it's harder to make it go so you don't have anybody go to to spread out the cost/risk thing.

So if it's all right with you, we might want to put in--I don't want to do it now, but just something to the effect that it unfairly burdens a group with a set of rare diseases or something like that. That will explain what's going on, and it's in the spirit of the oncology problem, too.

MR. WALSH: I think that makes infinite sense. We're not proprietary about the wording, and if we could wordsmith it to make it stronger, that would be fine. No objection.

CHAIRMAN CAPLAN: Yes, Jim?

DR. AuBUCHON: I agree with what you're saying. However, the issue about rarity doesn't quite apply when you're talking about blood transfusion.

CHAIRMAN CAPLAN: Yes, I mean, we could even handle it by saying "often burdened" or something like that.

DR. KUHN: Where we may find some opposition to this when it finds its way up the ladder is in the terminology "reasonable cost basis." But I would probably want to put a parenthetical statement in there for whomever looks at this, that they go back to the July 30 Federal Register that HCFA published on the changes to payment rates for blood clotting factor for hemophilia inpatients. And, you know, they did a very good job of coming up with good prices, reasonable cost for inpatient, now if they would just look at that and apply it to outpatient. But I would call their attention to the Federal Register of July 30th.

DR. NIGHTINGALE: Of what year?

DR. KUHN: 1999.

MR. WALSH: Mr. Chairman, also, there was a statute quoted yesterday that states that the Secretary is authorized to take action on this, and I think that this ought to be put forward in the spirit of her actually saying something immediately about this. And if this has to go to Congress to make a change before next year, it's ludicrous.

DR. DAVEY: Yes, Mr. Chairman, I'd support Jim's thinking on this. I'm wondering, though, since we are dealing with two very distinct APCs, 906 and 369, that really deal with two distinct categories of blood-related products and services whether we should consider two distinct resolutions, one pertaining just to plasma-based therapies, and another similar resolution dedicated more to the blood plasma and other transfusibles. So that we don't confuse the issue by melding them together, I would prefer that we have two distinct resolutions, and perhaps wait for the second one until after some discussion on APC 369.

MR. WALSH: Jim, I would agree with that. Would you? You're the second there.

DR. AuBUCHON: That's fine with me. I'm more of a lumper than splitter, I guess.

DR. HAAS: Yes, but lumping got us into trouble.

[Laughter.]

CHAIRMAN CAPLAN: Do you want to accept that?

DR. HOOTS: The only question I have is strategic, and obviously none of us can speak for the Secretary. But in terms of any opinions from people who have--you know, for whom we--to whom we know--let me say that again.

Does anyone have an opinion about how she's going to receive it as two issues versus one issue? Which will probably carry the greatest weight with her?

DR. NIGHTINGALE: I do not think that one or the other would have any difference. In fact, as the committee knows, what happens is the deliberations of this committee, as others, are examined very carefully. They are formulated in a manner that they are initially sent to the Secretary, who refers them to the Surgeon General, who then refers them to the affected agencies for comment, which we call clearance, but, in fact, that's what it is. When there is either a substantive issue or substantive differences of opinion, these are brought back through the Blood Safety Committee to the Chair of the Blood Safety Committee, who is Dr. Satcher, who reports directly to the Secretary.

One way of parsing that last sentence is a lot happens to the style of any resolution that emerges from this committee before it is presented to the Secretary. But I think that the resolution here is very clear in its purpose, and clarity of purpose is, in fact, the most desirable trait of a resolution as it enters the bureaucratic system.

CHAIRMAN CAPLAN: Carolyn?

MS. JONES: Art, you added--you were addressing the clarity of the second, and I'm wondering whether we should also address the clarity from the discussion we had yesterday about the way this decision was developed to reduce the reimbursement to $99. And should we call that to her attention that the mechanism that HCFA used to make this determination wasn't appropriate using some of the explanation that Keith provided and the doctor from St. Elizabeth's Hospital? Because I think that also sort of explains why we think she should really consider this resolution.

DR. NIGHTINGALE: Again, from the perspective of one who is, among other things, a paper bearer, I think that one is usually more effective when one expresses one's own opinion than when one attacks the opinion of another.

CHAIRMAN CAPLAN: We certainly can get it on the record, this discussion we've had, as sort of based on our discussions we will make the resolutions. We can go that far.

DR. HAAS: I have a slight preference for keeping the two separate, the simple communication theory that one idea at a time, even though I accept Steve's comment that it is studied closely. We have two very distinct messages that are similar that says here's one, here's the other.

The other thing I hope we will consider is that although I, too, want to see these go forward, I hope we continue the discussion in the spirit of Dr. Weinstein and say that there's a problem with the whole HCFA operation, and I think we want to figure out a good way to send that message, too.

CHAIRMAN CAPLAN: Jane?

DR. PILIAVIN: I'm not sure I want to say the same thing that I thought I wanted to say when I raised my hand.

I think there are slightly different arguments for the two things we want to say, and the first one I thought was spelled out very well in terms of: Only certain hospitals do this; those hospitals are being heavily disadvantaged by this; they may have to stop doing it, blah, blah, blah. Obviously you can't give that succinctly. But to just have a very brief discussion of this is because it's very rare and will disadvantage academic-based hospitals. Thinking about the Secretary having been a former academic, I thought that might--she had to deal with hospital issues when she was chancellor at the University of Wisconsin, so she understands university hospitals.

I don't know what the basis of the argument for the more routinely used blood products would be, which is why I'm not really strongly in favor of separating them because I think we might be more likely to lose if we separate them because the argument wouldn't be as strong.

CHAIRMAN CAPLAN: How many people wanted to offer a brief comment on the blood--whatever that phrase is, "human-produced"--

DR. AuBUCHON: "Human-derived biologicals."

CHAIRMAN CAPLAN: Yes. Did you want to say something about that? If we're going to get there, maybe the way to answer split or lump is to hear a little about that.

MS. DUCCA: The problem with commenting is that until I can show you the data that we have on 369, we're kind of only talking about part of the issues having to do with the blood therapies, so we're kind of trying to decide if we combine a resolution on two items where we haven't heard a complete discussion of the second item, and that's why I'm having trouble, you know, giving you a yes or no or thumbs up or thumbs down.

CHAIRMAN CAPLAN: Do you want to take a few minutes and do the--

MS. DUCCA: I can certainly do that. That changes around your agenda, and I--

CHAIRMAN CAPLAN: No. It seems like we're here, so--

MS. DUCCA: You know, I'm happy to do that.

MS. LAUERHASS: There are a number of groups--

MS. DUCCA: A number of groups want to speak on 369.

DR. NIGHTINGALE: That's a big item.

CHAIRMAN CAPLAN: All right.

DR. NIGHTINGALE: Why don't we address the amendment? Jim?

DR. AuBUCHON: As an alternative, could we postpone deciding what we want to do until we've heard all of the reimbursement discussions, and then we've got this still on the floor to discuss, and we can combine or split at that time.

CHAIRMAN CAPLAN: Okay.

DR. AuBUCHON: I think that's a motion to table.

CHAIRMAN CAPLAN: Okay. Let's do it that way. We'll table this one, come back, get a report on hepatitis C, and then we'll go right into the safety mandate finance--

DR. HAAS: Art, how worried are you on parliamentary procedure, since that happens occasionally? If we're going to do that, I suggest we table it with the intent that it's brought right back up as soon as the discussions are through. That way it doesn't get lost in any way.

CHAIRMAN CAPLAN: Yes.

MR. WALSH: And, Mr. Chairman, as we're talking about process here and agenda, are we skipping by consideration of resolutions on the shortage issue? Or are we going to come back to that?

CHAIRMAN CAPLAN: I was going to come back to that, too, before we went to the hepatitis C lookback. But let's get a motion for Paul's--do you want to make that?

DR. HAAS: I made that.

CHAIRMAN CAPLAN: Second?

DR. AuBUCHON: Second.

CHAIRMAN CAPLAN: All in favor?

[Show of hands.]

CHAIRMAN CAPLAN: Opposed? Abstained?

[No response.]

CHAIRMAN CAPLAN: Okay. Did you have another motion that you wanted to put forward on the shortage issue?

MR. WALSH: I think Dr. Kuhn would probably want to do that later. Or do you want to do it now?

CHAIRMAN CAPLAN: Okay.

MR. WALSH: On the shortage issue, we have two, but with respect to the HCFA issue, we have an additional one. We can do that after this.

CHAIRMAN CAPLAN: All right. Let's do hepatitis C, then we'll do the compilation of all the relevant testimony, and then we'll go immediately back to the motion we just tabled, and then we'll look at new ones. Do I have that right?

DR. NIGHTINGALE: Yes. That would be Dr. Meade.

xx CHAIRMAN CAPLAN: We're going to hear next from Dr. Meade from FDA. We've got the status report on the hepatitis C lookback divided into policy that's come out on guidance to industry. We've got discussion briefly of the direct notification efforts, and then general public notification. Are you doing both of those, Mary?

DR. NIGHTINGALE: No. Kay Gregory.

CHAIRMAN CAPLAN: Oh, Kay Gregory is going to do that, and you're going to do the public.

DR. CHAMBERLAND: I'm doing general.

CHAIRMAN CAPLAN: General, all others, whatever it is.

DR. MEADE: Thank you, Dr. Caplan.

This morning I will provide the committee with an update on HCV lookback. Specifically, I will discuss the June 1999 FDA draft revised guidance for industry document, focusing on how it differs from the guidance issued on September 23, 1998, and provide a review of the recommended time frames for implementation of HCV lookback by the industry.

Now, the current status--and we'll hear a lot more about this a little later this morning, but the status of the implementation of HCV lookback may be summarized briefly as follows:

The blood organizations report that blood establishments have implemented HCV lookback programs prospectively, or based on current donor testing, and retrospectively, or based on review of records of historical donations tested using EIA 2.0 or EIA 3.0. They have established written SOPs for lookback based on current and historical donations. They have diligently conducted record searches to identify prior collections from donors who were reactive on multi-antigen screening and supplemental tests. And they have been performing additional tests on stored samples or in some cases on fresh donor samples.

Some blood banks have already begun doing lookback based on EIA 1.0. The Chiron RIBA 3.0 supplemental test was licensed in February, and it is useful for resolution of the donor's infectivity status to minimize false notifications of recipients.

Blood establishments have begun to notify consignees. The deadline for this consignee notification to begin was specified as March 23, 1999, in the FDA guidance document issued last September 23rd. As recommended in the FDA revised guidance issued in June, blood establishments should complete consignee notifications by September 30, 2000. And in according with the public education and physician education efforts of the CDC, transfusion services have begun to notify recipients.

The Advisory Committee on Blood Safety and Availability met on January 28, 1999, to consider options for implementing the November 24, 1998, recommendations of the advisory committee to expand the targeted HCV lookback program to include recipients of blood from donors subsequently identified as repeatedly reactive by the single-antigen enzyme immunoassay EIA 1.0 screening test for HCV infection that was licensed in 1990.

The committee considered that in cases where the supplemental testing had not been done, it was reasonable to limit the lookback for EIA 1.0 based on the signal-to-cutoff ratio of the screening test--in other words, that it was optimal to perform lookback on a subset of the EIA 1.0 repeat reactives to capture the vast majority of the true positives and minimize the unnecessary false recipient notifications.

At the committee meeting in January, Dr. Michael Busch estimated that when supplemental testing had not and is not done, if direct notification was to be based on an EIA 1.0 signal-to-cutoff ratio of 2.5 or above, about 100,000 notifications based on EIA 1.0 would be triggered. About 10,000 of these individuals would be alive and be traced by the notification effort, and about half of these, or 5,000 individuals, would have been previously unaware of their potential HCV infection.

Dr. Busch also estimated that using a signal-to-cutoff ratio of 2.5 to trigger direct notification as opposed to using simply a repeatedly reactive EIA 1.0 test to trigger direct notification would prevent about 452 false positive notifications for every true positive notification that would not occur.

And so, having considered a signal-to-cutoff value of 2.5 as being the optimal ratio for triggering lookback based on EIA 1.0, the Advisory Committee on Blood Safety and Availability unanimously recommended that targeting lookback should be initiated based on a repeatedly reactive EIA 1.0 test result on a repeat donor unless: A, a supplemental test result was performed and did not indicate significant risk of HCV infection; B, no supplemental test result is available, but the signal-to-cutoff ratio of the repeatedly reactive EIA 1.0 test was less than 2.5; or, C, follow-up testing--that's testing on the same blood donor--is negative. And that follow-up testing could include a negative EIA 2.0 or 3.0 or any supplemental test result not indicative of infection.

In accordance with this recommendation, FDA issued a revised guidance for industry document that replaced the guidance issued on September 23, 1998. This draft revised guidance was posted on the World Wide Web on June 17, 1999, and the notice of availability was published in the Federal Register on June 22nd. This draft guidance was distributed for comment only.

However, FDA is aware that many blood establishments began to implement these recommendations immediately upon the issuance of the guidance. The recommended period of 60 days for submission of comments ended last Monday, August 23rd. However, written comments and suggestions regarding this document may be submitted to FDA at any time.

The revised guidance differs from the September 23rd guidance in the following significant ways:

First of all, as I mentioned, lookback has been expanded to include EIA 1.0. In addition to the previous sections on prospective lookback based on EIA 3.0 and retrospective lookback based on EIA 2.0 or 3.0, a new Section 3 in the guidance contains recommendations for dealing with lookback based on EIA 1.0 test results and the Figure 3 has been added.

For an EIA 1.0 repeat reactive, if additional testing using EIA 2.0, EIA 3.0, RIBA 2.0 or RIBA 3.0 was or is performed on the original sample or on a later sample from the donor, the guidance addresses whether recipients should be notified and whether product should be destroyed or relabeled or released, depending on the outcome of that additional testing.

Now, if no additional testing was or is performed following the historical EIA 1.0 repeatedly reactive result, then in accordance with the recommendations of the Advisory Committee on Blood Safety and Availability in January 1999, the blood establishment should base its lookback actions on the signal-to-cutoff value for the original donor sample. A signal-to-cutoff value of greater than or equal to 2.5 indicates that the transfusion recipient should be notified unless a RIBA 3.0 is done and is negative or indeterminate.

Now, for EIA 1.0 lookback, it is recommended that the records search for prior collections extend back indefinitely, not just to January 1, 1988, to the extent that electronic or other readily retrievable records exist. Now, this recommendation that the records search extend back indefinitely was made because to issue a revised guidance in 1999, with a recommendation for a retrospective records search extending back ten years before now based on screening that started in 1990 would only give you one year of retrospective records search, which wouldn't really be a very meaningful lookback. So the only remedy for this was to call for an indefinite retrograde search, provided, of course, that the records can be found, so that this lookback, which is expected to be very meaningful, can have a significant yield.

In the September guidance, the records search for prior collections from a donor with a current repeatedly reactive EIA 3.0 or a historical repeatedly reactive EIA 2.0 or 3.0 was to extend back ten years or to January 1, 1988. But this June version of the guidance extends that records search back indefinitely also to the extent that electronic or other readily retrievable records exist.

Since this is being recommended for EIA 1.0, this recommendation was made for consistency to avoid the situation of having the records search extend back different lengths of time, depending upon the screening test that was used, and to avoid the situation of neglecting to notify certain at-risk recipients simply on the basis of the screening test that was use for a later donation from that donor.

Now, regarding additional testing using Chiron's RIBA 3.0 assay of a donor's sample previously found to be RIBA 2.0 indeterminate, this revised guidance specifically states that, and I quote, "These recommendations apply to licensed RIBA 3.0 assays and to RIBA 3.0 assays used under an IND or provided as an in-house service by the test kit manufacturer."

Similarly, for supplemental testing of EIA 1.0 repeatedly reactive samples, the guidance states, "If a RIBA 2.0 or RIBA 3.0 was used previously under an IND exemption or was provided as an in-house service by a test kit manufacturer, the results of such testing may be used to determine the need for further action."

So FDA is really saying here that the result of any RIBA 2.0 or RIBA 3.0 is acceptable whenever it was performed, whether licensed or not.

Some other changes include more detailed information regarding how the recommendations apply to lookback for repeatedly reactive plasma donations and specific recommendations on dealing with prior collections from a repeatedly reactive autologous donor.

Now, with respect to the time frames for implementation of the retrospective HCV lookback by industry, the June 17th draft revised guidance recommended that for the records search extending back to January 1, 1988, that's already underway pertaining to EIA 2.0 and EIA 3.0 repeatedly reactive donations, as recommended in the September guidance and which the industry, as I said, has been doing, blood establishments should complete notification of consignees by March 23, 2000, which is unchanged from the September guidance. That still represents one year from the date, March 23, 1999, by which blood establishments were to begin consignee notifications for EIA 2.0 and 3.0.

But now we have given blood establishments more time to extend the records search for EIA 2.0 and 3.0 back indefinitely, that is, prior to January 1, 1988. Blood establishments should begin notification of consignees as soon as feasible and should complete all consignee notifications by September 30, 2000, which is six months later than the completion date for consignee notification for the records search going back to January 1, 1988.

Due to concerns raised by the blood organizations with respect to having adequate time for implementation of retrospective HCV lookback pertaining to EIA 1.0 repeatedly reactive donations, FDA has recommended that blood establishments begin notification of consignees by December 31, 1999, and complete all consignee notifications for EIA 1.0 by September 30, 2000, which is the same as for EIA 2.0 and 3.0.

Transfusion services should begin notification of the recipient when notified by the blood establishment and should complete all notifications of transfusion recipients identified in the retrospective records searches by September 30, 2001, that is, within one year of the last of the notifications that they receive from the blood establishments.

Now, all of these same measures as are in the guidance are codified in a proposed rule on HCV lookback that FDA originally submitted to the department in January 1998. It was cleared by the department early in 1999, but FDA took it back in the wake of the PHS Advisory Committee recommendations of January to extend the scope of the targeted lookback to EIA 1.0. FDA accomplished a revision of the proposed rule and forwarded it to the department for review at the end of July 1999.

Thank you.

CHAIRMAN CAPLAN: Paul, do you want to say anything about the comments received?

DR. MEADE: We're still receiving comments, as I said. The comment period, the recommended comment period, ended August 23rd, last Monday, but we have received some comments. We're looking at them now, and we'll be discussing them at length in-house and within PHS to see what revisions or clarifications we should issue.

CHAIRMAN CAPLAN: Maybe one question. Have you got one?

COL. FITZPATRICK: Do those comments include an explanation of what readily retrievable is?

DR. MEADE: Yes, and I think you'll be hearing some comments later on this morning that I think point to the need to clarify what we mean by readily retrievable records. I think that will go a long way toward resolving some of the grief.

COL. FITZPATRICK: Thanks.

CHAIRMAN CAPLAN: I think we had Kay Gregory next, and then we'll go to Mary.

MS. GREGORY: Good morning. My name is Kay Gregory. You all met me yesterday. But I'm here today to speak on behalf of the Interorganizational Committee for HCV Lookback. This is, I think, a very successful committee consisting of members of the American Association of Blood Banks, America's Blood Centers, the American Red Cross, and more importantly, we have liaisons from the CDC, the FDA, and from HCFA. So this is a group that has really been working very diligently to see that HCV lookback is implemented appropriately.

Next slide?

Just quickly, I want to review some of the accomplishments of the committee which really needed to be accomplished in order for HCV lookback to move forward.

First of all, we developed standard notification letters with the assistance of CDC so that a message that is going out to people is consistent throughout the country, and these letters were developed not only for physician notification but also for physicians to use in their recipient notifications. And I should also tell you that we've already sent out notification letters for HCV 1.0 lookback even though we're not really required to start that yet.

We also developed a flow sheet, sort of a checklist for physicians to use so that we can be sure they remembered everything that we really wanted them to do. We supply educational materials to a wide audience, including sending out copies of the CDC MMWR on HCV, a list of resources for patients and for physicians. So we've really tried to make a lot of information available.

We've worked very diligently to be sure HCFA understood the need for reimbursement for testing for this issue, and I think we were successful in getting that done.

Then, finally, we've been very vocal about the FDA guidances. We've commented on all of them, and I believe we supplied the committee members with our comments on the latest guidance as well.

In addition, the FDA guidances, as you know, are pretty comprehensive and sometimes difficult to understand, so we spend a lot of time answering questions and explaining things to members when they call in with questions about what does this mean, what should I really do.

Next slide?

You're probably a lot more interested in progress monitoring, that is, have we really done anything? So this group has also conducted two surveys. Now, these are not meant to be scientifically valid surveys at all. They're meant to be more snapshots of what's going on because we really thought it was--it's more important to get the lookback done than it is to spend a lot of time documenting what we're doing. So we tried to make it as simple as we could, but still get some information about where people are. So each of the surveys was a simple one page that was faxed out. We asked them to return it within a week. Generally speaking, we got responses back starting almost immediately, and the response for both surveys was up to about a 40 percent return rate, which is pretty good when you only give somebody a week to get it back to you. In April, we got back 589 usable responses, and in July, 554. So as I said, it's not scientific. We didn't make any effort to determine if it's the same people who answered in April or the same people who answered in July. As a matter of fact, I couldn't identify for you who did and who did not answer because we really didn't want to have identifiers on the survey.

Next slide?

Okay. So we looked at the blood collection facilities, and we asked them, first of all, how many of you have completed lookback? As you can see, in April, 29 percent of those responding said we're done, we've done everything we need to do. In July, that figure rose to 43 percent.

Then we also said, well, how many of you are more than 50 percent complete? And you can see that that was 24 percent in April, and then 17 percent in July. And then, of course, the rest are less than half completed.

Next slide?

In July, we thought people should be far enough along that we could ask another questions, and that is, we wanted to be sure they understood the difference between consignee notification and are you complete with that, and where are you on your records review. So in July, we asked a specific question: How much of your record review have you done? And 38 percent of the respondents said they had completed their records review. If we looked at more than 50 percent complete, that number jumps to 55 percent are at least half completed with the records review that they are doing.

Next slide?

Then we also asked the same information of our transfusion services. We asked them: How many lookback notices have you received? And in April, that figure was a little over 10,000; in July, it was a little over 12,000.

Now, you need to keep in mind that this is just the number of lookback notices. Each notice might contain a list of hundreds of components that needed to be reviewed. So that doesn't necessarily represent the number of components that are being investigated, just how many notices did you get back.

For these notices, how many recipients have you identified? In April, it was about 6,500; in July, it jumped to 10,000.

How many recipient or physician notifications have you done? In April, as would be expected since they were just beginning, there were about 3,000. In July, that jumps to a little bit more than 4,000. And in July, we asked an additional question that we did not ask in April, primarily because a number of people volunteered the information in April, I think trying to make sure that we understood why the number of notices and the number of people that had been identified--you know, things didn't always add up very well. So we asked them: How many of these recipients were deceased at the time you got this notification? And roughly 4,000, a little over 4,000, were already deceased when they got the notification. And we'll have some more to say about some of this data in our public comments.

Thank you.

CHAIRMAN CAPLAN: Questions?

[No response.]

CHAIRMAN CAPLAN: Okay. Thank you.

Mary?

DR. CHAMBERLAND: Good morning. Just as a little bit of a segue, before I get to general lookback, the first transparency, I wanted to just follow up on Kay's comments and actually probably skip down to the third bullet since she very nicely covered some of the other activities that CDC via the Interorganizational Task Force has been involved in, meaning the sample notification letters and the educational information. And Steve Nightingale asked if I would speak a little bit about another activity that CDC has been involved in.

In the hepatitis branch, we have developed a software application to assist transfusion services in tracking the status and outcome of their notification efforts. Transfusion services received a letter in June of this year informing them of the availability of this software. The software is being made available at no cost to transfusion services. They can access it via the Internet, or it can be mailed directly to them upon their request.

Essentially, the software is kind of a--it's a bookkeeping system. It allows the transfusion services to enter information on each of the potentially infected blood component units that they have received word about from the blood collection centers. And then as the transfusion services work toward identifying these recipients and determining their status--alive, dead, letter delivered, et cetera--they can add that additional information as it becomes available to them.

Also, the software will allow transfusion services to generate summary tables. It's Y2K compatible, and it can run under a couple of different Windows programs.

We felt that there was a need to do this because, as I believe the committee has heard previously, we are working toward--CDC, in collaboration with the Agency for Health Care Policy Research and FDA, is working toward implementing an evaluation of both the targeted and general notification lookback efforts.

In brief, this is going to be conducted by a series of national surveys and other approaches to try and determine the effectiveness in identifying persons with HCV infection as a result of these two notification approaches. CDC published a Federal Register announcing its plans to do this in May of this year, and at the time that we mailed out letters to the transfusion services notifying them of the availability of the software, we also gave them a bit of a heads-up on the kind of data that we're going to be looking to collect from these surveys.

And, again, it's fairly straightforward. We're certainly going to want to know the number of notifications, the number of potentially infected blood components that were reported to the transfusion services by the blood collection establishments; what the disposition of these components was, were they transfused, not transfused, expired; the number of transfusion recipients that were identified, the year of their transfusion, the outcome of this notification effort; also, if the transfusion service is offering any anti-HCV testing, what the results of such testing were. And then, also, we very much want to get estimates of the personnel time and the costs that were involved in conducting the targeted lookback.

So we felt given this, knowing what's coming down the road, that it would be important for transfusion services to have available a bookkeeping system to start to keep this information in an organized way.

We're hoping that--Dr. Hal Margolis and Miriam Alter of the hepatitis branch believe that they will have some preliminary analyses available hopefully by January of this year to really build on what Kay Gregory has presented via the AABB surveys, which--as she characterized it, snapshots, you know, not really having--it's kind of--really it's sort of numerator information that's not carefully controlled, as she said, for duplicative responses and whatever. So hopefully by January of this year we'll have some preliminary analyses.

If I could have the next overhead, please? Thanks, Mike.

I was asked briefly to review some of the efforts that CDC in collaboration with any number of partners has undertaken with respect to the general lookback. And this is, as you all recall, the sort of general education campaign to get the word out to individuals who may have received transfusions prior to July of 1992 that may be missed by the targeted lookback effort. As you know, the targeted lookback depends on a donor being a repeat donor, someone who has come in more than once to donate and, hence, the ability on the part of the blood establishment to pick up that this donor has become infected in the process with hepatitis C infection.

I know that many of you are aware that we started this effort--we felt it was important to build some sort of important background or groundwork to this, and knowing that information was going to be coming out to the public, we felt that it was important to first have available to health care professionals and others who might be encountering individuals who are coming to them saying, hey, I've heard these messages or I got this letter from a transfusion service, what does this mean? What do I do? But it was really important to try and put together information for these health care professionals for them to know, to have a good, comprehensive educational information themselves about how to handle this.

The very first thing that was done a year ago was the publication of this MMWR on recommendations for the prevention and control of hepatitis C infection. This, along with an audiotape that dealt with clinical diagnosis and management, also very equally important, was mailed to some 250,000 health care professionals in the United States.

Having this in place, the next step in this sort of staging was to develop what CDC is calling a hepatitis C public information campaign, and essentially this consists of multiple layers, and it's directed at really the widespread disbursement of information and educational materials targeted to different audiences, to the media, the print, for example, print and radio, to health care professionals, and to the general public.

The way this has been prioritized is that the first group to be targeted by this general education--or this public information campaign are individuals who received blood transfusions prior to July 1992 and the health care professionals who will be caring for these patients.

I very much appreciate Dr. Davey's comments yesterday that when you look at the whole pie of hepatitis C infection and how people acquire their infections, clearly, proportionally, this accounts for a small piece of that pie, I think about 7 percent, and that there are much more common modes of transmission. And certainly nowadays, you know, we're looking back at infections that occurred via the blood supply in the past.

But, you know, the mandate from this committee and the whole lookback effort really causes us to have to prioritize and target the transfusion recipients as our initial population.

And we want to move forward also to encompass the materials and access to individuals who fall in other risk behavior groups, and I'll have a little bit to say about that after the general lookback.

So if you accept that this is our starting point, this educational or this information campaign has its sort of kick-off, if you will, at a media briefing that was held here in Washington at the National Press Club on May 5th. Art Caplan, Steve Nightingale, Jay Epstein, any number of people here in this room were present at that National Press Club briefing.

Subsequent to that, we, CDC, in collaboration again with a whole host of partners, is really moving towards some other, I think, more visible activities.

And one of these is about to happen beginning September 1st, and this is going to be sort of a pilot testing, if you will, of transit ads that were going to be placed in the insides of buses and other--trains, public transportation, in two cities, in the Washington, D.C., area and in Chicago. And for the period of September 1st to October 31st will be this, if you will, pilot testing of these transit ads.

The selection of buses and commuter trains was reached after careful evaluation with focus groups research, who indicated that this is an environment where they are likely to look at, if you will, these kinds of informational displays. And, essentially, the committee members have received in their packets copies of some of these transit ads. And those of you that live institution Washington area hopefully are going to get to see these very soon. The message that ties all of these together is the following:

"Hepatitis C: You may be at risk if you had a blood transfusion before July 1992. Ask your doctor if you should be tested." And then information is given about contacting the CDC toll free, I guess it's a 1-888 number, or the CDC Web site to get additional information about hepatitis C.

These transit ads are going to be, also, with the advent of the transit ads, we felt it was important that we should have a hotline that is manned by a live person, so that during this test pilot phase, individuals who call this number will actually speak to a person and not simply have a recorded message.

We recognize that obviously two cities, the whole country, we obviously wanted to certainly cover a broader area. So also beginning September 1st, hopefully, we are very hopeful that many of you will be hearing Public Service Announcements. CDC has sent out any number of media kits for print and radio PSAs, story lines, et cetera, to media outlets throughout the country, and these appear both in Spanish and English. And, again, this is not something that we have direct control over, whether these groups opt to use these PSAs, but the information is out there and available for them to use.

Just a couple of other things that I wanted to say with respect to the general lookback. The referral that people have, as I said, the manned hotline and also the Web site, the Web site has been expanded. It offers a lot more information. People can call in or write in and get information. There's packets of information that are mailed out. They include brochures, pamphlets, articles on hepatitis C treatment. In the near future, we hope to have bill stuffers and posters--again, things that individuals may find useful.

We're also encouraging health departments, and health care providers and organizations. They have been contacted by a large letter campaign mail-out to contact the Hepatitis Branch directly with questions, how to request materials, et cetera.

Hal Margolis tells me that early in the new fiscal year, again, now that this is in place, that we have these kind of materials, the hope is to do what he had talked about I think at a previous Advisory Committee meeting, which is to work with the professional organizations and voluntary health groups that have contact with patients who likely received transfusions--so these are oncologists, the sickle cell organizations, et cetera, people who are in contact with patients who likely receive transfusions--to work with them so that they can, in a sense, personalize these brochures and information that have been developed and distribute it through their own networks. Many of them have indicated, We want to have something that we can maybe put our logo on or tailor a little bit to what our specific needs are. So we feel now we're at a point in time where we have that kind of information and support that we can offer.

I think I'll just move onto the last couple of overheads there, what I'm calling "Beyond HCV Lookback." And this is, I think, to try and get a little bit at what Rick Davey was talking about, and I know is a concern for many others, which is, well, what about everybody else. And, again, we think what's very important, what's absolutely necessary, is to have in place an infrastructure to handle what we presume will be a large number of inquiries from people when they start hearing about public information, about hepatitis C risk. Where do I go to get information? Where do I go to get tested?

What we have planned for this fiscal year is we are going to be making very shortly some one-year planning of some awards to plan in three ELCS, which stands for Epidemiology and Laboratory Capacity Sites. These are essentially Health Department sites that have been funded as part of CDC's emerging infectious disease plan that are already in place. So there's an infrastructure in place. And we're funding one-year awards to have them assess the feasibility of integrating hepatitis prevention activities in existing programs. So like HIV counseling and testing sites, STD clinics, et cetera. It seems to make sense that you would want to kind of bundle--I think this is a positive use of the word "bundle--but kind of bundle or one-stop shopping places. Also, we have begun focus group testing in Baltimore with groups of IV drug users to try and figure out, with their help, what are the kind of messages that these kinds of population groups will listen to, will catch their eye, you know, how can we best reach these groups.

And then also there's going to be an award that's made to do specific needs assessments in correctional settings to try--and, again, a very important population that needs to have HIV prevention and counseling activities in place.

What we're ultimately working towards in the year 2000 is the award of comprehensive demonstration projects; again, working towards this integration of HCV into existing infrastructure. But, obviously, a lot of that is going to clearly be resource dependent. As Fernando can well tell you, Health Departments just don't have this capability currently in place.

And another approach that Hal Margolis has talked about with this committee is working towards putting what he's calling hepatitis C coordinators in state health departments, sort of paralleling the vaccine coordinators that are often placed in health departments.

So that's some of the work that's been going on in the last several months.

MS. O'CONNOR: I think this is wonderful, and it's really positive to see the steps that have been taken already.

I noticed that most of the programs are directed to people who probably either have it already as intervenous drug users or just adults in general. Would there be an opportunity, through the state health programs, to get awareness in schools, even starting as low as grade school? Because prevention, of course, would be the ultimate goal, rather than treatment.

DR. CHAMBERLAND: I think that's actually a very important piece of any sort of prevention and activity program. I'm not specifically aware of any sort of educational efforts in the school arena. That doesn't mean that they don't exist. I don't know, Fernando, do you want to amplify anything in that area?

DR. GUERRA: I think you've certainly covered it very well.

I guess that there are a number of parallel efforts that maybe are even a little bit further ahead of where we are in the public sector, and that's through the Hepatitis Foundation--

DR. CHAMBERLAND: Yes.

DR. GUERRA: --and the American Liver--

DR. CHAMBERLAND: Right. And I didn't mean to neglect mentioning them, but I know that they have been partners in--

DR. GUERRA: And they have certainly reached out to the school community and to populations of college students, in particular, with some very clever educational programs. I know that in our own community they have also really gotten into some of the large businesses and groups of employees just to do some educational type of programs. So that's been very helpful. But I think it's the kind of effort that we probably need to certainly try to link up with just to be sure that we are giving consistent messages.

MR. WALSH: Mary, that was a nice presentation. Thank you.

I hate to saddle you with this question, but do you believe that CDC has the financial resources to be able to implement a comprehensive program in the next year?

DR. CHAMBERLAND: Well, I think sort of a similar question was addressed to Dr. Satcher yesterday. And I think he answered it nicely in the sense that suggested that, you know, what CDC was undertaking was sort of in concert with what resources we had.

There is, in this fiscal year, monies have been identified and are actually, on a permanent basis, are going to be used, in excess of $5 million from CDC's emerging infectious disease monies that come to the Agency for that purpose, are being redirected to hepatitis C efforts. My understanding is that the President's budget for FY 2000 has not yet been finalized, and there is in there a provision for additional monies for the year 2000 for hepatitis C.

My understanding is that there has been a lot of interest on the part of various congressional offices that are key in areas like appropriations and whatever and that CDC has, in response to their inquiries, has spent a lot of time talking and explaining what it is we'd like to do and how to go about doing it.

So, to the best of my knowledge, that's where things stand. I think, also, we're looking towards, you know, beyond the year 2000, that there will be a need, and hopefully that will hence follow even more funding for this, for the hepatitis C prevention overall activity.

DR. KUHN: So, Mary, there is hope then that in the fiscal year 2000, especially if we go into an omnibus, that there could be additional funding to continue this program.

DR. CHAMBERLAND: Yes. There is in the year 2000, which is I guess it's finalized later on this summer, whatever, there is a request for additional in that--or there is budgeted additional money beyond this emerging infectious disease.

CHAIRMAN CAPLAN: Okay. Thank you. Oh, Ron, get ahead.

DR. GILCHER: A couple of general comments here that pertain to what Mary has talked about. . When you look at the lookback, there are really a number of situations, and one that we have not really addressed, which I will in a moment.

The general lookback targets both, in a sense, transfusion recipients, but also the general public, to make them aware of the fact that there's a lot of hepatitis C out there. The targeted lookback, as far as blood centers are concerned, clearly focuses on the fact that we have a positive test result, and we look back.

But, in fact, there is another lookback that has emerged in our system, and we're calling it, for lack of a better term, the reverse lookback. And let me explain what that is. And that is based upon individuals who have, through whatever method, are aware that they were transfused, and they've come forth and been tested, and they are, in fact, positive, and we've confirmed that. And that comes back to us either from the individual directly coming to us, we're testing them, but in fact there's no record in our system. So we go back to the hospital. We then find out what unit they received, and now we come back into our system and find the donor. And, in fact, we have found two donors that clearly are linked to multiple cases, and this is before testing occurred. So I'm calling this the reverse lookback. Unfortunately, one of these individuals also brought their attorney.

So there is really another kind of lookback that we have not addressed. It is not a required lookback. From our standpoint, if we're performing the lookback, we consider it to have an ethical consideration.

DR. CHAMBERLAND: And that strikes me as very similar, also, to HIV, you know, how--especially particularly in the early days--when transfusion recipients became positive, and it was the reverse approach.

CHAIRMAN CAPLAN: Let me move this along. I think we've got some public comment about all of these efforts. I do want Steve to say just one word about NIH.

DR. NIGHTINGALE: This is an advertisement. I am not employed by the Agency, but I have great respect for it.

Tab V, the last tab on the long background materials that I sent you, was one example of what has been going on at the NIH and their efforts on hepatitis C. And it's the report and science on the Sixth International Conference on Hepatitis C. I would encourage to review that not only on its own very substantial merits, but as reflective of the effort that the NIH has put into this disease entity.

And I also might make an advertisement for my colleagues, Dr. Alter, Dr. Margolis and their associates at the CDC. The August 19th NewEnglandJournalofMedicine has an article on the updated epidemiology of hepatitis C. It's really a nice piece of work, and I will be sending it out to the committee along with the transcript and the minutes of the meeting.

CHAIRMAN CAPLAN: I think we've got a number of people who want to make comments on these hep C lookback efforts, and I'm slightly nervous about time. So I'm going to watch here and ask everybody to keep it to five minutes, including questions. If you go over five, you won't get them--or comments.

Who have we got up, do you know? Do we have a list on that?

DR. NIGHTINGALE: We'll start with, I believe, the American Association of Blood Banks, America's Blood Centers, American Red Cross, Dr. Holland. Is there anybody between A, RC and H, who wishes to comment? I believe not.

Dr. Holland, you may have the last word.

MS. GREGORY: Thank you. I'm, again, speaking on behalf of the AABB Inter-Organizational Committee on HCV Lookback, and I need for you to use your imaginations. You need to imagine me as being over six-foot tall, I'm a physician and a male.

[Laughter.]

MS. GREGORY: Unfortunately, Dr. Triulzi, who was to give this presentation for the committee, was unable to stay and be with us today. So I got volunteered to do it instead.

But Dr. Triulzi is the associate professor of Pathology and Medicine at the University of Pittsburgh and medical director of a large multi-hospital transfusion service that supports the largest organ transplant program in the country. And he wanted to give you a flavor of HCV lookback progress, sort of a different perspective; that of one who is somewhat intimately involved in actually doing the lookback.

We now have some data about the anticipated yield. At my hospitals in Pittsburgh, we've completed approximately 80 percent of the HCV 2.0/3.0 lookback. This represents about a little over 1,800 lookbacks and a little over 1,600 records that we've looked at. And we specifically compiled the data on the mortality of recipients involved in lookback.

At a tertiary hospital, three different tertiary hospitals, they looked at 1,125 recipients and found that 54 percent of them were already deceased. At a Children's Hospital, they looked at 97 and discovered 57 percent were deceased. And then at three community hospitals, they looked at 108 recipients, and 72 percent of them were already deceased. And actually, this number increased as they proceeded with the patient notification procedure. These were just the ones that when they went through their records, they already had records that showed that the patients were deceased.

These numbers are remarkably consistent with other data sources. We have data from a large midwest hospital, in which the Social Security Death Index indicated that out of 113 recipients, 49 percent were deceased. Again, the final number went up as they proceeded, so that it went up to a much higher percentage.

Data from a southeast blood center that looked at 177 recipients discovered that 75 percent of them were deceased. And again, in our survey, we looked at 10,088 recipients and were told that 42 percent were deceased. And all of this is consistent with another type of lookback study; the CJD lookback study, in which they have now looked at, through June of 1999, they have now looked at about 283 recipients, and 56 percent of them were deceased.

Another member of the HCV lookback Committee has provided data on effectiveness. This is from a general hospital with a large cardiac surgery program, and they identified 141 components that required recipient tracing. They looked 113 records, in which transfusion had actually occurred. And as you just heard, 55 were deceased, leaving 58 notifications to be sent out. Forty-three of those recipients were actually contacted, and three of those were spouses and children that told them that the patient was already deceased. The other 40 were actually tested for HCV. Three tested positive, but one of them already knew about this positive test, and the rest of them were nonreactive.

We have data from another center in which they had sent out 397 notifications, and they have received back 200 responses. Twenty-three of those components were discarded or not used, 132 of them were deceased, 5 were lost to follow-up, 29, the recipient was not notified for some reason or another, and they tested the remainder. Nine were nonreactive, two were positive, and they both knew already that they were positive. So investigating all of those components found no one who didn't already know that they were positive.

While these are only preliminary data from very small samples, and we look forward to the CDC evaluation, which will be much more comprehensive, we believe that these scenarios are typical and just wanted to share them with you.

Now we'd like to move on and comment on the proposed FDA guidance. You received a comment of all of our comments, but I want to highlight just one issue that we're greatly concerned about. First of all, it is not the expected requirement to do HCV 1.0 lookback. We understand that, and many of our hospitals are already even proceeding with that.

However, the draft guidance recommendation to identify prior collections, extending back indefinitely to the extent that electronic or other readily retrievable records exist, we are concerned about, and we actually urge that this provision be deleted. Our reasons for this are, first of all, we're very concerned that we'll cause an unintended slowdown in the current present lookback efforts for 2.0 and 3.0 and in moving forward to 1.0.

We know that the further back in time a search has to be conducted, the greater proportion of recipients that are deceased or lost in follow-up, and the greater proportion of record retrieval that will be manual rather than electronic. And even if they are manual and they are readily retrievable, we have to do something.

Secondly, this requirement will force blood centers to reopen many of their already closed lookback cases because we stopped in 1988. This commitment of resources must be done without knowledge of whether the hospitals can even search their records back that far. The way the system works is that you can't identify the specific consignee hospital until after you've done all of the work on the donor test record.

So even if you know that a particular hospital doesn't have records, one of your other hospitals probably does so you have to do all of the work to find out essentially information that will go no further than you researched the records and found it out. We know, for instance, that in Pittsburgh no one has electronic records prior to 1988, and we suspect that the same is true for a number of other places.

Third, you've seen our data on effectiveness, and we question the value of this indefinite record review. This committee, meaning your committee, understood that there were incrementally small returns to be expected as the process is extended further back, and your recommendation was to go back to 1988. And we believe that was the appropriate choice.

We remind you the HCV lookback was always intended to have two components: Direct notification, which is what we're doing, and then all of the efforts of the CDC for the more general notification. And we believe, as a matter of fact, we have some data, which we supplied with our written statement, that indicates that a targeted lookback will not provide a greater yield than a general lookback. We believe we will get as much value out of the generalized lookback as we will out of the targeted lookback.

We also ask for one other thing in the guidance, in addition to deleting the indefinite review. We have established a rolling ten years for any new lookback that we discover that we need to do. So prospective lookback, we're asking for a rolling ten years. With the recent requirement for hospitals to retain their records for ten years, we believe this is the reasonable thing to ask for.

In closing, the blood banking community has heard your recommendation to complete HCV lookback and has moved forward to meet that challenge. We believe it's premature to extend the lookback indefinitely, when the original commitment was to do the lookback and then analyze the results and determine whether it had been done effectively or whether there was something more that could be done. And we still believe that that's the appropriate approach.

Thank you.

CHAIRMAN CAPLAN: Thanks. Let's move right on.

DR. NIGHTINGALE: Does America's Blood Centers wish to comment?

AMERICA'S BLOOD CENTERS REPRESENTATIVE: No.

DR. NIGHTINGALE: Does American Red Cross wish to comment?

DR. DAVEY: Only briefly, Steve. As members of the task force, we concur and agree with what Kay has said, and we certainly encourage FDA to delete the requirement for indefinite record review and lookback.

DR. NIGHTINGALE: One last time. Is there anyone, other than Dr. Holland, in the room--

[No response.]

DR. NIGHTINGALE: Dr. Holland, as promised. Dr. Holland, you can either speak or--

DR. HOLLAND: Thanks. I introduced myself yesterday. I'm from the Sacramento Blood Center. At our large, regional, independent, not-for-profit blood center, we completed our part of this lookback process in March of this year; meaning, we began last summer, in July, to begin that process. We devoted the resources to it. We couldn't wait for CDC or HCFA or anyone else to develop the letters and so on. In fact, we sent our letters to CDC to help them along.

In any case, that process, that initial part, is completed. Our hospitals are still wondering whether HCFA is going to help them get reimbursed for the part that they are now currently undergoing.

But my main message for you today is I wanted to point out, as you've already heard, that, again, with some other data, how largely ineffective and how wasteful of resources this whole effort is. But I also wanted to remind you of something that has been left out, is that for many patients this has been a very unwanted process, in addition.

Nonetheless, we are going to proceed with the next phase when we get the re-revised guidelines, and hopefully some of these points will be clarified; that is, this indefinite lookback, and what are readily retrievable records. Because without really strict definition of that, we could, again, waste a lot of time and effort.

Now, some of the information I'm going to present was actually published in 1993, but I think it's worth reminding you. We did a study whereby in 1990 we went back in our freezers and tested 29,000 units of blood that had been transfused before the hepatitis C test was available. We wanted to identify units and then notify recipients, through their physicians, of units of blood, not which we thought might have been positive for the test, but which we knew were positive for the test for hepatitis C because we had actually tested those units, albeit in retrospect, after the tests became available.

We worked through the physicians in the community, and we asked them to notify at least three times those recipients to get them to be tested. An average of seven months after getting to those people, we found the following: Forty-seven percent of them had already died of their underlying disease; 19.6 percent of them agreed to be tested; 19 percent of them said, I don't want to be tested. I am afraid, I'm angry, you've upset me, and you've taken away my right not to know this; 12 percent of them, despite repeated efforts, would not respond; 3 percent were unlocatable, even an average of seven months after; and 1.4 percent couldn't give consent.

So my point is, even at that very rapid time period, we were unable to locate many, many patients. Forty-seven percent of them had died of their underlying disease, and 31 percent did not want to be tested, as opposed to only 19.6 percent who did.

The other point I would like to end with is basically the point that Dr. Davey and Mary also mentioned. We are wasting a lot of time and effort on this 7 percent of people who got transfused. I really hope we're going to devote an equivalent amount of time and resources to the 93 percent of people who got this disease by other means and also that HCFA or someone will appropriate the appropriate funds to treat these patients. Because just to find them and identify them is not going to do a lot of good, unless you make the commitment to treat them and take care of them.

Thank you for your attention.

MR. CAVANAUGH: Hi. I'm Dave Cavanaugh with the Committee of Ten Thousand. I'm sorry I didn't catch your note before about signalling anybody in the alphabetical order because I was kind of shocked at the previous statement--I was writing it down--which was that it was on the public comments on HCV lookback that we first imposed a time limit on speakers at this meeting.

We've heard reports from AABB and CDC on the range of activities now underway. But we, at the committee, are seriously concerned about the hepatitis C lookback. We're dismayed by the lack of timely implementation and what still appears to be stall tactics by representatives of the blood banking industry.

The time for debate and discussion has long passed, yet we are told here that only a few thousand individuals have so far been contacted under the current targeted lookback. This is nine full years after the licensure of the first-generation HCV antibody test. We continue to contend that if a pathogen is dangerous to screen for, then it must be dangerous enough to warrant lookback and notification of those who were exposed. However, the debate continues, and the action that is ethically and morally imperative, largely has yet to be officially undertaken. One has to ask the question, why?

Over the past year, we have heard many reasons why the lookback was never undertaken. From our perspective, it is time for a history lesson, as some members of the government and the industry seem to have forgotten certain germane facts.

We have repeatedly been told that a primary reason for not undertaking lookback was the lack of any treatment for HCV during the first five years of the 1990s. We find this perplexing when, as many of you already known, Interferon was licensed as a treatment for hep C in February of '91, less than one year after the validation of the HCV antibody test, the so-called RIBA-1. In fact, the first studies published on the usage of Interferon as a treatment for HCV appeared in the NewEnglandJournal in 1988, a significantly different picture than the one that has been painted before this committee.

It is also interesting to note that, like the situation described by representatives of the Stanford University Blood Bank at the February meeting of this committee, discussions were undertaken at individual blood banks regarding HCV and notification during the 1990s. However, in every instance we are aware of, the groups that met and decided not to lookback were comprised of doctors and blood bank officials. No consumers of blood were ever party to these meetings, where critical decisions regarding notification were undertaken. The very people who stood to lose the most by not undertaking lookback had absolutely no voice or role in these decisions that had such significant consequences for their lives.

We find this rewrite of history appalling, and the continued foot dragging equally violative of FDA's goal of increasing public confidence in the blood supply.

Before we ever get to the question of available treatments for HCV, we must address the ethical issue of right to know. That right was abrogated, trampled and ignored by those in decision-making positions in the blood banking industry in the Federal Government. In fact, in many instances, the right to know was essentially dismissed by those discussing the desirability of initiating HCV lookback. In essence, another risk-benefit analysis was done on behalf of individuals who had no idea their future was being discussed and decisions were being taken that could potentially have life or death consequences.

This makes a mockery of the issue of trust and is absolutely unacceptable. How are citizens to trust those in the blood industry and the government officials who regulate if basic rights are not respected, and the health and well being of the consumers of blood is not the priority driving decisions?

This obviously leads to the question, what is the driving priority? In this instance, all roads lead to liability, fear of civil liability exposure. It is time we end the facade and address what is clearly the unspoken underlying problem here, liability and fear of monetary exposure. We all know it. We just never honestly discussed it as a prime element in decisions such as HCV lookback. There hasn't been an HIV lookback..

We are questioning compromises such as the ones made regarding the targeted lookback, which we all expected to begin moving in a timely fashion once the compromises were ironed out. However, we were sadly mistaken, as this is not what has occurred.

Nine years after we began screening for HCV, we are still discussing lookback. We appreciate the new guidance's specification of indefinite lookback where practical, but we still must ask can anyone claim the industry and government have moved with even a modicum of timeliness? We think not, and we will continue, as we have since 1995, to aggressively push for full disclosure through lookback and notification.

In 1990, the records were being stored in a manner hardly to be readily accessible a decade later. So the problems that are being encountered were understood beforehand.

We commend Harold Margolis and Miriam Alter for what appears to be an excellent public media campaign regarding those exposed to HCV, tainted blood and blood components and for the residents of the two-month pilot program in Chicago and Washington, D.C. It appears that it will be effective. However, it also appears that senior HHS officials chose not to seek funding for the entire campaign publicly. And if friends in Congress do not aid them, then the good work done on the notification of those exposed to HCV-adulterated blood nationwide will die on the shelf, except for a few PSAs that may be aired in some markets in the traditional 2:00 to 5:00 a.m. PSA time slot.

At the end of the day, when all is said and done, this country's record on lookback and notification is appalling. There is no other conclusion possible, when one really digests the facts--not the rhetoric and the excuses, but the facts. The real story of years of hep C being transmitted through this country's blood supply and that transmission being allowed to continue unabated well into the late 1980s, well beyond the time when we understood what happened with HIV and blood and the devastation that transmission visited upon almost 20,000 Americans: Forty-five hundred persons with hemophilia are dead, more dying each and every day, not to mention those who have died and are dying from transfusion-associated AIDS.

And what have we learned? For us, HCV lookback represents a litmus test for the lessons of the 1980s. It appears to us that we have failed the litmus and are operating in a climate where liability and monetary exposure remain their prioritized position in the decision-making process.

Thank you.

CHAIRMAN CAPLAN: Let's open the floor up for discussion on these comments and see if we have any beginning discussion points to go to by committee members.

DR. KUHN: In listening to the revisions of the guidance, I'd like to have a little bit more clarification. It seems that there are revisions to the September 1998 HCV lookback and the reasons for extending the completion dates. And I would like to just hear someone kind of summarize. I hear one of them is an issue probably based on indefinite record review. But are there other reasons why there may have been an extension in this? I'm just trying to get clarification here.

DR. MEADE: I think the only extension in the dates in the new revised guidance was, rather than completing the notification, the consigning notification for EIA 2.0 and 3.0 by March 23, 2000, we've given another six months, to September 30, 2000, because now that record search is extended back indefinitely. Other than that, the dates that were set forth in the September guidance have been unchanged. But now there are new ones because of the 1.0 lookback.

CHAIRMAN CAPLAN: While you're up there, just I had a question about this. I don't think I followed what you said about the reason for moving from the '88 date cutoff to the indefinite. It was that the Agency felt it had a kind of authority issue in terms of going back past the time when the regulation was issued? What's the--

DR. MEADE: Are you talking about the 2.0 and 3.0?

CHAIRMAN CAPLAN: Uh-huh. Uh-huh.

DR. MEADE: Which had previously been set as a ten-year retrospective record search to January 1st of '88.

CHAIRMAN CAPLAN: Uh-huh.

DR. MEADE: It was necessary to make the record search extend for EIA 1.0 beyond 1988 because you would have only had a one-year lookback if we had stuck to that date for 1.0. So having made the decision to go back indefinitely in records search for 1.0, we did the same thing for EIA 2.0 and 3.0.

We went beyond the January 1, 1988, date that had previously been set for several reasons; one of which was consistency with the EIA 1.0 indefinite record search so that you wouldn't be searching records back different lengths of time, depending upon what the screening test was that was used, and secondly, when you look at it another way, that an at-risk recipient is an at-risk recipient who should be notified, regardless of what screening test was recently used upon the donor and found to be repeatedly reactive.

For example, a recipient who was transfused in 1984 and 1985 and the donor has recently been found to be repeatedly reactive using an EIA 3.0 test, that at-risk recipient should be notified, just as he should be if it was an EIO 1.0 repeat reactive that first surfaced the donor's problem. So for those reasons, we extended it indefinitely for 2.0 and 3.0, also.

DR. AuBUCHON: Maybe the calendars in Washington look a little different than the calendar I use in New England, but HCV 1.0 testing began in May of 1990. And to go back to January 1 of '88 would be almost 2 1/2 years, correct?

DR. MEADE: Correct.

DR. AuBUCHON: Now, you said one year in your comments, Paul.

DR. KUHN: Yes, that's right.

DR. MEADE: Well, yeah, see, it was originally, when the guidance issued in 1998, we said January 1st of '88 because that was a ten-year--

DR. AuBUCHON: Correct.

DR. MEADE: Okay. So what we're thinking of really is, you are right, it's 2 1/2 years for EIA 1.0 from the time it was licensed to January 1, 1988. But if we now look at a current lookback, for a donor whose current repeatedly reactive test, using an EIA 3.0, if we look back ten years now for that person, you are talking about 1989.

DR. AuBUCHON: Correct. And I do appreciate that the Agency is going to define more precisely what "readily retrievable" is. Blood centers generally, at least in my experience, have better record-keeping systems than most hospitals or they implemented more effective record-keeping systems earlier, I guess I should say. And so blood centers can go back quite a ways. I don't know precisely how far.

My hospital is blessed with a very complete record-keeping system, and I can probably identify most transfusion recipients back to World War II, and I imagine that my blood center can probably make a stab at pretty close to that as well, at least back to the late 1950s. By "readily retrievable," everything is in a warehouse, and if we put enough people in it, we'll come up with those paper records, and if we put enough time and effort into it, we can identify all of those people.

What I may think is readily retrievable may not be what somebody else thinks is readily retrievable. So it would be very helpful to have a very precise definition.

DR. MEADE: Understood. And we intend to do that. The intent here was not to cause record searches that go on and on in old warehouses and stacks of boxes and just become an enormous burden. That was not the intention. We really do mean that the records should be readily retrievable. Whatever that means still needs to be defined.

[Laughter.]

CHAIRMAN CAPLAN: If the boxes are in Jim's garage?

[Laughter.]

DR. MEADE: Maybe. Perhaps. We did use some language elsewhere in the guidance--I think it's on page 10--that talks about "To improve the effectiveness of these activities, blood establishments, from henceforth, should maintain adequate records for at least ten years and maintain these records in such a manner which permits their rapid retrieval; for example, within five working days."

Now, I don't know that that's the yardstick we're going to apply to "readily retrievable" when we define it, but that language is in there and may be helpful.

CHAIRMAN CAPLAN: Other questions, comments?

I'm going to ask if anybody wants to make any motions on this subject. We may not, given the way discussion has gone about attempts to clarify the way that these regulations came out. But are there any?

DR. AuBUCHON: I would like to move that the committee recommends that the Secretary direct the FDA to construct the HCV lookback--continue to construct the HCV lookback along the prior recommendations of this committee or in accordance with the prior recommendations of this committee.

CHAIRMAN CAPLAN: Second?

DR. PILIAVIN: Second.

CHAIRMAN CAPLAN: I have a feeling this won't take much discussion, but discussion?

[No response.]

CHAIRMAN CAPLAN: I think we've got the language pretty clear. So why don't we move a vote on this one, and then we can probably see whether we're going to be able to get to our bathroom break. How's that for an incentive?

[Laughter.]

CHAIRMAN CAPLAN: All in favor of the motion to reiterate that the lookback be done in accordance with our recommendations, please say aye or raise your hand.

[Show of hands.]

DR. NIGHTINGALE: Ten.

CHAIRMAN CAPLAN: Opposed? Hands up.

[Show of hands.]

DR. NIGHTINGALE: One hand up.

CHAIRMAN CAPLAN: Abstain?

[Show of hands.]

DR. NIGHTINGALE: One.

CHAIRMAN CAPLAN: All right. We will take a ten-minute break. When we come back, I'm going to go the next fascist imposition of a rule, which is trying to go five minutes on the reimbursement issues for people to offer comments, and then we'll come back to the tabled motion.

[Recess.]

CHAIRMAN CAPLAN: I've concocted, during the break, a strategy for the testimony that I hope will be a productive use of our time.

Since we were talking about some of the reimbursement issues that pertained to certain specific APC codes, actually, I'd like to ask people who want to offer public comment to address the tabled motion. What was that tabled motion, again?

DR. NIGHTINGALE: I think Mac had it. I'm not sure.

CHAIRMAN CAPLAN: This is the one that is on biological therapies resolution. We also have copies sitting in front of us that Mr. Walsh put before us. It basically calls for the Secretary to exercise statutory authority to exclude plasma-based therapies, and we're trying to decide, if you remember, whether to add to that other types of blood and blood products.

So what I want the testimony to do is, if it's relevant to the reimbursement question on this tabled resolution that I'd like to get us to decide or move forward on, let's hear that first concisely. I think most of the people who are going to present actually are going to do it in two parts, anyway. Then we'll come back to the other issue after we move the tabled motion along.

Do people with public comment understand which way I'm going here? All right. Why don't we do AABB first?

MS. LAUERHASS: Sorry. Hi. Again, my name is Theresa Lauerhass, and I'm here speaking on behalf of the American Association of Blood Banks, and I'm just going to give you a few comments about our position about HCFA's proposal to establish an outpatient prospective payment system, in particular, its treatment of blood therapies under APC 369. But later you'll hear from AABB's President-elect Paul Ness, who will share with you the blood banking and transfusion medicine community's broader concerns regarding inpatient reimbursement for blood therapies and, in particular, the need to account for new emerging technologies.

Starting out on APC 369, AABB has several concerns about the treatment of blood therapies, and in particular, we believe that APC 369 would hinder patient access to high-quality transfusion therapies, including several high-cost procedures used to treat serious diseases. It will impede the development of new life-saving technologies in that the proposal does not account for frequent updates of the APC proposal. And sort of as a general principle and why we're speaking to you as the Blood Safety and Availability Committee, we believe APC 369 as currently drafted stands in direct contradiction to our national priority, that is, to assure broad access to the safest possible blood products and services.

Next overhead?

As you've heard some or you may have seen, APC 369 includes a variety of very diverse services both in terms of cost and clinical characteristics, and this diversity we believe violates the Balanced Budget Act requirement that services bundled under an individual APC be both alike in terms of cost and in clinical characteristics.

One striking example, as reflected on this chart here, is that it includes services that have median costs ranging from $18 all the way up to $1,673. Clearly, I think that shows that you're not talking about similar services in this one bundled category.

Next slide?

In addition, we believe that many of the relevant costs of providing blood therapies under APC 369, which ranges from your average--or your different types of transfusions to different pheresis procedures to stem cell collection, that all of these are missing certain relevant costs. In creating the APCs, HCFA is supposed to be including a variety of relevant costs, which include not only the cost of providing the service in terms of staff time, equipment, departmental and institutional overhead and supplies, but also the cost of all relevant blood components and other products used to provide the services to the patients.

Again, we don't fund the $325 proposed payment. It clearly appears that many of these costs are not included in the proposed payment. And in analyzing the proposal, we have been assisted by a well-respected health care economic analyst, Don Muse, of Muse & Associations, who formerly worked with the Congressional Budget Office as well as HCFA. And together we have come up with--although it's not totally clear because we don't have all of the figures that HCFA used in creating and establishing the proposed payment, but from what we could garner, we've come up with several possible reasons for why the $325 payment is not sufficient. Among those reasons--Anita Ducca spoke yesterday in terms of 906 also--is that HCFA used an unrepresentative sample. It only used approximately 45 percent of the available CPT claims data for APC 369, and thus we believe they most likely excluded some of the more complicated and as costly procedures in calculating their cost payments.

In addition, we strongly believe that the proposed payment of $325 does not include all the relevant costs for providing these procedures. In particular, we believe that the cost of providing certain products was excluded, and the most striking example, again, of that is in certain apheresis procedures, $325 is not even half of the amount that it costs to provide the replacement fluid product for these procedures, and, therefore, we think that that cost needs to be reassessed to reflect the cost of the product.

In addition, HCFA has labeled many services as incidental. Approximately $29.1 million of incidental services that are, in fact, relevant and critical in providing the services were misallocated and not included in the cost, the proposed $329.

In addition, analyzing HCFA's own data, Muse & Associates has determined that HCFA has allocated a vast sum of money stemming from blood general revenue costs to other APCs, and the next slide demonstrates that.

As you can see, the vast majority of blood-related coding costs have now--instead of being directly allocated to APC 369, we believe that they have been misallocated to other APCs.

Now, a response to that may be that, well, one way or another the hospital is going to be reimbursed for these costs. But we believe that the costs need to be specified in connection with the transfusion services that they are associated with, particularly in a case of high-cost procedures using, again, apheresis as an example, that not all hospitals provide, so misallocating it broadly across the board is going to--could end up hurting those hospitals that are serving seriously ill patients who require life-saving services.

The next slide, please?

Quickly, the AABB has two additional concerns, overarching concerns with the proposal. One is that under the PPS proposal blood services are treated in a category so that multiple services--or when services are performed in conjunction with other procedures, the second coding would be reimbursed at only 50 percent of the $325 amount. In addition, we think that the system is lacking frequent enough updates. We believe that the APCs need to be revised to account for new technologies, particularly in the area of blood where things are evolving so quickly and the advancements are so critical to patients.

Next slide?

In conclusion, I think that these recommendations can be connected to the discussion the committee was having earlier this morning about the proposed resolution. AABB suggests that the following revisions to the outpatient PPS be made:

First, we believe that separate APCs should be created for more costly services such as plasma or cell exchange, photopheresis, and stem cell collection, i.e., they should be separated from your other transfusion services.

Secondly, we would recommend that blood products and components be reimbursed separately from the costs of related services.

Third, again, we would ask that the proposal be revised so that blood services are always given 100 percent of reimbursement, even if there are multiple procedures.

And then, lastly, we would ask for at least annual reviews and updates of payments to reflect new technologies as soon as they come on the market and are available to provide patients with better care.

CHAIRMAN CAPLAN: Thanks. Why don't we hold questions and go right to America's Blood Centers that is up next.

MR. : I'm from America's Blood Centers, but I'm here to talk about--

CHAIRMAN CAPLAN: More general, okay.

MR. : Yes, the PPS rather than APC.

CHAIRMAN CAPLAN: The Red Cross must be up next.

MS. DUCCA: Good morning. Again, my name is Anita Ducca. I'm the Director for Regulatory Relations at American Red Cross Biomedical Services, and I wish to thank the committee for this opportunity to speak once again.

We'll make our comments today a little bit briefer than yesterday. AABB has done a good job of explaining some of these concerns. We're here specifically to talk about APC 369, which grouped several different forms of blood therapies into one APC.

Next slide, please?

Just to demonstrate, the American Red Cross is involved in all of these forms of blood-related services. Yesterday we talked about infusion therapy. There are several additional services, and I'm going to talk about in particular therapeutic apheresis today. We also do stem cell collection. We will actually go into the hospital and perform these services under a contractual arrangement for stem cell collection therapeutic apheresis and transfusion services. But in the interest of brevity, I'm just going to highlight the therapeutic apheresis just to give you an example of how we operate and what the associated charges to hospitals are for this procedure.

Next slide?

As we did yesterday, we selected the examples of a 70-kilogram patient. Therapeutic apheresis, this process works--the patient comes in, they are hooked up to the equipment. The units are replaced. In this case, a sickle cell anemia case, approximately seven units of leukoreduced red blood cells would be used during this procedure.

When Red Cross conducts this procedure in a hospital outpatient setting, they have a charge that they charge the hospital for the service, and then we have added into that the amount of the average service charge plus the product charge, and together to perform that service it's a minimum cost of $1,646. APC 369 plans to reimburse at $325. So as you can see, there's a big difference between what it takes to perform the service plus the product and what we would be reimbursed under this regulation. This, again, is a minimum loss because it doesn't include the overhead charge in that total there.

We have found, you know, it's similar throughout the other therapeutic apheresis and some of the other procedures that we do, similar data occurs. So we are convinced that the $325 just isn't going to begin to cover what our needs or--or, I should say, what the patient's needs are.

Can we have the last slide, please?

We need to look at 369 again, we've advised to HCFA in our public comment letter. I think the concerns that we expressed yesterday about delivery of therapies in outpatient departments, that certainly carries over for blood-related therapies as well. We simply don't want a disruption of how that operates in outpatient departments.

We urge adopting consistent, equitable reimbursement practices for all patients. There are going to be a variety of clinical requirements, but, you know, when you see similarities, I don't think you can have a reimbursement system that sets up two tiers of who gets paid and who doesn't.

Finally, we urge fostering reimbursement policies that are consistent with and recognize the public's expectation for only the safest possible blood supply. Certainly you've got FDA and other agencies--they're the regulatory side of things, but there's also that public expectation that you're going to continue your research and development, continue to improve safety, and we certainly need reimbursement policies that are going to match that.

That concludes what I'm prepared to say this morning. If there's any other questions, I'll be happy to take them.

CHAIRMAN CAPLAN: Okay. Thank you.

Any other public testimony right on this particular issue?

DR. HOLLAND: Again, I'm Paul Holland from the Sacramento Blood Center. We provide over 1,000 therapeutic pheresis procedures a year to our community. These are done either as outpatients at our blood center, as outpatients in the hospitals, or as inpatients if necessary. In general, doing these procedures as outpatients is more cost-effective, and most patients prefer them rather than be hospitalized.

However, as you've heard, HCFA Is proposing under this 369 to reimburse us 10 to 25 percent of our costs, and clearly we can't do that. We would go broke, and we either have to stop doing these procedures, especially as outpatients, or find another solution.

You've heard some of the solutions, but it sounds like many of them are not going to work, or HCFA is not going to accept them. Therefore, we need to think of some other solution.

What's the problem to get these patients with sickle cell disease or progenitor cell collections or Guillain-Barre to get their therapeutic pheresis performed? We need to balance the budget. We need to provide money for these expensive but very good therapies which really improve patient care.

I'd like to propose an alternative solution. I would like to propose that we pay the staff at HCFA 10 to 25 percent of their salaries. If that isn't enough, then we'll extend it to HHS and all of the government. Think of it. Now, to be fair, we'll pay the higher-paid people 10 percent of their salaries and the lower-paid people 25 percent. We'd save a lot of money on salaries.

Now, a lot of HCFA people may quit their jobs because they can't pay their mortgages, they can't feed their families. But that's great. We'll lose even more employees. We'll save even more money. And we can use that money to pay for health care.

Ridiculous? Maybe. But we are being asked to do exactly that. We have to pay our bills. We have to pay our mortgages. We have to pay our employees. We have to buy the tests. And we cannot do it in a negative cash flow and certainly exist very long. We can't have a huge budget excess--excuse me, a huge budget where we keep spending money like the Federal Government does and doesn't really care how much money it builds up in terms of loans. Our loans come from banks, and they want them paid back. We can't continue to exist this way. We need to get adequately reimbursed for these procedures based upon what they cost. If they don't believe what they cost, our cost anything, I invite them to come and see. We will show them very carefully what our cost accounting is.

Thank you for your attention.

CHAIRMAN CAPLAN: All right. If that's it for public comment, let's get back to the tabled motion. While he's coming up there, remember, there's really two questions out there. One is the resolution that John proposed. There's a second resolution which we could marry to it that Dr. AuBuchon proposed. And we had begun a discussion of whether we thought we wanted to put them together or treat them separately. So that's the question that's before us now.

Jim?

DR. AuBUCHON: I'm well beyond my knowledge in parliamentary procedure here, but can I amend an amendment?

CHAIRMAN CAPLAN: Sure. You're asking the right guy.

DR. AuBUCHON: I was considering a different motion entirely, but perhaps just adding this additional "whereas" clause to the existing motion in addition to including "human-derived biologicals" where we had previously put it would encompass what we're talking about here to broaden the motion as originally made to include all of what has been discussed this morning.

CHAIRMAN CAPLAN: So that's just to insert another whereas basically on the Walsh proposal.

MR. WALSH: Mr. Chairman, we might want to put a reference to APC 906 in the language of the original motion. 906 and 907, is it?

CHAIRMAN CAPLAN: We can do that. We don't have to do it up here, but we'll--we got that.

Does this amendment need a second? I guess it does.

DR. GUERRA: Second.

CHAIRMAN CAPLAN: Discussion?

[No response.]

DR. NIGHTINGALE: Vote on the amended amendment.

CHAIRMAN CAPLAN: All right. Why don't we move a vote on the amended amendment to the Walsh motion? So you are now voting on a four-part whereases with the same text conclusion that you've got in front of you on this piece of paper. That's an additional clause justifying this recommendation to revisit the APC reimbursement as it's presently constituted and asking the Secretary to exercise the statutory authority to exclude. That's what we're talking about here.

All in favor?

[A show of hands.]

DR. NIGHTINGALE: Unanimous.

CHAIRMAN CAPLAN: Okay.

DR. NIGHTINGALE: Now you want to vote on the amended amendment.

CHAIRMAN CAPLAN: Why don't we just do that?

DR. NIGHTINGALE: We voted on the amendment--if I am--

DR. PILIAVIN: We voted on the amendment.

DR. NIGHTINGALE: The amendment as amended was unanimous.

CHAIRMAN CAPLAN: Yes.

DR. NIGHTINGALE: Now we're voting on the motion itself.

CHAIRMAN CAPLAN: Right. Okay. So we added the amendment. This is just procedural. We added your amendment to the Walsh proposal. Now we're going to vote the whole proposal again?

DR. AuBUCHON: Just a point of clarification. Did my now-passed amendment include the phrase "human-derived biologicals" in the--

DR. PILIAVIN: Yes.

DR. AuBUCHON: Okay. Thank you.

CHAIRMAN CAPLAN: And it has 906 in there, too, which we didn't put upon the board but we will.

All right. Now, all in favor of the motion as amended--

MR. WALSH: Excuse me. Discussion, please? When you said--Dr. AuBuchon, I thought we took that "human-derived biologicals" out, your first motion?

DR. PILIAVIN: We put it back in again.

MR. WALSH: I'm sorry. We would like this last--I would like, as having made the motion, and the consensus of the industry and consumer communities is that this be specific to plasma-based therapies, recombinant analogues, and biological alternatives for this paragraph. Don't you feel you're adequately covered on your 369 with the--

DR. AuBUCHON: Well, then the--if you don't wish to see the bottom paragraph include the 369 items, then either we need to take out the "whereas" that we put in about 369--

MR. WALSH: No. Leave that "whereas" in, but let's put another paragraph. I'd just like to keep the two separate as we can so that they can be--you know, I just don't want to water the plasma therapies down. But we certainly want to support your intention.

DR. AuBUCHON: Well, then, give me a second to come up--

MR. WALSH: Okay.

DR. AuBUCHON: Would you object to that? Or we could just take the "whereas" out that we put in and I can offer a completely different resolution.

DR. NIGHTINGALE: This is Steve Nightingale. Let me suggest that the record is getting complicated.

This is a substantive point. The record of the committee needs to be unequivocal. What I'm going to ask the committee to consider is to stop here and put on the floor the motion that they want the Secretary to read and make it as clear as you possibly can. If there is any ambivalence, if there is any equivocation in that resolution, it will impair the progress of the resolution, I assure you.

DR. AuBUCHON: Well, therefore, let me--if I could offer a further amendment, which will add a new "therefore" clause, we can keep the "whereas" clause in place. We could have the three "whereases" up there, followed by the "hereby" clause, followed by the "whereas" clause--I'm sorry--yeah, that we had just approved--

MR. WALSH: Right.

DR. AuBUCHON: --followed by the following "therefore" clause.

MR. WALSH: Okay.

CHAIRMAN CAPLAN: Let her read that.

[Laughter.]

CHAIRMAN CAPLAN: That could be a logic example.

DR. AuBUCHON: I was just trying to keep it simple, but--

CHAIRMAN CAPLAN: But we understood you.

We've approved the top "whereas" as an amendment. Now we're talking about amending the resolution to include as a separate paragraph from the one you've got, the committee recommends the Secretary use her existing authority to exclude these therapies, et cetera, et cetera.

DR. AuBUCHON: And we would remove the phrase "human-derived biologicals" from the first "therefore" clause.

CHAIRMAN CAPLAN: Everybody follow? Discussion? Everybody clear about what's being asked as the amendment now?

DR. DAVEY: If we can just name them Section 1 and Section 2?

CHAIRMAN CAPLAN: Yes. Now, voting. The first vote is to accept this amendment to the motion. All in favor?

[A show of hands.]

CHAIRMAN CAPLAN: Opposed?

[A show of hands.]

CHAIRMAN CAPLAN: Okay. Give me a motion to move the now amended motion, the complete one, Section 1 and 2. Do I hear a motion to move that?

MR. WALSH: So moved.

CHAIRMAN CAPLAN: Second?

DR. PILIAVIN: Second.

CHAIRMAN CAPLAN: All in favor of the Walsh proposal as now doubly amended? In favor, hands up?

[A show of hands.]

CHAIRMAN CAPLAN: Opposed?

[No response.]

CHAIRMAN CAPLAN: So I think we got that pretty clear. The 906 goes in there, too.

Okay, good. This may be time for you to say something about--remember you were going to say a few words of--

DR. NIGHTINGALE: I do remember.

CHAIRMAN CAPLAN: A few words of woe.

DR. NIGHTINGALE: Not woe at all. Words of thanks. As we are approaching the last agenda item on this meeting, we are also approaching the last agenda item for the seven members of the committee whose terms will expire on September 30th of this year. The process of renomination and reappointment, appointment of new members is in process right now within the department, and I cannot comment further on it at that time. But what I can comment on is the appreciation for which I speak on behalf of the Secretary, Dr. Satcher, the Surgeon General and Assistant Secretary of Health, and Dr. Lurie and the staff, and Captain McMurtry and myself, not only for the seven members whose terms have expired, but for all the members of the committee.

This has been a very productive two-plus years in our view, and it would not have been so productive without your efforts. We want to say thank you. I could say thank you several different times over again, but we mean that very sincerely. And we have been pleased and proud to have been associated with you and look forward to our continuing association with you all in one form or another. Thanks.

CHAIRMAN CAPLAN: What we're going to do, I think there are still some motions that may want to be put on the table about dealing with shortage. I don't think there's other things that I've been told about. So we'll go on our lunch break and listen to those first, then come back to the final item of--who do we have to hear from?

DR. NIGHTINGALE: HCFA.

CHAIRMAN CAPLAN: Oh, HCFA on the financing. Okay. Well, we'll hear that. Why don't we hear that and then go on our lunch break?

MR. : Also, Dr. Rossiter has a 1:30 appointment.

CHAIRMAN CAPLAN: We'll hear from HCFA. Then we're going to go to lunch, because otherwise we're going to get quite cockamamie here. So let's have a HCFA presentation. We'll listen to that. In fairness, then, we'll try and get the other people out of here faster because we'll be back by 1:00 and hear the rest of the presentations on the finance issue, and then I'll the shortage motions. We'll do them all the way at the end then. We'll get to them, but we'll just do them at the end of the things. Okay. Let's do it.

MS. EDWARDS: Does Dr. Nightingale have a comment?

CHAIRMAN CAPLAN: He's so weepy from his emotional good-bye there. He barely can--

[Laughter.]

DR. NIGHTINGALE: Yes. As was noted in the Secretary's letter, we were to expect a presentation on the issue, particularly from the Medicare perspective, and to give that presentation will be Dr. Nancy Edwards. She is the Acting Deputy Director of the Plan & Provider Purchasing Policy Group of the Center for Health Plans and Providers of HCFA, and I know I got some of that wrong, Nancy, and I apologize.

MS. EDWARDS: Well, the first thing you got wrong is that I'm a doctor. So we'll just let that go.

Good afternoon, almost. I want to thank you for asking us to come down and talk to you all because I think there's--you've heard from a lot of the blood industry folks, and I think it's time to hear just a little bit about what HCFA is planning to do or what it has done. And Steve has asked me to kind of just briefly speak about what Medicare is and what it pays for, because I think there is some misunderstanding about--people think of it as a federal program, but it's a relatively--it's a federal program limited to just a certain set of beneficiaries, which are not all the patients in the country.

Medicare is implemented by the Health Care Financing Administration. Medicaid is implemented by states, and we help pay for the costs that the states incur in their Medicaid programs. But those programs are much more in the control of the states than HCFA. We have some general guidelines we give, but our role is helping finance the states to finance their programs.

But the Medicare program is much more directly implemented by us, and one thing I want to make clear is virtually everything we do in payment is dictated by the statute. It's dictated by Congress. It is not HCFA kind of taking a hunk of money and trying to figure out what to do with it. It is Congress appropriating money to us. It's the Medicare trust fund from which we follow the rules of Congress to try to pay for all these services.

So if someone is interested in only paying 10 to 25 percent of a salary, it's your Congressman, not HCFA, that you should be looking at, because they have set the rules for both inpatient and outpatient hospital policy.

I have actually been in charge of the inpatient policy for years. I have recently also taken over the outpatient as it has become a more prospective payment type system.

Medicare does--I believe their beneficiaries use up approximately 50 percent of the blood products that are available. Now, obviously, they're patients who are 65 and over and people who are too disabled to work anymore. And, generally, this is a population that is in the hospital a lot, is ill, and needs a lot of services.

The hospital inpatient setting is where a fair amount of these services are given. That has been under a prospective payment system for 16 years now, and under that service we bundle virtually everything, everything we pay to a hospital for a patient's stay in the hospital, into a diagnosis-related group. And it's similar to what you've heard a lot about, the APCs. The patients are clinically similar and the patients are also supposed to consume a relatively similar amount of resource use through the hospital.

There are currently about 500 DRGs. It did not start out quite that many, but over the years it's evolved.

In 1989, Congress passed a law that allowed blood clotting factor to be paid outside the inpatient setting, and every year we set payment rates for those. The DRGs are revised annually by HCFA. Some of that involve moving services from one DRG to another, creating new DRGs, getting rid of DRGs that seem no longer relevant, and moving those services into other DRGs.

We also recalibrate the DRG weights. The weights are what dictate how much payment is. We do that annually also. We do it based on the latest data we have, which is the year before--the year before we're calculating the rates--and it's based strictly on the hospital's charges, the charges they send to us on the bills. So we feel pretty confident that the amounts we're paying under the DRGs are sufficient based on the charges the hospitals are sending in.

Now I'll quickly move to the hospital outpatient so we can all get to lunch.

Hospital outpatient since the beginning of the Medicare program, over 30 years ago, has been on a reasonable cost basis, which is just what it sounds like: the costs the hospital have, as long as they're reasonable, HCFA just gives them the money for it. Of course, they have to go through an elaborate cost reporting system about this. It's not quite as simple as it sounds. But they have had two things. In the claims they send to us, they have had no incentive to code the actual services they give because we're paying them on an interim basis based on those bills, but in the end the costs they put on their cost report are what we are going to pay. So it doesn't matter how you billed these services you were doing.

The second thing is that by paying reasonable cost, hospitals have had not had much incentive to act as efficiently as they possibly can. Now, that was under the in--the original thought under the inpatient system was if you set a payment up front, hospitals will understand how much money they're going to get for a particular service or patient, and they will efficiently figure out how to buy the services they need from outside the hospital to service this patient or this service that comes in.

We've been working on the hospital outpatient system since about 1986 when Congress first asked us to look at it. We did not give them a report until the mid-1990s, and soon thereafter in the Balanced Budget Act they passed a law describing the type of hospital outpatient system they wanted HCFA to implement for Medicare beneficiaries. This system dictated to us that we had to use the actual claims and data from 1996 for Medicare beneficiaries that hospitals had sent to us, that we would pay on the basis of services or groups of services, there would be weights assigned to those services, and there would be what is called a conversion factor or a payment rate that is used to multiply the weights by the payment rate to get the payment rate to the hospital for the service.

We had earlier developed the APGs, ambulatory patient groups. We modified those into the APCs, which are what was published in the proposed rule that we finally put out last September. The APCs, similar to the DRGs, are designed to group clinically similar services that are also similar in terms of resource use.

We published this proposed rule last September. We had a series of comment period extensions which only just ended last month, the end of the month.

Originally, Congress has asked us to implement this program by January 1, 1999. By the time we got our program together, we had run up against HCFA's need to make their systems Y2K compliant, so we made a decision within HCFA that putting in place a hospital outpatient program with all the various changes it's going to mean to hospitals and HCFA and all the different systems that will have to be changed, we decided to put it off until after January 1, 2000. We still plan to implement as soon as possible after that date, although I believe HCFA has said they probably won't do anything until at least April 1st. So it will be somewhere after that.

We have spent these last ten months during the comment period meeting with virtually every industry group, you know, in the country who has an interest in these APCs. We met with several of the groups who have spoken here. They have given us all their data, information, their concerns, their worries, and HCFA has been actively working on those comments even before the end of the comment period. We have done some contract work to have people go out and look at what's in our data so we can make it better. We have done a lot of work among the APCs themselves, like looking at each APC to see if it can be better formulated if certain procedures in APCs should be moved to other APCs, if we should create new APCs, and I think I can say confidently here that when we publish the final rule, which will probably be sometime the end of this year, you will see a very different set of APCs.

We are looking at every single one, but in particular, we are looking at the APCs that we have received the most comment on. And certainly 369 and 906 are two of those APCs.

This includes going back to our data trying to figure out how we can get things better into groups, going even back to before that, and one comment you saw was on the general revenue centers. We're making sure we've done that correctly. We have called in--we have several doctors at HCFA that we use to help us figure out what the correct clinical choices should be.

I honestly think that, to a large extent, we plan to--I don't want to say solve the problem because there's a certain amount of lack of money to begin with, but that we will ameliorate the problem the best we can on the blood APCs.

Now, one other thing you had talked about was new technology. We also plan to do a lot of work on APCs for new technology, and just because there are blood APCs does not mean that new blood technology may not go into technology DRGs--or APCs, sorry, until we get some actual cost data in hand and can decide what kind of APC to create for them, or if there's an APC out there that works for them.

One thing I need to say is HCFA is not inclined in any way to do a cost pass-through. The blood industry has asked for a cost pass-through, but so has virtually every single other industry. Everyone has a problem with some set of APCs. Every specialty group has some procedure they believe is going to be vastly underpaid.

Our theory on this cost pass-through is that if you do a cost pass-through, you end up with two problems. Number one, hospitals will not need to fill out their claims correctly with the correct codes on them as long as they're getting a cost pass-through, because that will be done, you know, through the cost report as opposed to through the claims. Second, to continue any kind of cost reimbursement does not put the right incentives on hospitals to manage their finances to most efficiently buy the services they need.

Now, saying that, HCFA understands that it only has one year of data, 1996, and many things have happened since then. The data is only as good as hospitals provided to us, and we understand, even if we do the best set of APCs we can, there are going to be hospitals who are going to end up not making as much money under the new system or not being able to maintain the same reimbursement level they had as under the old system. So HCFA is actively figuring out what kind of a transition policy we can have to protect those hospitals through the first two, three, four years of the system until we can collect really good claim-by-claim data where hospitals send in and say, you know, we did this blood procedure, this is exactly how much, you know, we charged for it, these are all the codes that go with it. So HCFA can do a more in-depth look at the APCs in the future based on that data.

So, in the meantime, we plan to work out some sort of transition system that would protect hospitals who may end up losing more than they can afford to under the system.

I'm just making I've said everything I was planning to.

Yes. Does anybody have any questions?

MR. WALSH: I'm real pleased to see that you think you're at least on a pathway to ameliorate some of the issues in regard to 906, 907, and 369, and the considerations for protecting the hospitals losses in a three- to four-year transition period. But what if, in fact, there are some therapies that aren't covered appropriately and patients are restricted from access to those therapies? Is there a pathway to be able to address that?

MS. EDWARDS: The first thing I'd like to say is we heard all these same worries and concerns in the inpatient rule, when we first did it 15, 16 years ago, and it was all the same worry. You know, once you start putting the payment amount on a patient, how are you going to be sure that they're not just going to shut the door to patients they can't afford to take care of? And I'll tell you, we've had no problem with that, absolutely none. And, in fact, I think you can say that the hospital medical world has certainly improved greatly since then. I'm not saying it's due to our payment, but certainly our payment didn't stand in the way of anything.

I know myself that over the years we have entertained a vast number of people coming in and asking for DRG changes, and a lot of them have been made.

We do have--we'll have a quality control system. We used to use the PROs. I don't know if we will still use them. They're the peer review group of some kind. I forget what their name is, but it consists of medical people who make sure that hospitals are not limiting access in any way.

We will also look at claims data. If a hospital is suddenly doing a much lower volume or is doing a lower volume in certain areas, we're going to be able to see what's going on. And the hospital industry and beneficiary groups are not--they're not shy about coming to tell us what's going on.

So, you know, we'll be out there looking, and we'll be welcoming any comments we hear from anyone.

MR. WALSH: One follow-up if I may.

MS. EDWARDS: Sure.

MR. WALSH: As you're going through this process between now and 1 April--good day--

MS. EDWARDS: Well, it's actually before that because it has to be done in time to be in the final rule, way before April.

MR. WALSH: We appreciate HCFA's willingness, number one, for you to come here on the firing line, per se, but also HCFA's willingness to deal with these issues up front. Are stakeholders going to have an opportunity to review what you think you might end with as a final recommendation or reg?

MS. EDWARDS: No, I don't think they will. You know, that's what the proposed rule is for. We put out what our best guess that things were, and no one has been shy about telling us how wrong we are in so many ways. And that information--now, the one thing we do is every single comment is answered. You know, I'm not going to say every single individual comment is answered, but certainly the groups of types of things. We say why we did something, why we didn't do something, what we plan to do in the future.

Certainly there will be future final rules. There's one on inpatient every single year. I can't imagine we won't get at least very close to that on outpatient also.

CHAIRMAN CAPLAN: Keith?

DR. HOOTS: A couple of comments and a question. Let me start with the question.

One of the things that I think perhaps it's difficult to analogize back to '86 with the DRGs because of the amount of non-excess money that's in the system now compared to then, and particularly from the private side because of managed care. So a lot of things that might have been absorbed at that time may not be as easily absorbed now. But how still--and I have not yet heard--for specialized sorts of diseases that are concentrated in very few centers of excellence, quote-unquote, that come under an APC or a DRG that's very broad and that's been rendered, aside from the fact that you're going to equalize over four years, in year five after this period--because it's going to be based--I mean, you say it will be a four-year adjustment period.

MS. EDWARDS: Well, actually, I didn't say how many years it was.

DR. HOOTS: Yes, right. I'm trying to be generous by saying up to four years. After that, how still will the system accommodate those places--and it's not a place--depending on the disease entity or particularly rare, expensive diseases, will the system adjust so that those places don't--you're worried about not incentivizing hospitals to save money, but how do you avoid disincentivizing those hospitals from doing what they do for those rare, expensive diseases?

MS. EDWARDS: Well, one thing under the inpatient is that we pay quite a bit of extra money to teaching hospitals who generally fall into this center of excellence group. Now, they get--go ahead.

DR. HOOTS: A comment. A recent study in the New England Journal shows the disparity between, say, New York reimbursement for teaching versus Texas reimbursement for teaching that ranges from $60,000 down to $2,000.

MS. EDWARDS: Right.

DR. HOOTS: So, clearly, that hasn't solve that issue.

MS. EDWARDS: But those costs--those payments are based on what the hospital actually does. It's not just--we don't say, okay, New York, you get this much, Texas, you get--it's the exact same rules for both groups. The exact same rules.

I don't want to argue about it, so let's move on because I've actually got--and what we intend to do is during this transition period we're getting in several years of data under the new system. Part of the transition is to allow us to try to figure out--I know we didn't propose any special adjustments for any different types of categories of hospitals in the outpatient proposed rule. Part of that is our data is so not specific. The data the hospitals have sent in in the past is so--I don't want to say so poor. It's not good enough to make the kind of adjustments we might want to make.

So during this four-year period, we're going to be able to look at data in a much more intense way and try to figure out if there are certain areas where we need to make extra payments to hospitals.

DR. HOOTS: I appreciate that.

MS. EDWARDS: We will mostly be talking to Congress about it, too, pretty much.

DR. HOOTS: I understand because, obviously, that occurred with the DRGs as well.

MS. EDWARDS: Right, right.

DR. HOOTS: I think it is not quite fair, although it is true. It is just not quite fair for HCFA, because they manage directly only Medicare, to insinuate that the impact on the overall hospital and outpatient health care system will be only that fragmented portion because if we go to the DRG analogy and see the impact that that transition had on Medicaid and then on private managed care, I do not think it is hard to quickly jump to the conclusion that what you do has a profound impact far beyond the Medicare population.

MS. EDWARDS: I agree with you totally, although at the moment I would say what Medicare pays on its fee-for-service side, we are one of the better payers at the moment. HCFA used to be the poor payer, but since managed care took over the rest of the world, we have become one of the better payer. I understand.

DR. HOOTS: I agree with that, too.

MS. EDWARDS: It is true. When we do something, we are a national group. We cover a lot of beneficiaries, and we cover a lot of hospital services just because our beneficiaries tend to avail themselves of it far more than the younger populations. I agree with you totally that we need to be very careful at what we do because it serves as a national model.

One thing I would like to say, when you talked earlier about no excess in hospitals, but the last 4 or 5 years, hospitals have been making on average approximately 15 to 18 percent on the inpatient side. So there was a period right after hospital inpatient went in where everybody made a fair amount of money. It kind of dipped down in the late '80s or early '90s, and they are back up.

I know some of the things they have done is shift cost elsewhere. Believe me, we know what is going on.

CHAIRMAN CAPLAN: I am going to jump in here.

DR. HOOTS: Sure.

CHAIRMAN CAPLAN: What we are doing is reinventing the DRG--

MS. EDWARDS: Right.

CHAIRMAN CAPLAN: --with respect to the payment system fight.

Let's get two more questions, if we have got them, on the specifics of the blood financing issue.

DR. GUERRA: Just a couple of questions. For consistency around the country, I guess that you are clearly defining the pieces of data that you need, and that is across public hospitals, not-for-profit, for-profit, all the different systems.

MS. EDWARDS: You mean the data they will have to put on the claims to send to us?

DR. GUERRA: Right.

MS. EDWARDS: Everyone fills in the exact same claim.

DR. GUERRA: They are all standardized. They are all standardized.

MS. EDWARDS: Yes.

Now, certain hospitals are better at filling them in than others. Clearly, bigger hospitals are better than smaller hospitals.

DR. GUERRA: That has been a problem, yes.

MS. EDWARDS: Yes, but the specificity you will need to get an APC will be enough for us to look at the data.

CHAIRMAN CAPLAN: I guess I will take the last question.

I am curious about your views, as you have encountered it in other industries, but as it would pertain to blood, what we are going to talk about later. When we mandate safety issues, put on leukocyte depletion, test for certain things, whatever the additional mandate might be, this committee wrestles with safety a lot.

MS. EDWARDS: Yes.

CHAIRMAN CAPLAN: How have you thought about that in relation to blood, or how have you thought about it in relation to similar mandates that come into other parts of the health care sector? It is not a technology innovation. It is a, sort of, we want safety, so pass it through, add it on, adjust the DRG.

MS. EDWARDS: Well, I would say the blood clotting factor is the only thing that I have ever seen that a case was made to Congress to take it outside the system.

In general, safety measures cost hospitals money. They have to raise their charges, but you will find their charges are not raised in every DRG or every APC.

Let's say blood. The vast majority of blood is not in all the DRGs. It is concentrated. It is in the surgical DRGs, and not even all of those. So the charges for those DRGs go up faster than the rest. So those DRGs start getting more of the payment dollars than the lower-cost DRGs do.

I presume it will work sort of the same way with APCs. It is generally not connected to safety, but it can be connected somewhat to safety when some new procedure comes along that is safer. So those groups will come in and talk to us about DRG XYZ is just not paying us what it should, look at our charges, look at our costs, compared to everybody else in that DRG. We do new DRGs. We move them to higher-paying DRGs.

CHAIRMAN CAPLAN: One radical question you may want to comment on.

MS. EDWARDS: Yes.

CHAIRMAN CAPLAN: We have talked about it a little here quietly. Do you think the best way to deal with blood is to have it nested in the other DRGs? Does it need its own?

MS. EDWARDS: Not DRGs. Let's talk ABCs. DRGs, it is just such a big set of services you get. I do not think there is usually quite as much problem. In fact, that is what the blood industry tells me. They are not quite as worried, but in the APCs, that is why there are. There may need to be many more specific APCs just for blood, and I think we are totally open to dealing with that.

CHAIRMAN CAPLAN: Thank you.

We are going to try to be back here at five past 1:00 and have our next speaker on this issue ready to go. So please return at five past 1:00 and no later.

[Whereupon, at 12:20 p.m., a luncheon recess was taken, to reconvene at 1:21 p.m., this same day, Friday, August 27, 1999.]

A F T E R N O O N S E S S I O N

[1:21 p.m.]

CHAIRMAN CAPLAN: We are going to have some testimony on the general issue of financing and reimbursement. I am going to ask Dr. Rossiter to come up to the microphone.

While I am doing that, part of the reason this topic is on here is because various committee members have asked for it. It obviously influences access. It can influence safety. Taking a look at money issues is important because we are actually one of the few places that gets to take a little look there, but I did want to say to all of the people about to present, and just for discussion purposes, I doubt we will reinvent the financing mechanism to the United States. So you may want to testify that we should go do that. I doubt that even if we direct the Secretary to do that, that she could do that.

What I am hoping is that we get a discussion that focusses in on the ways in which we can say things besides do away with DRGs, kill managed care, institute national health insurance and other such things, which may or may not be valuable, depending upon your point of view, but more concrete and linked to the specific issues that blood and blood products raise. How is that for a preamble?

DR. ROSSITER: Thank you, Mr. Chairman.

My name is Lou Rossiter. I am chairman of the board of the holding company for Virginia Blood Services, and I believe I bring a unique perspective because I am a health economist and a blood donor.

CHAIRMAN CAPLAN: And there are only two of those.

DR. ROSSITER: I am glad you got it, Mr. Chair.

[Laughter.]

DR. ROSSITER: Before I became the volunteer board chair of our local community blood service, I was deputy for Policy at the Health Care Financing Administration in the previous administration. I was honored to work closely with Gail Wilensky and then-Secretary Sullivan, and was very much involved in revamping the way hospitals are paid for capital, which was a $7-billion program at the time, and the way physicians are paid for services under Medicare, which is a $58-billion program.

I have written extensively about HMOs and how HCFA and others pay HMOs. So my expertise is in provider payments under public programs. I am pleased to offer some concrete suggestions to you today for your deliberations.

First, some philosophical reflections, however, at the risk of provoking interpretation from the chairman, but when I left Richmond this morning, there were 22 hospitals who were counting on us in our mid-sized independent blood service, which by the way is Virginia's ninth largest charity. They were counting on us to make deliveries of blood and blood components.

I actually asked them to check. We had about a thousand units available. We had seven blood drives planned that are occurring as I am speaking. They are probably winding up now, actually.

We opened eight fixed donor centers, and approximately 200 people came to work to ensure that the needs of our hospitals and patients were met.

This happens nearly every day, and our blood center is open 24 hours a day, every day of the year. This is true for all blood centers.

Under the principle of public good, everyone in Central Virginia benefits from the availability and the level of safety we will provide today as a community blood center. None of us knows when we will perhaps suddenly need blood, but even when it expires on the shelf because it was not needed at that moment, the community benefits from its availability.

From this perspective, it is easy, in my health economist mind, to elevate blood to special status in the marketplace for medical goods and services. It is neither a mere procedure nor a professional service. It requires a non-market transaction in the form of a donation.

Most of the time, blood is transfused into an elderly Medicare beneficiary with a life-threatening condition. Except for organ donations, there are few other clinical products or services that always begin with a gift and so often end with a life in the balance.

Market forces are lacking in many ways in this picture. Thus, one can easily conjure up a Government role or subsidy.

At a more practical level, I think that the mechanism for the subsidy already exists. As I mentioned, much of the blood used in this country is used for patients covered by Medicare. Thus, it makes sense that Medicare should take the lead in the proper financing of blood safety and availability.

I also believe that you the advisory committee, the Secretary, and HCFA have a very straightforward vehicle for providing the necessary leadership immediately, this month in fact. Each year, HCFA releases its annual update for the hospital prospective payment system.

By the way, just to put it in perspective, APCs are important today because we are talking about this new change, but in a way the flow of funds is much larger on the inpatient hospital side, of course.

The current payment framework for PPS hospital operating payments includes five component factors for the annual update, usually expressed in percent or fractions of a percent.

If you have my remarks, on the back side you will see these five components for the update listed. One is the market basket forecast, which is HCFA's estimate of general inflation. The second one is scientific and technology advances. The third is productivity improvement. The fourth is product change, and the fifth is case mix changes.

So, each year, the actuaries sit down and look at these five broad categories and come up with an estimate of how much hospitals should be paid more based upon these five categories.

My proposal is straightforward. Each year, the HCFA should explicitly recognize in its Federal Register notification of the hospital PPS update any changes in FDA expectations for new testing or other regulatory changes that would raise the cost of blood or blood products.

HCFA could appropriately adjust the scientific and technology advances component of the payment update. They could publish an aggregate figure within the preamble of the regulation. That would provide the Nation the HCFA actuaries' estimate of any FDA mandates for blood or blood products.

It is not a pass-through. There is no requirement for hospitals to do it, but it would provide an excellent basis for each blood center to negotiate with its own hospital customers. Both would be working from the same set of aggregate numbers.

I believe the Secretary and HCFA can make this change administratively. If not, congressional oversight support for a change in current law should be sought immediately.

When Dr. Satcher appeared before this committee, he said, "We as a society need to assure unequivocally that the blood supply must be safe. However, the Nation's current system for health care reimbursement may not allow technology advancements." He urged the committee to look forward toward how to implement costly technologies to prevent threats to blood safety.

I think we can all make a little list of new things that could happen universally next year which I think we can agree it is not obvious where the funds are going to come from for those things.

I hope our friends in the hospital industry can support this proposal. I am sure HCFA and the hospitals might have concerns, explicit recognition of blood and blood products, opens the door to all manner of products and services that fit into the category of scientific and technology advances, and they would all seek explicit treatment which, if I put my HCFA cap back on for a minute, that is what a HCFA person would say.

By the way, an alumnus of HCFA is called a "hicklett" [ph].

[Laughter.]

DR. ROSSITER: When I think about it, if we do this for blood, then everyone would line up and want the same explicit treatment, but I believe the distinction is the involvement of a donor, blood and blood products, tissue organs. All of these require a human donor, and this public good aspect might serve as the defining characteristic for explicit recognition of blood in the PPS update.

I believe it is not too late to implement this notion for this year, this upcoming fiscal year in the update beginning October 1st. In that testing, the deferral of donors who have resided or travel the United Kingdom, other changes could be explicitly factored into the update now.

I could foresee blood center contracts immediately renegotiated after October 1st and include their own update clauses in the future, timed with the release of the PPS update.

This simple step would greatly reduce the transaction costs for blood centers and hospitals in their contract negotiations. It would provide some authoritative source for establishing the price for blood, with flexibility for local conditions. It would ensure hospitals and blood centers to be reimbursed at least for Medicare and provide a definitive process for financing new safety mandates as well as new technologies.

Thank you for giving me an opportunity to comment.

CHAIRMAN CAPLAN: Steve?

DR. NIGHTINGALE: Dr. Rossiter, I ask this as one who was at a time favorably disposed to this proposal, and I was asked the following question that I could not answer and I will see if you can do better than I did.

How would you proposal ensure that the increased payment for services to one industry was passed back onto the base industry, which in that case would be you?

DR. ROSSITER: In this proposal, no assurance. It is, as I said, an authoritative source for an estimate of what the increase should be, and one would have to rely upon the good intentions of the Nation's, primarily, community hospitals to work in cooperation with their community blood centers.

DR. NIGHTINGALE: I wish to communicate back to you that, as you know, as the American blood centers know, there has been extensive discussion of this proposal, and we have been unable to come up with a satisfactory answer to that question. I would encourage you to continue in your attempts to do so.

There is one other question that you raised that we are also struggling with, and perhaps you have a better answer than we do. Is the voluntary donation sufficient to differentiate blood from any other public good; for example, a natural resource?

We realize that there are arguments that make blood unique, but we also realize there are arguments that make the rain unique. What differentiates blood from other public goods or other common resources that are shared?

DR. ROSSITER: I think it is the gift nature of the blood that it begins with a gift and a donor. I think the argument is weakened if we ever went to paid donors, greatly weakened, but, today, from that standpoint, it serves as a public good and could be a way for HCFA to say this area of blood and blood products is very important, donors are involved, we cannot upset that, we cannot have availability concerns, we cannot have safety concerns. The FDA, after all, is making these requirements. So we are carving out this piece to make this explicit estimate of the cost.

DR. NIGHTINGALE: Sure. This is from one who is sympathetic to the concept, but unsure of the execution.

What differentiates the voluntary donation of blood from other voluntary donations that are made throughout the health care system and, for that matter, elsewhere in the economy?

DR. ROSSITER: That it is one on blood or blood tissues. It is from your own body rather than money. Are you talking about money contributions? Funds?

DR. NIGHTINGALE: In-kind contributions.

I think there are a variety of ways that you can parse the question, but there are in our economy a number of voluntary transactions, blood donation being one of them.

CHAIRMAN CAPLAN: I am going to add a friendly amendment to my colleague here. I would ask this in a slightly different way.

I should know the answer to this because I am supposed to be knowledgeable about organ donation, but do you know in terms of rates set for organ or tissue donation whether there is any special carve-outs in terms of safety on that end? Is that proposal mimicked in any way because of the voluntary nature of producing organs and tissues, solid ones?

DR. ROSSITER: That is a good question, Dr. Caplan.

Only in terms of that whole rich system, of course, would be one aspect, and I guess transplants are treated differently by HCFA. There are centers of excellence, as you well know.

CHAIRMAN CAPLAN: Right.

DR. ROSSITER: It is the first example telling some provider. Normally, HCFA is open to anyone with a Medicare provider ID number, but, in this case, transplants were treated separately. So there are slight differences in which organ donation is treated differently.

I guess my point is let's try to put blood and blood products over on that side, too, for special treatment because of the fragile nature of that non-market gift that occurs.

CHAIRMAN CAPLAN: I will attempt to spend the rest of the afternoon watching a health economist, but in the interest of time, let me make sure. I understand your point about this. So let me make sure I let anybody else who wants to get in here with a question get it on the table.

Keith?

DR. HOOTS: In terms of Steve's question, if you just locked donation of human tissue--

CHAIRMAN CAPLAN: Blood, tissue, whatever.

DR. HOOTS: --then would that solve the problem of excluding all of the other potential donations that might cause complications if they wanted to compete for the same sort of consideration?

DR. NIGHTINGALE: Not in many minds. Their volunteerism is a substantial components of the economy. One of the many counter-arguments is that volunteerism is in fact a public duty.

I think the point that I wish to raise and perhaps elicit comment from Dr. Rossiter was that, as you know, there are many different perspectives on this issue. I wish to emphasize that we respected the one that you presented here and that many of us have considered that quite carefully and continue to, but recognize that there are powerful countervailing arguments.

DR. HAAS: I think part of what we are doing here is not asking the good economic question. I think when we are trying to carve out what is a public good or a social good versus not, your point, Steve, is that those out there making the decisions do not deal with that definition appropriately, so let's try and carve out blood as having some unique characteristics.

I do not know, Dr. Rossiter, but I will bet you if we talked here for 2 minutes, we know there is a set of core definitions for that concept of which blood very easily fits into that category.

So are we asking ourselves how to come up with the best political statement to take this thing forward? Are we saying as soon as we make the decision that safe blood supply to all of society is a social good and this is something the Government needs to be involved in? Then we have to go through the mechanisms that are suggested in here and how to do it effectively. If that is the case, then I think the discussion is over. If it is a political discussion, then we have to make the distinction.

DR. NIGHTINGALE: I do not think the discussion is over.

DR. HAAS: I do not think so either, but I wanted to make that distinction.

DR. ROSSITER: May I say one more thing? Any other questions?

CHAIRMAN CAPLAN: Yes.

DR. ROSSITER: I agree it is a modest step that you have to count on the goodwill of the hospitals and blood centers to work together on their contracts. On the other hand, as the chairman of the board of a local blood center, I am not looking forward to the coming year in which we will have a lot of changes that have to be balanced. It seems to me this is a modest simple step that would help. Whether it would solve it, I agree. I am not sure it is the entire solution, but I believe it can be done administratively and it is an easy step, and it would be very helpful.

So thank you for your kind attention.

DR. HAAS: Art, may I make another comment?

CHAIRMAN CAPLAN: Yes.

DR. HAAS: I just want to reemphasize a point that was made. We are obviously not talking about a market system. The demand and supply, as economists talk about it, are not working in this market. You have supply that is somewhat working on it, but supply works well in a competitive model when you have many suppliers of given products. The markets that I know in this area do not have many. They have few and sometimes one.

So the gist of what I am seeing here is saying we have to come up with an administrative response, and we want it to try and act as competitive-like as possible. That involves judgment decisions, et cetera, and this is one model of approaching it.

DR. ROSSITER: That prompts one other point. I think HCFA tends to view blood and blood products as small. The term is "budget dust." We give so much money to hospitals that they should be able to find the money.

The other nice thing that this does is it makes the actuary and the administrator see the figure. What would it cost to do universal leukocyte reduction in one year? It attaches a Medicare budget figure to it. I think that is helpful for everyone.

CHAIRMAN CAPLAN: Yes.

DR. GUERRA: Not being an economist or an ethicist, I guess the more complicated question is access to blood and blood products, is it a right or a privilege in terms of the social good or the public good discussion, especially in the instance of children, in particular in dependent settings.

I guess it is hard for me to sort out for those that are not funded the willingness-to-pay issues linked to cost of illness. That can certainly be across the spectrum of considerations. So I do not know. I would just raise that as a question.

Maybe you could provide some insight into that.

CHAIRMAN CAPLAN: While we have a short philosophy moment for Dr. Ness to come up, if you set up a system that relies on community participation and tries to obtain its resources by voluntary gift-giving behavior, not expected by the way. Gifts are what we call in the trade "superogatory," beyond duty. It is a gift. No one comes to your house and says you did not give last year some blood. It is not a duty that way. Maybe they should, but they do not.

Then you are under some obligation, if you want to run that system, to make sure the distribution is fair.

What you see all the time in the organ donation world is people refusing to donate organs and tissues because they do not think they have fair access. It is a chronic problem when you go out to certain communities and say why don't you donate more organs. They say I cannot get a transplant, I cannot afford one, I do not have access, I am not going to donate.

So there is that hook that you would expect reciprocity out of gifts systems, and blood, to the extent that it runs that way, has that dimension, I would expect.

DR. ROSSITER: During the philosophy moment, I did have a response to Dr. Nightingale, which is so many of those other gifts that we were talking about earlier receive tax advantages. So maybe your recommendations should be to the IRS to make blood donations tax deductible.

[Laughter.]

CHAIRMAN CAPLAN: I am tempted to say I knew you could not give a whole talk without getting that market factor back in.

All right. Dr. Ness?

DR. PILIAVIN: Maybe an undue incentive.

CHAIRMAN CAPLAN: Undue incentive.

DR. NESS: Thank you.

My name is Paul Ness. I am a hematologist in charge of transfusion programs at Johns Hopkins, and I am also the senior medical director of the Red Cross region which serves the needs of patients in Baltimore and Washington.

As president-elect of the American Association of Blood Banks, the AABB, I am pleased to present the perspective of our broad membership on the pressing need for improved reimbursement for blood products and transfusion therapies.

The committee has already heard a lot about APC, 369, and the outpatient problems. I am going to be talking more about the inpatient problems, and I think that I was a little surprised to hear that HCFA has already solved this problem because that is not true in the needs of our membership.

My discussion today builds off a joint position statement submitted to the committee by a number of interested professional associations, including AABB, America's Blood Centers, the American Hospital Association, the American Society of Hematology, and the American Society of Clinical Pathologists.

The diversity of these endorsers speaks to the broad effect blood reimbursement policies are having on the health care community, including collection centers, laboratories, transfusion facilities, hospitals, and physicians. We all share a common goal, ensuring that patients requiring blood-related treatments receive the best possible care. Our concern is that inadequate reimbursement is likely to hinder patient access to quality care.

Today, you will be hearing separately from the representatives of other blood centers. While sharing their concerns, I will focus today on the reimbursement issue for hospital transfusion services. In my work as director of transfusion medicine at Johns Hopkins, I face this troubling issue on a frequent basis.

In fact, if my beeper goes off while I am talking, it is because I have to go home and do a plasma exchange for which we will be reimbursed $325 which, as you know, is grossly inadequate.

The Nation's blood supply is now safer than ever before, and the blood services sector is committed to maintaining enhancing this high level of quality. Advances in transfusion therapy have led to a variety of new blood therapies and safety-related measures, including tests to screen blood for several infectious diseases.

In addition, very soon, new more highly sophisticated tests and techniques such as NAAT, or nucleic acid amplification testing, and leukocyte reduction are expected to be universally implemented. In the future, as new life-enhancing technologies become available, the public will expect those to be put into place as well.

As we move beyond the traditional transfusion menu of red cells, platelets, and plasma to a new generation of blood components which features apheresis collections, leukodepleted blood components, virally inactivated plasma and cellular concentrates, and blood substitutes, we are facing a heightening concern. This new generation of blood components is challenging our abilities to provide the highest quality of transfusion care, particularly given the raise of managed care and other increasing financial restraints on providers.

Moreover, existing and proposed Medicare policies limiting payments for blood services threaten financial restraints on providers. It is my concern that today's reimbursement dilemma will only get worse as these new generation of blood components come into the possible clinical use.

As HCFA moves to implement the Balanced Budget Act of 1997 and control Medicare expenditures through the use of market pressures, the question becomes whether these pressures will limit or even eliminate patient access to the best possible treatments.

In the case of blood therapies, Medicare policies are particularly important not only because as the Nation's largest third-party payer, Medicare drives other insurer's policies, but also because such a large percentage of patients requiring blood-related care are Medicare beneficiaries.

There is no adequate system in place to ensure that Medicare inpatient payments fairly reflect the value and costs of new blood products and services in a timely manner. The vast majority of blood and related services is provided in connection with hospital inpatient services. Thus, the cost of blood products and services must be covered in the bundled DRG payment made to hospitals by Medicare.

With the addition of new costly safe technologies and tests such as leukoreduction and NAAT, the cost to providing a single unit of blood is expected to increase at a substantially greater rate than the modest increases in DRG payments.

The infrequent revisions to the DRGs lag in providing new codes hinder the employment of valuable new health care technologies, taking several years from the time a new technology obtains FDA approval to the time HCFA accurately reflects the cost of the technology and adjusted DRGs in its reimbursement to hospitals. This delay may make it impossible to meet the public and Government demand for enhanced blood-related technologies.

The disconnect between safety mandates and the new technologies on the one hand and reimbursement rates on the other present several harmful consequences, all of which threaten patient access to high-quality care.

First, faced with budgetary restraints, hospitals and providers will be hard pressed to provide patients with the best possible blood-related care. They may be forced to make difficult decisions regarding whether to employ the full array of available technologies, therapies, and procedures beyond mandated minimums.

Anecdotal evidence already suggests that such decisions are being made, decisions to use pools of platelets rather than more costly but safe single donor platelets.

Second, non-profit blood centers cannot afford to absorb substantial additional non-reimbursed costs. Not-for-profit organizations that comprise the blood community operate on a cost recovery basis and have limited reserves to invest in the ramp-up and to cover the lag that comes with each new initiative.

In addition, without fair reimbursement, blood centers likely will not have resources available to undertake necessary donor recruitment efforts, thus posing an additional threat to blood availability.

Third, if reimbursement does not reflect the continuing evolution of technology, we are in danger of eviscerating the incentive for private industry to develop new products and technologies to enhance safety and improved transfusion therapies.

This problem cannot be rationalized on the grounds that hospitals have plenty of money, from Medicare or other sources, and should simply allocate more to blood services. The practical realities are that unless additional funds are designated for inpatient reimbursements to reflect new blood technologies as they are implemented, hospital blood banks and transfusion services will continue to be considered as uncompensated cost centers and will not receive sufficient funding to allow elderly Medicare patients to reap the benefits of advances in blood services.

Policy-makers should not seek to reduce what they believe to be excess hospital capacity by forcing institutions to make decisions that prevent patients from receiving optimum care.

The Government must take an active role in assuring fair reimbursement, and, therefore, patient access to quality blood services. The blood service community recognizes that the Nation does not have unlimited resources to spend on health care services, but, at the same time, a focus solely on limiting health care expenditures conflicts directly with the priority to give patients access to the safest and high-quality blood in the transfusion services.

Several guiding principles should be considered in addressing issues related to the Nation's blood supply.

First, Government reimbursement policies should recognize the unique priority of blood safety and availability by providing adequate reimbursement to permit providers and suppliers to continue to take all appropriate steps to safeguard the blood supply and to develop the new technologies and services that enhance these efforts. If necessary, to accomplish this goal, blood and related services should be reimbursed

separate from DRG and APC categories.

Second, Government mandates and public expectations concerning new safety measures should be explicitly reflected in coverage and reimbursement dates for blood products and therapies. Were these new measures to increase cost, reimbursement must also reflect these improvements. Reimbursement policies must also recognize the vital importance of research and development in the evolution of blood safety.

Third, HCFA policies concerning new technologies must be streamlined to ensure that once FDA approval is obtained, procedure and product codes are available as soon as reasonably possible. This will permit providers to more readily bill and be reimbursed for these new technologies and ensure timely access to state-of-the-art care for Medicare patients.

Fourth, hospitals and other health care providers should not suffer from a zero sum game in which appropriate reimbursement for blood services results in reductions in payments for other vital services. There should be direct funding, if necessary, of the limited additional dollars needed to ensure that the vital role in patient care played by blood products is continued.

The AABB strongly urges the advisory committee to take appropriate action to ensure that the above recommendations are implemented as soon as possible. Adherence to these principles will ensure that all patients continue to have access to blood products and services meeting the very highest levels of quality and safety and will provide for the future development of new and innovative technologies that will further enhance the value of these services.

Thank you very much.

CHAIRMAN CAPLAN: Let's open the floor for questions and comments.

Steve?

DR. NIGHTINGALE: I will try to make mine brief, but it is, nevertheless, a question we have been asking within the Government for sometime as we respectfully consider the views that you have espoused here.

The pharmaceutical industry, when it introduces a new product, does so at a certain price. When it wishes to raise its price to the hospital industry, it does so. Why is the blood industry different from the pharmaceutical industry or other industries that supply the hospital industry?

DR. NESS: In some cases, the provision of the blood industry, things are mandated by Government or mandated by prudent medical care. So we have a discrepancy right now which is very difficult for us to handle.

There is a competition among drugs. There are multiple drugs sometimes to treat a patient, but there is only, in many cases, one blood product. So that, we are forced to pay for unreimbursed amounts for the safer product or offer something less safe. It is that simple.

DR. NIGHTINGALE: Are other industries subject to regulation and safety regulations as well?

DR. NESS: I do not think other industries in the pharmaceutical industry and patients who are served by the pharmaceutical industry have heard from the Government, claims by previous Secretaries, that we will have the safest possible blood supply, and even using the term "zero risk."

If we really believe that we are supporting zero risk, then somebody has to provide us the resources to pay for it.

CHAIRMAN CAPLAN: One comment I was going to make on your recommendations, although I am not making them just to you.

I suspect the third issue, streamline new technologies, is something that is a health system issue. So that one will not be handled separate for blood, I doubt.

The last one, zero sum game, I think is national policy at this point.

DR. NESS: No.

CHAIRMAN CAPLAN: Subjecting everyone to a zero sum game on a fixed reimbursement under Medicare.

So those two are going to be national health policy issues. The other two, however, are blood-related, and what we are starting to come back to and talk about a little bit is what makes blood unique. We talked about it in the first presentation. We are talking about it now.

It does seem to me, a couple of things have been identified. One is that it depends upon a voluntary system. Another is that we have made a commitment to make it as safe as possible, which we have not made for some other things that we deal with.

I could think of a third reason which is that by having problems of safety and blood, you put a large number of people at risk in a way that you do not if you have a safety problem in a single pill or you may put a subpopulation at risk, but this one probably touches a lot of folks.

What we are going to wind up doing, I suspect, is considering the case for blood exceptionalism. Is blood different? Do we have to pay for it in a different way because of that? I am just curious.

Do you think there are any other reasons?

DR. NESS: I think the second reason is the one that to me is the most compelling that we as a society through our Government and our leadership have made the claim to blood recipients and patients that we want a safe as possible blood supply as we can derive. Unfortunately, under the rules of health care reimbursement that are now applied in our hospitals, we are not paying for it and it has to compete with other technologies, sometimes marginal differences in blood safety, which will make it safer and meet that Government sort of mandate or claim, cannot be reimbursed. I think you hit the argument right there.

DR. NIGHTINGALE: Paul, is there something unique to the zero-risk requirement that society is imposing on blood to the zero-risk requirement that we impose on airplane safety? What is the difference?

DR. NESS: I am not sure of the genesis. I do not know what the zero risk for airplanes are. I cannot comment on that. I deal with blood. What I am faced with every day is that dilemma which is basically I am offering John Q. Public patient zero risk, or trying to, and it is difficult to do.

I would like there to be zero risk in an airplane, too, as I have to fly home.

[Laughter.]

DR. NIGHTINGALE: We are not trying to engage in an argument here. What we are trying to do is identify the responses that we have received when we have carried these arguments forward. If you can, either now or later, give me a response to that question that will carry that out, I would appreciate it.

CHAIRMAN CAPLAN: Keith?

DR. HOOTS: It seems to me what you are getting at Steve is obviously what is the uniqueness here.

This committee exists part and parcel to the fact that there is an implicit uniqueness to it. Again, part of it is because of the way our whole capitalistic society has evolved in terms of paying for things, why there might be distinctions between a pure single component unit versus a large pool of Factor VIII, let's say, or something like that.

Clearly, I think if you ask John Q. Public about blood and how it fits into what they think the responsibility of society is, that they have a relatively unique idea about blood being a national resource. I do not think that is unique to the United States at all.

What makes the United States more complicated, I think it is because the fact that the Government has not stepped forward and automatically guaranteed it as a right. A number of people, I think, around this table, if you ask them if it should be right, would answer yes. I certainly would.

So I think part of it is that it is unique not only because it is donated, but because there is a gestalt here that it is a national resource for which our very essence depends, at least until we come up with a better strategy.

DR. NIGHTINGALE: Dr. Hoots has put precisely the question that is on the table, and he has identified exactly why I put this on the agenda and why I had originally devoted an entire day to it. We will donate additional committee time to it until we come to an answer.

I am in the position of having taken these arguments forward to others who do not share our perspective or, I might even say, our bias. If I were to say that blood is unique because my committee was set up for this purpose, there are agencies of the Government who would respond, "You are by no means unique."

What I need from this committee is an identification of something that makes blood unique in an economic sense, and any help that can be provided today or later would be most appreciated.

CHAIRMAN CAPLAN: Paul?

DR. HAAS: I think Keith's comment and what we were hearing from the floor are ones I prefer, but on the economic side, comparing airlines with blood, there is a competitive element in the airline industry. It is much less competitive, but since we are going to make a monopoly like we would say in the blood industry we have monopoly-like conditions, which given all the other issues we have talked about makes it very difficult to not have Government making the types of decisions we are talking about today.

DR. NESS: I think that is right, and I think the other thing, the airline industry does not have a cap on their prices. We effectively, based on reimbursements, have a cap on our prices.

CHAIRMAN CAPLAN: One more here, and then we will go to the next presentation.

I have to ask the people following to please watch their time so we can get some discussion.

COL. FITZPATRICK: The pharmaceutical industry and the FDA does have the orphan drug program which makes exceptions for specific drugs and provides different forms of funding for the production of those drugs.

DR. GUERRA: I think the vaccine industry maybe has some similarities here, and that one has obviously set up a system that does deal with public good issues in a way that I think is a bit more equitable and where there is some significant limit in terms of charges and reimbursements and what have you. That is obviously the National Vaccine Compensation Act that has had a tremendously important role in that, the Vaccine for Children's program, to sort of equalize the distribution across the sectors that are not able to afford and to limit what those reimbursements are.

It has worked well. It has allowed us to raise the levels of protective immunity across all sectors of the country to the highest levels they have ever been.

CHAIRMAN CAPLAN: Thanks.

Who do we have next? The American Red Cross?

DR. NIGHTINGALE: Is there anyone whose name begins with A to G?

If not, Dr. Holland, welcome back.

DR. HOLLAND: Thank you.

I think the simple answer, of course, to the question, how should federally mandated blood safety measures be financed, is the Government should, but that having been said, I think there are unique aspects of blood, Steve.

I think that it is something special, and, certainly, if the Government mandates NAAT testing on drugs, then maybe they ought to pay for NAAT testing on drugs.

If they require leukoreduction of drugs, maybe they ought to pay for leukoreduction of drugs. Blood is a drug, by the way.

In any case, if we are going to be forced to do look-backs, to do universal leukodepletion, or add new tests, then I think the Government should pay at least its fair share, and if, for nothing else, that applies to Medicare patients, which is the main beneficiary of this blood that we are using.

So, certainly, there should be almost automatic increases in the DRGs. When one part of the Government mandates something, let's have the other part of the Government follow suit, so that then with Medicare following the way, insurance companies and HMOs hopefully will follow suit and do the same.

The word "subsidy" has been brought up. I do not think we are asking for a subsidy. We are just asking for a fair reimbursement of what you have mandated us to do. Money does not come out of thin air. If you want us to do these things, and we certainly want to do them, we want to make the blood supply safer. That is what this committee is all about. We also want to make it available, but we have to pay for these tests, this leukodepletion and so on. Money does not come out of thin air. The Government should shoulder its responsibility when it mandates something to at least pay within its mechanisms for its share of what it is causing the burden to fall upon, us as regional blood centers.

Thank you.

CHAIRMAN CAPLAN: Other comments?

DR. BINION: Yes. I want to thank the executive secretary for the opportunity to comment here today.

CHAIRMAN CAPLAN: Please give your name for the record.

DR. BINION: Oh, I'm sorry. Steve Binion from Baxter Health Care.

I have some brief general comments regarding the technology and also reimbursement aspects of blood processing technologies.

The Fenwal Division of Baxter Health Care is a manufacturer of medical devices and technologies which are used in blood banks around the world. In partnership with our customers in the U.S. blood banking community, we are also committed to maintaining the high standard of quality and safety that exists in the United States blood supply, while continuing to strive for improvements in the safety of the blood supply through advancements and blood processing technology.

If I could have the next slide, please. The committee should have a hard copy of these overheads.

For today's session, I want to focus on two aspects of Federal policy which need to be addressed if the administration's goals of maintaining and improving the safety and availability of the Nation's blood supply are to be met.

The first issue is the regulatory process for approval of blood processing technologies. Recently, FDA Center for Biologics Evaluation and Research has announced its device action plan. This action plan is noteworthy for its acknowledged focus on CBER's responsibilities in the regulation of blood processing technologies which are used in blood banks.

Senior management representatives from CBER have indicated a desire to improve communications with industry on the regulatory process associated with blood bank devices, while also listening to industry input concerning problems with CBER performance and device reviews.

The next overhead, please.

A significant opportunity which has not yet been addressed by CBER is the development of an expedited review process specifically aimed at medical devices which incorporate new technologies for improving blood product safety. This type of targeted review process would greatly enhance the stated objectives of CBER's device action plan, while demonstrating the agency's commitment to continued improvements in the safety of the blood supply.

A companion initiative for speeding up blood center licensing of new devices and processing technologies would also greatly improve the availability of these improvements.

Regulatory approval of novel medical devices, however, is just the first step in adoption of new blood processing technologies. Federal reimbursement policies and procedures must be reconfigured to reflect the unique nature of blood components and to reinforce the Government's commitment to continual improvement in blood product safety.

In addition to a focus on technologies which offer significant improvements in blood safety, reimbursement procedures which ensure that new technologies are quickly eligible for reimbursement are also required.

The last overhead, please.

A reimbursement policy which supports and recognizes technological advancements in blood processing and safety and provides reimbursement commensurate with the safety standards that the public demands is the only way to adequately meet the expectations which are placed on the Nation's blood supply.

This type of reimbursement initiative, if applied to a product approval system, which also emphasizes technological advances that improve the safety of blood products, offers the best means of achieving the common goals of patients, manufacturers, blood bankers, and regulators.

These common goals are the rapid approval and adoption of new technologies that significantly improve the safety of blood products and providing the best possible patient access to those improvements.

Thank you.

CHAIRMAN CAPLAN: Dr. Binion, let me start by asking you a question that I tossed out before. In the area here, there are lots of group industries that will say, "We need our technologies that are proved reimbursed quickly." Do you think it is different with respect to things in the blood area as opposed to new drugs, expedited reviews of vaccines, whatever?

DR. BINION: From the perspective of the regulatory process, specifically for blood processing technologies and devices regulated through CBER that are used in blood banks, there is no corresponding mechanism for expedited review and approval. This is a proposal that I think has come from various sources in industry and the blood banking community on occasions other than this committee meeting today.

For instance, there has been historically no concentrated focus, at least that I am aware of, as a regulated device manufacturer for that approach towards rapid development or implementation of new technologies in blood processing.

There may have been efforts associated with in vitro diagnostics, other types of blood bank-related products, but I am not aware of any similar type of effort for significant improvements in blood safety through blood processing technologies. So that is the first answer.

With regard to the comparison of the blood bank device marketplace and the position of blood bank device manufacturers relative to the pharmaceutical industry, I would simply echo the comments of the blood banking community who comprise Fenwal's customers in that the situation does not offer parallels that are immediately obvious.

CHAIRMAN CAPLAN: Thank you.

Any other public comment? Let me be sure to get an identification on tape, too.

MR. MacPHERSON: Jim MacPherson, America's Blood Centers.

I just wanted to make a brief comment about process because I think something Dr. Hoot said triggered something in my mind. This committee was created by congressional oversight, recognizing that there are some special problems within blood that do not get resolved through the normal processes. That is why this whole committee exists.

I think that we much appreciate the fact that Dr. Nightingale has tried very hard to resolve this question through the normal mechanisms, and that is within HHS to try to jawbone and try to work through the issues, but it has not been successful because the HCFA has said there is not a problem. Yet, the industry and the industry not only being the blood banks, but the vendors and the hospitals, the customers and the physicians are all saying there is a problem, it needs to be fixed.

So, on a simple basis, if this committee recognizes the problem and could vote on some kind of action to say that the problem needs to be fixed, that sends a very powerful signal that the next level needs to be taken, and that is either the Secretary fixes it or congressional oversight needs to fix it.

Thanks.

CHAIRMAN CAPLAN: All right. At this point, why don't we open the floor up for discussion on the issues of reimbursement. We will see if any ideas for recommendations fly out of that.

One thing that occurred to me when I was listening to this discussion is my area is an overhead area in health care; that is, ethics. No one has a special DRG for ethics, and when you pay for your little ethics program at a hospital or academic health center, whether it is your IRB or ethics committee or just having someone around to talk about courses, to offer courses and so on, you have got to do it out of your overhead. That is just the way it has been. It has always been an overhead expense.

As things have ratcheted down in health care, the bioethics types have started to say, "Well, let's say what it really costs," and there are ways that you can put numbers on that.

The nightmarish factor, however, is when people sometimes look at what it really costs and say they do not want it anymore. So one of the issues that comes up when you start saying let's make explicit what it really costs to do leukocyte depletion or other things, people may look at it and say, "You know what, that commitment to the safest blood supply in the world, we will go back on that. Pretty safe is good enough. We are not sure about this."

Sometimes you get what you ask for when you get explicit and people look at it and say, "Boy, that costs a lot to get that fractional improvement in safety. I do not know if I want that anymore."

So one cautionary note about playing the financing and let's get it out there and let's make sure that everybody can see what we really cost is that people look at it for a while and then they say, "You know, that is a lot. If that is what it really costs, maybe we should do something else with this."

I have watched it in my field. They dump out the programs when the academic health center gets in trouble. You would think who is going to throw out ethics. What statement is that? Well, if it has got to delivery services versus have a little ethics discussion about the services, then sometimes the services stay and the ethics discussion goes. So I have a cautionary note about those matters that I can put on the table, too.

It does seem to me at the same time, though, we are facing a question. There are a lot of complaints saying the reimbursement for mandated safety is not working right, and the committee has in front of it a challenge about what it wants to say back to the Secretary in terms of taking steps in response to complaints from many within the blood area about the fact that the mandates that are imposed to get a safe as blood supply as possible do not seem to be reflected in reimbursement.

DR. HAAS: I see one slight difference, although I do not think you will find anybody who says "I want to be unethical."

In the case of this scenario, it seems that representatives of society have spoken very loudly that they want the zero-risk blood supply, or at least as close as one can asymptotically approach it.

So I think you have to give them the facts that tell them how you get to what they want. If they do back off, then that is their job, not ours, because we are charged with doing that and we have accepted that responsibility. My guess is they will not back off.

There are certain things that when push comes to shove, people rarely back off on, and their life is one of them. If they can vicariously put themselves in a position where they see this as their life, then they will not back off and they will make other difficult compromises in order to make it.

That is what I meant before when I said about an essence thing. There is an essence concept here that I think is very important.

DR. NIGHTINGALE: Art, your question raised an issue that the Government really is not contemplating right now as it requests input in this decision.

The question that I have to ask that I am trying to get answered really could be reduced to: Should the cost of the increased safety measures that we now deem necessary or may deem necessary in the future be recouped either from the market or from the Government, which ultimately is from taxes?

The question on the table, as I understand it, is not whether we want to pay for our current set of safety measures. We do.

DR. HOOTS: Right, but there is one other scenario that we have already approached, which is the Government passes regulations to airlines about safety and imposes them. Then the airlines decide either that they can have more planes and more routes or not.

DR. NIGHTINGALE: That is right. They go to the market.

DR. HOOTS: They go to the market, and they compete against each other.

DR. NIGHTINGALE: That is right.

DR. HOOTS: Here, the Government is setting the rules on both ends of the game completely because of the dramatic influence that HCFA has over reimbursement for all medical care in the United States as it has evolved, particularly over the last decade.

As a result, on the one hand, they are saying you must. On the other hand, they are saying we will not. They are putting people in an untenable position, and I think that is the message this committee has got to get out to the people making the rules.

CHAIRMAN CAPLAN: Trish?

MS. O'CONNOR: Isn't there legislation as far as Federal mandates back to States that when they require things of the States that will cost money, they need to provide compensation for that?

CHAIRMAN CAPLAN: Unfunded mandate.

MS. O'CONNOR: Yes.

DR. NIGHTINGALE: That is the legislative branch and not the executive branch, I think you are talking about.

MS. O'CONNOR: There might be some precedent in that when you make these rules that people have to follow, you need to provide the funding since it is not really a free-market economy the way the airlines are.

DR. NIGHTINGALE: Of course, the question is who is you, and you, of course, is us.

MS. O'CONNOR: It is us either way, isn't it?

DR. NIGHTINGALE: That is correct. You put your finger on it. The question is which version of us would be the most efficient vehicle for promoting blood safety and availability. That is the question.

MS. O'CONNOR: Probably the fairest is the universal "us."

DR. NIGHTINGALE: "Fairest" and "most efficient" are very similar concepts, but perhaps not identical, and the committee might wish to consider the difference between them.

DR. HAAS: I beg to disagree. Those two concepts are very different. Equity and efficiency are clashing all the time.

MS. O'CONNOR: Right.

DR. NIGHTINGALE: That is right. I meant to create the distinction and identify it. Well, not create it, but I meant to identify the distinction.

COL. FITZPATRICK: One of the problems with the argument about the market is that with Medicare, the Government makes up 50 percent of the market and establishes their own price in the market. So then the other 50 percent of the market that is not Government will have to take up the other piece of that.

I will put on my DOD hat here for a minute. Our problem is that I am the director of the body that makes policy for the DOD blood program. So, when a mandate comes down to put in that testing, I then mandate an unfunded requirement to the three services that they implement in that testing. The DOD budget is fixed for that 1.5- to $2-million it will take to do NAAT testing comes from some other source within DOD health care or within DOD, and there is no mechanism to increase the DOD budget during that year for that requirement.

DR. NIGHTINGALE: Mike, what happens when Exxon raises the price of jet fuel?

COL. FITZPATRICK: We fly less.

DR. NIGHTINGALE: That is the point.

COL. FITZPATRICK: I do not transfuse less blood.

DR. NIGHTINGALE: Do you fly less, or do you reduce other services?

COL. FITZPATRICK: That is a choice the Joint Chiefs of Staff make.

DR. HAAS: But it can be made. That is what is important.

It is repetitious of something I said earlier today, but there is not a market out there. The 50 percent that we are talking about gives the lead into the private sector which is now managed care almost exclusively, not totally, and to the extent that in the Medicare and Medicaid area where, in these directives, managed care picks up right after it, there is not a market. These are mandated fees that are out there, and we have got to address them directly.

DR. NIGHTINGALE: I am not speaking for HCFA, but there is a perception in HCFA that there is a market for these goods and services by the health care and specifically the hospital industry, and the provider who can provide those at the least cost will be the provider that prevails.

DR. HAAS: We have to watch some of the circularity and the reasoning. If an institution is told this is all you are going to get, send us your request inside of that limit, and then those receiving the request say, "Well, that is all they are requesting. Therefore, that is what we are giving them," wait a minute, folks. We would not make market decisions that way, but that is what is happening, I believe, here.

DR. NIGHTINGALE: It may be circular, but it is also real.

CHAIRMAN CAPLAN: I was actually writing a short paper here in my spare time. I was trying to come up with sort of a general message.

One of the things that occurs to me sometimes is that we do not necessarily have to solve how to finance blood safety. As what Mr. MacPherson said, we have to come up with a directive to get the Secretary to think about things.

So, if you were going to do a little argument, you might say something like this: The committee believes that there is a growing crisis with respect to both the pursuit of the safest blood supply possible and emerging technologies.

DR. NIGHTINGALE: Would you say impasse or crisis?

CHAIRMAN CAPLAN: Crisis. That is always fun. At my house, no one pays any attention to impasses.

So there is a growing crisis, emerging crisis or growing crisis where compensation reimbursement is not keeping abreast of mandates for safety, emerging technologies for a safer blood supply.

Then, since these are the arguments I have heard, blood is unique because the distribution of blood is not a market-driven system, there are monopolies for many products. It is a gift. We have made promises to make this resource as safe as possible. If it becomes risky, it risks many. It is a national resource. I am just repeating back what people have said so far. There is a special reliance of some people on blood in a way that is not true for other products, which we did not say, but that is the hemophilia groups.

DR. PILIAVIN: Could I add something to the list?

CHAIRMAN CAPLAN: Yes.

DR. PILIAVIN: The great majority of the organizations that provide the product are non-profits.

CHAIRMAN CAPLAN: Non-profits and, the public demand, a safe as blood supply as possible. So, if you sort of said there is this crisis and this is a unique area for these many reasons, then we urge the Secretary to present to us options about how to handle the problem of reimbursement.

What I am looking for here is not to duck the issue, but the burden should be coming the other way. My "then" becomes a "talk to HCFA," talk to whoever, and let's see is it making price explicit, is it doing the value-added for a safety component in the way that we heard about. What is it, or what are the many options?

The message I think we are trying to send, and this is moving toward a question for the group to consider now, are we persuaded that there is a problem. If there is a problem, are we persuaded that we have got to come up with something different here for these reasons that are sort of blood is unique, blood is maybe even ethically a special area? Then what we are asking for is we want to hear some ideas not just about what cannot be done or why things are okay, but if we say there is a problem, then let's have some options presented about what we might do to handle compensation in different ways.

DR. McCURDY: There are a couple of things that I would like to put in front of the group here. One of them is I think we have got two issues here. One of them is the outpatient reimbursement that has just been suggested by HCFA, and the message I got this morning was that HCFA understands that it is not right the way they have it and they are going to try to fix it.

Whether we are going to like the fix or not is a different question, but that is part of the problem and I do not know that you can do a lot more with that now.

The other one is the changes that come with improved safety or things of that nature, and that is a problem, but I think it should be separated from the other.

The other thing is that there keeps being said that there is not competition in the blood industry. I am persuaded that that is not quite accurate. If the prices need to go up, there may very well be price competition in the blood industry.

I can tell you from personal experience that there was price competition in the blood industry in the early '80s, and probably before, but competition in the blood industry, that is, a hospital going out to get a bid for its blood supply, particularly if it is not local, lends itself to something that has been called "cherry-picking." That is, the supplier that ships from the Midwest to the East supplies so many units a month or a week as they are contracted to do so, but if there is an urgent problem that comes up, twenty O-negatives are needed in the middle of the night, you go to your local blood center. The local blood center which is not now planning for that demand or finds it difficult to plan for that demand is in trouble. I think that may be one of the issues where the blood industry is different from most of the others.

I think the pharmaceutical industry is under regulations. The airline industry is under regulation. There is some question as to whether we are paying enough for air traffic control. There are a whole number of things along that line, but I think the issue of where do you get your supply and the issue of cherry-picking is somewhat different, and that needs to be considered, I think, in the long term.

DR. HAAS: The time is not to have an economic discussion in terms of what is monopoly and what is not.

There are different segments of the market, and certain markets are more competitive than others.

Cream-skimming is another version of the cherry-picking argument. Yes, those things are out there, but you are also referring to spot markets, and spot markets can be very competitive. Whereas, the majority of the activity may not be competitive at all.

DR. McCURDY: I am not an economist, as you have probably defined.

DR. HAAS: Well, you notice I am saying more today.

CHAIRMAN CAPLAN: Carolyn?

MS. JONES: One of the things that Paul raised in his commentary just a minute ago is that HCFA is looking at revisions to the APCs, but the input from the affected community, they will not be able to see that until it is a final rule. I think it would sort of be inappropriate to make that a final rule if this committee as well as the affected community has so many concerns about it.

I am wondering whether this committee might not consider suggesting that it not become a final rule until the appropriateness of the reimbursement for blood products is considered or extensively reviewed by somebody. I do not know if that is possible.

DR. NIGHTINGALE: No. I think that it is truly not possible. The rule that you have got in your packet went out on September 8th for public comment. The standard procedures for public input have been followed. That is not to say that this committee's recommendation would not have additional input through the Office of the Secretary, but they have complied with all statutory requirements in the vetting of this rule.

DR. SNYDER: The other thing I was going to say, to follow up on that, Steve, when they published a final rule, since there were comments, a variety of comments, the comments, like she was saying, they have only addressed one, but let's say there were 100 comments on the APCs. What they do is they take the overriding theme in those comments and then their rationale for why they decided to go the way they did.

They give what the complaint was, and they give why they chose the solution, but that does not give you much solace.

MS. JONES: It does not, and it does not give me much solace from the aspect where she is saying that the data they based this decision on, hospitals do not submit the right information, so we used what we have to make this decision. I do not know any other situation where we would allow people to make decisions based on insufficient information.

DR. NIGHTINGALE: Yes. I think there is a lot more to that issue than she was able to put in, in the short period of time.

MS. JONES: Okay.

DR. SNYDER: One other concern I had, and I meant to ask her, if they put these bundled APCs out and they are going to "collect" data, is there going to be some kind of a little code that goes behind it to say that it is 906-dash-whatever, so that they actually know what the heck they are paying for? Am I making sense with that?

DR. NIGHTINGALE: It is 906.1, 906.2.

DR. SNYDER: Something like that.

DR. NIGHTINGALE: As you know, throughout the Code of Federal Regulations, there are dots and parentheses and dots within parentheses.

DR. SNYDER: No. What I mean is on the billing, when the hospitals actually bill, the outpatient departments actually bill, if it is under 906, let's say, is HCFA going to have this procedure is this, that procedure is that? Do you know that?

DR. NIGHTINGALE: If there is a 906, there is going to be one price for 906. If there is a 906.1 and a 906.2, the prices for those two might be different. That is the reason you are asking to split off, say, 369 into 369.1 for blood, 369.2 for platelets, and 369.3, say, for photopheresis.

What you heard from Ms. Edwards was that they are considering such a step, and if they did enact such a step, they would stipulate a separate reimbursement for each of those. The answer to your question, I think the short one, is yes.

CHAIRMAN CAPLAN: Do we feel comfortable, just in the spirit of what Paul said and what we are asking about now? The committee has expressed sufficient concern in the motions that we passed about the APC-proposed reimbursements. We have said what we want to say, that we are concerned there. We have passed some motions with a lot of "whereases" on top of them. Maybe we have said we are concerned, we are watching here, and we want the Secretary to get ready to exercise statutory authority, et cetera, however it breaks out in terms of the billing codes.

What I am not getting clear about yet, is there more we want to say on that particular issue about reimbursement compensation, anything more?

DR. HOOTS: If we are going to define the crisis and try to put the monkey back on the Secretary, I think that means the Secretary is in the political position, first of all, of it is a small amount of money relative to the HHS budget, but it is still an extra amount of money that comes from somewhere else, which is where that zero sum game comes in.

There are two ways. We can accept de facto that it has to be a zero sum game, or we can add at least that whether we have any influence any further up the line than the Secretary or not. We can at least say we think it is an important enough issue that it should be looked at as being reimbursed, even if that requires new resources, which then at least if she goes to Congress--

CHAIRMAN CAPLAN: You are talking about safety now.

DR. HOOTS: I am talking for safety, exactly.

If she goes to Congress and tries to explain why the 2000 FY budget is $14 million more, whatever it costs, $140 million more, that you could say 140 of this increase that we are requesting is because this has been mandated, we are going from A to B to C, which is what Congress charged us to do, to go towards ultimately safe products. At least we do not just put it to her to try to figure out how to add the zero sum up in another different way.

That really bothers me, particularly in a time when people are talking about giving tax breaks, that we are worried and we are going to charge the Secretary for stealing from somebody else who has a need in health care as well. I do not think that is right.

MR. WALSH: Mr. Chairman, with respect to the APC question, I think that the resolution that we passed, the motion that was made, reflects on the 906, 907, 369 before we had comments from Ms. Edwards, but I have less confidence in that being strong enough a statement from this committee to get some real direct attention and would suggest that we might think of some language in conjunction with how you are starting to phrase a wrap-up, if you will, to the Secretary to emphasize the concern, perhaps a little stronger.

DR. HAAS: I am ready to second Keith's comment.

DR. DAVEY: Yes, I would agree. I think Keith had some very good points, especially the fact that we must on one side and you cannot on the other side. Also, I think, Art, you are beginning to capture some of that very nicely, and I would second the thoughts that that should be expanded as a committee statement of some kind.

CHAIRMAN CAPLAN: Ron?

DR. GILCHER: I am not an economist either, but what I really have heard in the last few hours is that the Government is saying we are going to pay X-amount, period, but what we have not addressed is the issue of utilization in terms of proper and improper utilization.

This comes down to the practice of medicine which is what I understand the best, and what I am getting at is where there is a mandated cost in terms of NAAT testing or leukoreduction to tell the blood centers you have to do it, but you cannot be reimbursed does not make sense.

If it is mandated, it has got to be paid for, but now you have to look at the utilization side and say is it being utilized in a totally proper manner.

The other way to reduce the cost is to clearly look at utilization, and I can tell you that I can do that on the medical side and say there are certain services and certain products that clearly do not have to be used in certain situations, and that has not been addressed. It is very difficult to address that.

We are being forced into not being paid when that side of it is not being looked at.

CHAIRMAN CAPLAN: I have a sense of people being concerned that we express worry about reimbursement rates for the outpatient ambulatory care imposition of DRG-type categories. I hear what John said, that people may not be happy with the motion that we passed, and want more.

On the safety side, though, if you want to track off the way Keith was going, then what we wind up doing is putting forward a motion that said something like we would direct the Secretary to seek additional resources for maintaining the safest possible blood supply. It is not a complicated statement. It just sort of says we think you have got to get in there and get those resources.

You can put the long preamble and the short preamble on it, but you can do it. So I might move a simple thing, if you want to try the safety connection, and say we would like to direct the Secretary to work with Congress to seek additional resources to assure that the blood supply is as safe as possible.

We might have a long warm-up.

DR. NIGHTINGALE: No, do not bother with the warm-up.

CHAIRMAN CAPLAN: No, no. I just meant there, stop. The warm-up is the other bilge that was in the bull pen.

MR. WALSH: Mr. Chairman, could you somehow include access in there?

CHAIRMAN CAPLAN: I might do that separate, to tell you the truth.

DR. NIGHTINGALE: May I suggest that you would be better off if you were to recommend rather than to direct the Secretary?

[Laughter.]

DR. HAAS: Doesn't the title of our own committee capture what we are talking about right now? Our mandate is a certain level of safety, that there is a cost to the availability, that we need to make sure it gets covered.

DR. GILCHER: Mandated safety has to be paid.

DR. HAAS: Yes.

DR. PILIAVIN: So does mandated availability if we are going to get rid of all of those people that lived in Britain.

DR. GILCHER: What I tried to say a moment ago, Jane, is that availability and access, if we want to use those terms, is something that clearly can be looked at because that becomes also the practice of medicine, but the cost of putting in these new changes must be paid, and I think that has to be the way we look at this.

CHAIRMAN CAPLAN: Do you want to try my thing as a motion?

DR. NIGHTINGALE: Let's see. We recommend that the Secretary work with Congress to seek additional resources, as necessary, to support, I would say, the introduction and maintenance of necessary blood safety measures.

DR. HOOTS: With enough preamble to establish the crisis mode, right.

CHAIRMAN CAPLAN: Yes.

DR. NIGHTINGALE: Okay.

DR. HOOTS: I will second that.

CHAIRMAN CAPLAN: Discussion?

DR. ALBRECHT: Don't we need to stick to mandated safety measures? Coming from the industry, not the blood industry, the industry can come up with better measures which are believed to be improvements. That is a different issue.

DR. NIGHTINGALE: I should have had the word "mandated" in there.

DR. ALBRECHT: I think so because there are certain things that are mandated. The NAAT testing, that is mandated and it is expensive. It is very expensive than some of these other things.

DR. NIGHTINGALE: Then recommend the Secretary to work with Congress to seek additional resources, as necessary, to support mandated safety measures. We do not need an introduction in maintenance.

COL. FITZPATRICK: Not to split hairs, but do we run the risk of Dr. Holland's argument that a guideline is not a mandate and NAAT is not a mandate?

DR. NIGHTINGALE: No, not at this level.

DR. CHAMBERLAND: NAAT is not mandated.

DR. NIGHTINGALE: The distinction at this level is not what we are worried about.

DR. CHAMBERLAND: It is not even a guidance.

DR. NIGHTINGALE: Would you prefer "essential" to "mandated"? I think Jan made a point.

DR. CHAMBERLAND: A number of us were just having a side bar that the example that is being proffered is NAAT testing. Whereas, NAAT testing has not, in any way, been mandated by the Government, at least the U.S. Government. It was mandated in Europe and has had kind of a spill-over effect here, if you will, but HCV lookback, in contrast, has a guidance and a rule.

DR. NIGHTINGALE: Yes. I think that we would anticipate that NAAT will become mandated in the near future.

CHAIRMAN CAPLAN: Other discussion? Maybe we will move this one to a vote. All in favor of this motion with a rhetorical crisis-plus uniqueness argument in front of it?

DR. DAVEY: Are you using "essential" or "mandated"?

DR. NIGHTINGALE: What is the desire of the committee, "essential" or "mandated"?

CHAIRMAN CAPLAN: He had "mandate."

DR. NIGHTINGALE: I had "mandate" written down.

DR. PILIAVIN: How about "required"?

DR. NIGHTINGALE: "Mandate" has a specific meaning.

DR. SNYDER: Steve?

DR. NIGHTINGALE: Yes.

DR. SNYDER: One question. Is that going to refer to the Federal payers or to the private sector? Do you see what I am saying?

DR. NIGHTINGALE: Oh, yes, I see what you are saying.

The motion that is now on the table is a vehicle to continue this discussion. I think it is a very useful vehicle as it stands--

DR. SNYDER: I agree with that.

DR. NIGHTINGALE: --rather than as a prescriptive.

My pipedream coming in here was that we would come with a solution to this. I understand that it was worth trying, but I do think that we have made substantial progress in at least framing the issue and creating a vehicle for moving the discussion forward.

MS. DUCCA: For those of us sitting back in the peanut gallery here, some of the original language that Dr. Caplan was using about "it is a gift," we are relying on a safe as possible blood supply, some of that language, if that could be brought out, because when you sit back from the back seat here hearing "mandated," it sounds kind of negative. Although it is mandated, that is not quite the whole story. You want to bring out the positive side of supporting the blood supply and supporting the concept of a gift that must be maintained.

So maybe that kind of language could be brought out just a little bit more in your resolution.

DR. NIGHTINGALE: I just might comment that there is a certain level of discourse and a certain level of Government at which you want to cut to the chase, and we know what the chase is here.

CHAIRMAN CAPLAN: I think what we will do is, what Steve will be mandated to do--

DR. NIGHTINGALE: You cannot do that.

[Laughter.]

CHAIRMAN CAPLAN: --is to say that there is a perception of a growing crisis in terms of compensation for mandated safety measures. Then the committee believes blood to be unique for the reasons that you have that list. You can talk to me about filling it out. Jane made the comment, too, about the not-for-profit dimension of a large part of the industry. Thus, we believe that the Secretary must work, too. So we will put it that way. That is what the motion is going to look like, even though the nuts-and-bolts delivery part will be succinct.

All in favor of that suitably dressed-up motion?

[Show of hands.]

CHAIRMAN CAPLAN: Opposed?

DR. NIGHTINGALE: Unanimous.

CHAIRMAN CAPLAN: Abstained?

DR. NIGHTINGALE: Unanimous.

CHAIRMAN CAPLAN: Oh, it was unanimous? You are counting faster than I am.

There may be other motions that people want to put on the table in the roughly 45 minutes we have got left. They could be on the reimbursement issue. Let me ask about that first, if there are things we want to say about access. We sort of did this as safety.

We were offered many ideas about encouraging technological speed-up, I have to note, in some of the testimony. We do not have to do that today. We can do that later, but other things pertaining to reimbursement that people may want to advance?

If not, let me go back to the shortage area. I had been asked by some committee members to have a motion put on the table.

Did you want to do that, John?

MR. WALSH: Yes, please.

Mac?

We have a couple of overheads there to try to make the process a little more expeditious.

The testimony that the committee has heard with respect to specifically the A1PI shortage for the Alpha-1-Antitrypsin deficient community and the IGIV shortage for the immune deficient community, yes, it is capsulized in the following two recommended series of comments.

I have no objection, nor do I believe the Immune Deficiency Foundation has objection, to somehow incorporating both of these as one or perhaps two sections of one resolution that might be passed, stressing the importance of addressing the issues of the shortage.

With respect to the Alpha One situation, HHS and its agencies support the development of new therapies for A1PI to ensure that an adequate supply of raw materials, specifically 4.1 paste, be made available to manufacturers for maximum production of A1PI.

Three, to strongly encourage the continued development and licensing of additional sources of A1PI for intravenous use.

Four, that the NIH should expeditiously fund research directed at identifying surrogate markers of lung disease for use in clinical trial protocols.

Five, in consideration of the current vulnerability due to the single supplier, single product, the FDA should be directed to support the development of multiple formulations and delivery mechanisms of A1PI.

Then, with respect to the immune IGIV shortage, is there any discussion or questions on those?

CHAIRMAN CAPLAN: Put them up there.

MR. WALSH: Do you want to put up the IGIV, please?

With respect to the IGIV shortage, number one, the U.S. Government should immediately launch a study to assess the public health consequences of the current level of IGIV supply across indications for which there is proven therapeutic benefit, including primary immunodeficiencies.

Two, the industry should consider its commitment to support IGIV emergency supply programs, like the idea of a safety-net program, and continue to work with patient organizations like the IDF to promote IGIV rationing protocols in both hospital and home care settings.

Three, industry and Government must take the next step in tracking supply by making reliable projections related to product availability at least 6 months into the future.

Four, the FDA should give a higher priority and report regularly on their efforts to expedite their review and approval of new IGIV preparations, expedite lot release for currently manufactured product, and respond quickly with a sense of urgency to industry responses to FDA enforcement actions. Industry and FDA must minimize the length of plant closures and manufacturing slowdowns.

Five, consideration must be given to permitting the distribution of IGIV product currently under clinical trial for which adequate safety data already exists. Consideration should be given to other sources of manufactured product which, for various reasons, are not being released to the U.S. market.

Again, as far as structuring a motion, we could say, whereas, the committee is, et cetera, et cetera, to ensure a safe and adequate access to therapies or plasma derivatives, we make the following recommendations, or at least acknowledge that there is a critical shortage currently.

CHAIRMAN CAPLAN: I understand.

MR. WALSH: I do not know the preamble-type language.

CHAIRMAN CAPLAN: We would say something like it looks like the shortage is there and likely to continue for some time, so, therefore, we--and then you would be at ease.

I guess that is a motion.

MR. WALSH: Yes. So moved in its contorted state.

DR. ALBRECHT: If we pass this, we are very busy telling the FDA what they should do. In my opinion, and this is my opinion as a member of industry, we work with the FDA to come to some of these conclusions. It can usually be achieved.

I do not think it is the position of this committee to be telling the FDA how they should manage an industry. That is the industry's business to work with the FDA because they do have processes for expedited review, and if they do not have them in this area, then that is something that maybe they can work toward.

I cannot see that this is our position to be mandating or telling the FDA these are the things they should be doing.

DR. NIGHTINGALE: If I can interject, our position is not to mandate. Our charter is to advise the Secretary, to make recommendations to the Secretary.

Though I share Dr. Albrecht's concern for some of the language, it will be smoothed out downstream, if not here, but as an example, I think what the FDA should be directed to, actually the FDA has very substantial authority to do this on its own. There goes a very substantial concern within the Office of the Secretary that the Secretary does not interfere in ongoing regulatory actions.

MR. WALSH: Understood, except the criticism. We will expect that we can wordsmith that.

I think the important issue is that we ask that we bring this to the Secretary's attention and ask in the spirit of cooperation or collaboration that the FDA and industry work closer together. It is not working now. We still do not have any response from the feedback recommendations on the IGIV protocol design, and I think that it is just important that the Secretary be asked to at least address this.

DR. NIGHTINGALE: I think, for example, there is one sentence here that particularly does concern me, and I would like to bring it to the attention of the committee.

"Industry and FDA must minimize the length of plant closures and manufacturing slowdowns." I must say, I would find that superfluous. That is a complicated story.

MR. WALSH: Understood, no problem.

DR. NIGHTINGALE: Could that be wordsmithed or removed for further smithing?

MR. WALSH: It could be removed.

DR. NIGHTINGALE: Thank you.

DR. ALBRECHT: I also think if we are going to ask the FDA to look at expedited procedures and so forth, we should let them tell us what they are doing and what their plans are before we ask the Secretary to talk to them about what they have not done.

So I think, to be fair, we need to let them be heard and tell us what their plans are, how they will be going forth, and whether indeed progress is being made. If no progress is being made, then the committee can say to the Secretary, "Perhaps this needs to be discussed."

We have not heard from the FDA with regard to what their plans are or where they are going. So I think that is something we need to hear first.

MR. WALSH: Let's just rephrase that so that it asks that the FDA do that, but specifically address those issues. That is fine.

Dr. GUERRA: Art, what troubles me with this a little bit is we have not put some of the burden on the constituency through the Immune Deficiency Foundation to really track the different conditions in terms of incident rates.

We are putting, it seems to me, some additional layers of responsibility on the FDA and on industry without really seeing what the incident rates are of new disease that is being diagnosed, those that are being definitively treated with some of the new therapeutic type of interventions, whether it is the use of stem cells for reconstitution, et cetera.

I think part of what we need to also do, and maybe it could be covered in a preamble to this recommendation, we need that additional data set.

Dr. GUERRA: I think the Immune Deficiency Foundation through the surveys has reported to this committee on three occasions and has done their best with the limited resources they have, and I believe that they are negotiating for some additional support for oversight of health conditions. They need help, and I think it is inappropriate that they ask for it from any party.

MR. WALSH: Art, let me ask another question because I think it may provide perhaps a source for some of that information.

Are these conditions listed out on birth defects registries, do you know?

DR. GUERRA: I would ask Mariam O'Day from IDF.

MS. O'DAY: I am Mariam O'Day. I am with the Immune Deficiency Foundation.

We do not currently have a national health surveillance program. We do not have a requirement for reporting on birth records. So the efforts that we are putting forward, the first recommendation specifically is to take a look at the health outcomes at different levels of IGIV supply.

We do have plans. We are working with a grant from the Red Cross to put together a research planning committee to start planning national health surveillance.

Thank you.

CHAIRMAN CAPLAN: One of the things when I see the recommendations, we do need to work so that we are not mandating too much and not narrowing the range of response too much.

I also believe, at the same time I have said that, that some motion like this is important to get through simply because we were here a long time ago, made a set of recommendations about how to deal with the shortage. For various reasons, the shortage is still going to be here. The communities affected are still vulnerable. The fact that we felt good about things that we said still does not address the issue of how to deal with the shortage that will be around for some time to come. Some of these things are clearly ways that the Secretary may want to think about.

So I am not worried about any specific thing so much. It is just trying to fine-tune it slightly more than what I think will be helpful in terms of the agencies and the Secretary mounting a response.

DR. NIGHTINGALE: I am worried about some specifics, and they need to be brought up. I am in an uncomfortable position doing this, but I have go to put this back to you guys.

The first, the IDF recommendations clearly in the past, the recommendations for studies to assess public health consequences, studies of the efficacy of IVIG as the idea, as the rest of us know, have been severely impaired by the limited availability of product, and the question comes up here, is a bad study better than what we already know? I have concerns about that.

I very definitely have concerns, legal concerns, about projection of demand over the next 6 months. It has been presented to the committee before that there are substantial antitrust issues that have to be addressed with that one.

I think there are ways around those antitrust concerns, and one of them is common sense and watching a curve as it grows up. It does address that third issue, without us getting mired in antitrust concerns.

There are long-term issues over the release of products that are in clinical trials. It is a complex issue, and I know that the IDF is aware of the complexities of those issues, but they are not reflected in the Recommendation No. 5, at least as I have had a quick chance to read it.

CHAIRMAN CAPLAN: Having said all that, we still have our nose to the grindstone in terms of people saying okay, maybe there are things you want to modify and change, but here are things to contemplate in the face of the shortage.

MR. WALSH: Right. Mr. Chairman, on the twenty-third hour, I do not expect that the committee sit here and rewrite this.

What I would propose is that the language with respect to the A1PI is relatively simple, and perhaps we could work on the language for IGIV to incorporate the same type of structure.

I guess we respect and trust the integrity of the chair and the executive secretary. I would be willing to work with you on the final language and ask the IDF to participate in that process.

Is that comfortable to anybody here?

CHAIRMAN CAPLAN: We could also just send it out, if you want to do that. We could try to wordsmith and then send out to the committee members. That is another option, if you want to try that route.

DR. CHAMBERLAND: But are you going to vote?

CHAIRMAN CAPLAN: We can vote by mail.

DR. CHAMBERLAND: Vote by mail?

CHAIRMAN CAPLAN: Yes.

DR. NIGHTINGALE: That is tricky.

CHAIRMAN CAPLAN: Pardon?

DR. NIGHTINGALE: Real hard.

There is the Federal Open Meeting Act, folks. Sorry.

CHAIRMAN CAPLAN: So you just want their mandate to approve anything.

DR. NIGHTINGALE: I am stuck here. I appreciate John's comment. I do not believe I am changing any position that I have adopted, nor has Dr. Caplan previously, but I think the issue that was on the table here was, look, we made a lot of recommendations a year and a half ago, and things are a little bit better, but they are by no means good enough. For some of us, it is not enough better for us to start clapping our hands, if I summarized your position.

Let the record indicate that I see the IDF and Alpha One nodding in assent to that.

The basic cause, I think, we identified is a shortfall of domestic manufacturing and a shortfall in our expectations that importation would meet the shortfall.

We have addressed the issue of the reimbursement climate in our proposal, which was identified by the industry as a major disincentive to investment.

As far as our specifics, there are ongoing discussions between the foundations and the agencies, and it might be, as I was thinking before I finish this sentence how to finish it, a way to express our current thought by saying that the committee supports the efforts of the Immune Deficiency Foundation, the Alpha One, and other patient advocacy groups in their ongoing discussions with Health and Human Services agencies to take appropriate steps to increase both the safety and the availability of plasma derivatives. That is substantially watered down from where you started, but you may want to build up from that, rather than tear down.

CHAIRMAN CAPLAN: Let me ask another question while you ponder that. Are there others who have motions to put on the table? Is anybody contemplating advancing anything else today that you are willing to reveal at this time?

DR. GUERRA: I have one, but it is totally unrelated to this.

CHAIRMAN CAPLAN: Dana?

DR. KUHN: One that may be appropriate while we are talking about HCFA, and I do not want to overwhelm them as they are already overwhelmed as it is, but it maybe something that we just ask the Secretary to look into.

CHAIRMAN CAPLAN: What I will do, then, is say we will take 10 more minutes on deciding how to respond as a committee with these two proposals.

I guess the ways I see it, one, try and endorse in the spirit that Steve was suggesting, continued efforts by the patient groups to grapple with yet another crisis in the supply of these substances. We might also try to see whether there are particular elements of these documents that we can all agree to, with mild wordsmithing, and let other sections of them drop, or we can just vote them up or down. I guess are the three options.

DR. KUHN: Would it be a possibility for both IDF and for the Alpha community to be able to make a statement on the shortage, the supply shortage? Make a statement on it and maybe give some bullet points to reiterate what we have already asked for in the past.

DR. NIGHTINGALE: Let me try to make a response to see if this would address your concern. It is standard advisory committee practice to permit introduction to the record of statements by the committee members, and those statements can be introduced by the committee members for an arbitrary period, not extensive, but I think 28 days would not be beyond congressional, say, standards.

If any member of the advisory committee wished to introduce a statement into the record that might be signed by one or more members of the advisory committee, that might be a vehicle for keeping the discussion moving. That is not the same as a resolution. We all know what we are talking about here. We are all trying to get to the same place, and we are all concerned that by not doing anything, we do not get any farther than we already are. That would be an option you may wish to consider.

MR. WALSH: That makes good sense.

I apologize to the committee in an attempt to try to expedite the development of a resolution. We used language that was not intended for that purpose, and it just does not fit.

I have got one suggestion that I would like to talk off bar about.

CHAIRMAN CAPLAN: I was going to say, by the way, the only way to get real resolutions through our committee, I have learned since I have been here, is to make them up on the spot or make them illegible on overheads.

[Laughter.]

CHAIRMAN CAPLAN: Mary?

DR. CHAMBERLAND: As a non-voting liaison of the committee, maybe I am out of place in saying this, but one of the things I would be struggling with if I was being asked to vote on these recommendations is that there are 10 recommendations in addition to--I have lost track of the other motions we passed.

I think what I would want to do is actually entertain discussion on each one of these, and instead, I think they are being presented kind of as a package deal.

Personally, I am not sure about what each one of these might mean. I would need some clarification and entertain some discussion, and that could obviously take a long time. I am not saying it is an important thing to do. Maybe this is the time to do it, but I think that is one thing that I am struggling with is that there are 10 of these and they are all different. They are all leading to the same place where everybody in this room wants to be, but I think it is very hard to vote on a package of 10 recommendations.

I think there is a lot of uncertainty about we will wordsmith and we will do this. Unless it is really laid out, I do not think people can have a real good opportunity to know what they are voting for. That is just my observation.

DR. SNYDER: If I can put my 2 cents in, I agree completely. It may be worth saying that there continues to be a critical shortage in these two products that has not adequately to date been addressed and request that the Secretary, FDA, or whatever--

CHAIRMAN CAPLAN: That may be a motion, though, that we could get through because we could say there is a shortage, there continues to be a shortage, we respectfully request the Secretary to work with the affected patient groups to find responses. That then sets it up for the introduction. The Secretary could work with the patient groups and the appropriate agencies, to say that, does that get us anywhere? Then we have got the door open for the 28 days.

DR. NIGHTINGALE: It gets us there. I think we offended the FDA here.

We talked about circularity and other areas. I want to bring up circularity to this one.

Look, we have solved a lot of very difficult problems in the last couple of years. We have not solved even the more difficult problems, and I think that pretty much summarizes my gist of what happened since I showed up here.

What I think this meeting has done is to identify some hard problems that we have solved and some harder problems that we have not solved.

I am at this point almost as concerned about resolutions that are passed after 3 o'clock on Friday afternoon as I was yesterday about resolutions that were passed after 5 o'clock on Thursday.

We may have accomplished as much as we are going to accomplish at this meeting. I happen to think that was a lot, and I might suggest since the problem is not going to go away and since there are ongoing efforts, there is broad appreciation and support for those efforts, both Government support of community efforts and community support of Government efforts. Maybe it is time to take stock of where we are and do some thinking and come back in January, if not before, for another try at this.

MR. WALSH: I do not think anybody seconded my motion, but if they did, I ask them to withdraw same. We will definitely get some comments in within the 28 days and would ask they be submitted on the record.

DR. NIGHTINGALE: Submitted on the record and distributed to the committee, and we can deal with them as the need arises.

DR. HAAS: Steve or Art, are we still saying as part of our record here today that we are concerned that these problems have not been sufficiently addressed?

DR. PILIAVIN: I would be happy to second that.

CHAIRMAN CAPLAN: Yes. When you say it, but when I say it--

[Laughter.]

DR. SNYDER: Can't we just do what we talked about yesterday and just end the letter to the Secretary to say that there is a critical shortage?

DR. NIGHTINGALE: That there continues to be a critical shortage of plasma derivatives despite laudable, if you don't mind, efforts on the part of both industry and Government.

DR. PILIAVIN: Do not say plasma derivatives. Be specific about these two items.

DR. NIGHTINGALE: Okay, fine. There continues to be critical shortages of Alpha-1-Antitrypsin and immunoglobulin intravenous--is that accurate?--despite laudable efforts by industry, Government, and community groups to correct them. We--

CHAIRMAN CAPLAN: --remain deeply concerned.

DR. NIGHTINGALE: We remain deeply concerned and would support new as well as continuing efforts to alleviate that.

DR. GILCHER: I like that as a motion.

MR. WALSH: So moved.

CHAIRMAN CAPLAN: Seconded?

DR. PILIAVIN: Second.

CHAIRMAN CAPLAN: All in favor?

[Show of hands.]

CHAIRMAN CAPLAN: Opposed?

CHAIRMAN CAPLAN: Dana, what do you have?

DR. KUHN: I want to follow in the same vein of thought that Steve is that after 3 o'clock, you probably need a lot more time to make any kind of resolutions, but in talking with the plasma user groups, there is another side of that coin with the HCFA outpatient department services under the Medicaid program. Maybe we can do this in the future, encourage HCFA to include with hemophilia home-based infusion therapies for plasma-based therapies, biotech analogs and blood therapeutic alternatives. The precedence has been set for home-based therapy to be done for people with hemophilia. There does not seem to be any disparaging conflicts of people in the IDF, as well as the Alpha One being able to access that same kind of home-based therapy.

CHAIRMAN CAPLAN: I do not mean to sound indifferent, but I suspect we can hold that until January. Sometimes these things fall through the cracks. So, for the record, let's look at the issue of home-based on the next agenda for some amount of time.

DR. NIGHTINGALE: I would support that, too, because I can assure you there will be a lot of activity related to the proposed rules. It might be a more productive time.

CHAIRMAN CAPLAN: Fernando?

DR. GUERRA: Juste a couple of things. Obviously, our focus is in trying to address issues related to blood safety availability, shortage, and blood products for treating some of the conditions that obviously affect some of these groups of individuals.

I would like for us also to keep in mind that some of those that are affected with these chronic conditions need to say current with their booster doses of immunizations, and given the safety and the efficacy of those vaccines, certainly with individuals with Alpha-1-Antitrypsin deficiency, they need to be encouraged to get their influenza vaccines, as well as those with immune deficiency states, which sometimes we do not target specifically those groups and just offer general recommendations. I think the vaccines and staying current with those can certainly go a long way in terms of preventing some complications.

The other is one for Mary, perhaps, to consider in the hepatitis C awareness campaign. As we try to take that to scale, the emphasis, as I have looked at these, with the exception of two of the older versions of the CDC on hepatitis, in particular hepatitis C, it does call attention to some of the different ways for the disease to spread.

The emphasis, obviously, is on the spread of hepatitis C through blood transfusions. Given the fact that that accounts for a relatively small number of cases, I hope that it does not gain so much attention in the way that the media campaign is driven that we lose sight of probably the greatest risk factors that continue to affect enormous numbers of people that are closely tied to IV drug use or substance abuse and all of those risk-taking factors of multiple sexual partners on protected sex, et cetera. I think that is where we have to probably launch the even greater public health campaign.

DR. DAVEY: At the twenty-third hour, I have a couple of quick comments. Just about hemochromatosis, the committee may remember that we did recommend that we look at ways to include them as donors in the blood supply, and that there is a two-pronged effort. One was kind of regulatory on how to change the CFR and the frequency of donations. I commend the FDA for really taking some good steps on that, but the other part of the equation was, and I quote, that we recommended to the Department "to create policies that eliminate incentives to seek donation for purposes of phlebotomy."

Steve, I know we have heard some inklings, but I have not heard anything about what those policies are.

There is an AP story out today based on the comments yesterday that people with hemochromatosis can now donate blood, but there has been no policy comments from the Department about incentives and how to produce them. I think I know what your answer may be, but can you help me on that? Are blood centers just going to have to eat it in terms of the cost? Is it going to be our job to kind of provide free services?

DR. NIGHTINGALE: We could have a discussion about what is actually on the plate, but I think, first of all, the August 10th letter from Dr. Henney to Dr. Satcher speaks for itself. As you know, we have and are continuing to have discussions with HCFA about reimbursement mechanisms, pass-throughs, but so far we have not identified a durable solution. That is why that response has been delayed.

To cut to the chase, it is HCFA's interim conclusion, which I share, that a durable solution would have to come from the legislative branch. They concluded that they do not have the authority to implement the options that we have considered.

DR. DAVEY: Too bad.

CHAIRMAN CAPLAN: Here is a real exciting idea. New business? I feel like I am on the survival raft here.

[No response.]

CHAIRMAN CAPLAN: All right. In that case, let me thank the committee for getting a lot of work done in a number of tough areas. I know we will make sure to get the letters out from the Alpha One community and the Immune Deficiency Foundation, and you can look at those and decide whether you want to sign on.

We will try to get the wordsmithed resolutions that we have put through with their preambles out to you.

Our next meeting date in January is on the web site. I think it is the 25th, but it is in January. I know that. It is going to be here, right?

DR. NIGHTINGALE: Yes, it is going to be here.

CHAIRMAN CAPLAN: It is going to be here again.

DR. HAAS: Do we know who will not be attending?

DR. NIGHTINGALE: No. Until the Secretary signs a piece of paper, we know nothing.

CHAIRMAN CAPLAN: But if you look on the web site, if your name is not there anymore, do not come back in January.

[Laughter.]

DR. PILIAVIN: What is the URL?

CHAIRMAN CAPLAN: I think we are going to get an answer to this "when." We are going to know when the sign-offs take place. It is in the loop in terms of reappointment and new members.

DR. NIGHTINGALE: Perhaps the record should show that the executive secretary's ears are bright red.

[Laughter.]

CHAIRMAN CAPLAN: Thanks. We will see many of you in January.

DR. NIGHTINGALE: Thank you very much.

[Whereupon, at 3:23 p.m., the meeting concluded.]