Hemophilia Advocates Say Surcharge Would Prevent Potential Medical Conflicts of Interest

Andrew Kitchenman | February 11, 2013 | Health Care
Under proposed bill, doctors and treatment centers would never have to choose between profit and best treatment

In a bid to fund four of New Jersey’s hemophilia treatment centers, a proposed bill would add a surcharge on medicine used to treat the potentially deadly disorder, which greatly reduces the blood’s ability to clot.

The bill (A-2180) has advocates and drugmakers squaring off on either side of the issue. The Assembly Health and Senior Services Committee released the measure late last week

The proposal, which is supported by the Hemophilia Association of New Jersey, would require drugmakers to pay a 6 percent surcharge on hemophilia medicine. Homecare providers would pay 2 percent.

Although the bill calls the payment a “rebate,” it would be paid to the association and centers rather than to patients. The premium would be used by the advocacy group to offset the costs of insurance for hemophilia patients and to fund the state’s hemophilia treatment centers.

The bill’s critics argue that the so-called rebate would be better described as a tax.

Association officials claim that the legislation is necessary to avoid conflicts of interest for hemophilia centers and doctors. Without it, they argue, treatment centers would be required to enter the federal 340B program, which regulates drug prices, giving centers and doctors an opportunity to receive discounted prices from drug manufacturers.

That would enable the centers and doctors to profit from the difference between the lower prices and the amount that insurers will pay for those medications. This situation could force the centers and doctors to choose between maximizing their profits and selecting the most medically appropriate treatments, according to bill advocates.

“The bill is desperately needed to keep the doors open of the hemophilia treatment centers, who’ve lost 65 percent of their federal funding over the course of the last year,” said Elena Bostick, association executive director.

It’s estimated that the legislation would raise about $1.2 million annually to treat some 50 patients.

The pharmaceutical and biotechnology trade group the Plasma Protein Therapeutics Association (PPTA) supports an alternative to the bill. Instead of instituting the tax to fund the treatment centers, the alternative would shift the funding from the state to the Medicaid program.

PPTA officials argue that this approach works well elsewhere in the country and that the state would benefit from a 100-percent federal Medicaid match on state funding to the treatment centers.

The group also argues that it’s wrong for the association to receive funding under the bill.

“I’ve never opposed a patient bill anywhere else in the country other than this bill and its various incarnations,” said Bill Speir, director of state affairs for the Annapolis, Maryland, -based PPTA. “We oppose it because this is a tax on medicine and we believe that’s bad health policy.”

Bostick, however, argues that if funding comes through Medicaid, the centers would have no choice, under federal regulation, other than to participate in 340B.

“Their option is to go 340B,” which could force a conflict of interest, Bostick said.

“If they choose to become 340B, it will put us in a position where the physicians are negotiating with the manufacturers, writing the prescription, selling the product to the patient, and billing the insurance company. We don’t want to go there,” Bostick said, adding that the association proposed the bill as an “ethical solution” to the dilemma.

Speir also contends that under the Affordable Care Act, treatment would no longer require the Hemophilia Association of New Jersey to help patients pay for their insurance. Instead, beginning on January 1, 2014, the federal government will offer subsidies to buy insurance for low- to-middle-income residents through online health benefit exchanges and will limit their out-of-pocket expenses.

Dr. Claire Philipp of the Regional Hemophilia Treatment Center at Robert Wood Johnson Medical School said the New Jersey centers have chosen not enter the 340B program.

“We as physicians have wanted to preserve our role as specialized physicians taking care of this group of patients, rather than to also become involved in the sale of [blood-clotting] factor concentrates to the very patients we treat,” Philipp said in testimony she submitted to the committee.

Richard Vogel, who has hemophilia and contracted HIV in 1982 through an infected blood product, said he is concerned that doctors depending on the 340B program would limit the range of products available to patients to those that are most profitable to doctors.

“The determination of which product to prescribe for an individual patient should be based upon the medical judgment of the treating physician with the input of the patient or patient’s guardian, not upon revenue or profit maximization,” Vogel said.

PPTA lobbyist A.J. Sabath said it is wrong to increase costs to drugmakers when the state has an option that can instead provide more federal funding.

“We work closely with hemophilia organizations throughout the country on trying to ensure that they have access to the medicine that they need, but what we don’t believe in is that while it says rebate, that this is a rebate in this bill,” Sabath said.

The PPTA submitted testimony that the rebate would instead be the first tax of its kind in the country, essentially forcing drug manufacturers to fund an association.

“What’s next . . . a tax on cancer drug manufacturers to fund the American Cancer Society?” association officials asked.

Bill sponsor Assemblyman Herb Conaway Jr. (D-Burlington) said he wanted to find a way to support the centers without adding to the state budget.

“I thought it would be important to find some mechanism — when we see that there is both decreasing federal and state support for the work that needs to be done — bringing help to people off the budget, understanding how difficult our budgetary situation is,” Conaway said. He asked the two sides to further discuss the bill and report back to him.

The bill was released by a 7-2 vote, with all seven committee Democrats voting in favor; two Republicans voted against it and two abstained. The Senate Budget and Appropriations Committee released the Senate version of the measure in September.