HMOs take softer stance on anemia drugs

By Kim Dixon

WASHINGTON, Oct 26 (Reuters) - Private health plans, which often look to Medicare to guide reimbursement for pricey treatments, are taking a less-restrictive position than the government in paying for controversial anemia drugs.

Medicare, the federal health insurance program for 43 million elderly and disabled, is under fire from some cancer doctors for its recent decision to reduce payment for drugs. Millions of people take Amgen Inc's (AMGN.O) Aranesp or Johnson & Johnson's (JNJ.N) Procrit to fight anemia from chemotherapy.

Tighter government reimbursement for the drugs, which earn the companies billions annually, came after several studies found higher doses of the drugs boost risk of heart attack, stroke and death.

Sales of the drugs have slumped already over the safety concerns, with U.S. Aranesp sales down 17 pct so far this year, and pressure from private payers could dampen sales even more.

Health insurers often base their reimbursement policies on Medicare, according to experts. But in this case, they are largely siding with the cancer doctor groups, which favor a more aggressive treatment approach, company officials said.

Medicare's stance puts commercial payers in a bind: If they cut payments for drugs used by millions to save millions, they risk igniting the wrath of patients, who are backed by their doctors.

Lee Newcomer, senior vice president for oncology at UnitedHealth Group (UNH.N), the biggest insurer by revenue, said "we're not planning to change our policy" after Medicare's decision.

"Quite frankly, a few things bothered me about the decision," Newcomer said, including the opposition from cancer doctor groups.

Aetna Inc (AET.N) earlier this month said it would endorse a broader treatment range, while a spokesman for WellPoint Inc (WLP.N), with 36 million customers, said the Medicare change will not trigger a new review of the agents.

The drugs are erythropoietin-stimulating agents, also known as ESAs or Epo drugs. Aranesp is Amgen's best-selling drug, with $4.1 billion in 2006 sales. Last year's Procrit sales were $3.18 billion, though use of both has fallen sharply this year amid safety concerns.

"UNUSUAL SITUATION"

"It's an unusual situation where there is a huge patient population and a life-or-death clinical intervention," Sean Tunis, former chief medical officer at the U.S. Centers for Medicare and Medicaid Services (CMS), said.

Private payers may be taking the less-restrictive stance because of a feared backlash from employers concerned about the ire of workers and doctors, according to a former industry insider.

"On the commercial side, you have to look at the cast of characters driving the decision-making process," said Robert Seidman, former chief pharmacy officer at insurer WellPoint Inc. "I think what the commercial payers are doing is looking to CMS and then looking for a safe place."