Guest Editorial: March 2005: Magic Bullets and Economic Realities

Orly Avitzur, MD, MBA


March 01, 2005

Even before natalizumab -- a new drug for the treatment of relapsing-remitting multiple sclerosis (MS) and Crohn's disease -- was released, the buzz had reached palpable levels and physicians were inundated with phone calls. Infusion companies, sensing a new market opportunity, pitched their turnkey services; competitor pharmaceutical companies ramped up their office calls and armed their reps with counterpropaganda rhetoric; Elan and Biogen (the comanufacturers) engaged in a media blitz; and patients lined up for more information. And it was easy to get caught up in the excitement. The data looked so impressive that in November 2004 the US Food and Drug Administration (FDA) granted natalizumab accelerated approval following priority review based on 1-year data from 2 phase 3 studies, the Fibrillation Follow-up Investigation of Rhythm Management (AFFIRM) monotherapy trial and the SENTINEL add-on trial with intramuscular interferon beta-1a. In the 2-year, randomized, placebo-controlled AFFIRM study, natalizumab reduced the rate of clinical relapses by 66% compared with placebo at 1 year, and 60% of the patients developed no new or newly enlarging T2 hyperintense lesions, as compared with 22% in the placebo group. In the SENTINEL trial, interferon beta-1a-treated patients who continued to experience disease activity were randomized to add natalizumab, resulting in a 54% reduction in the rate of clinical relapses over and above the effect of interferon beta-1a alone.

Skeptics, competitors, and cautious experts frowned upon those practitioners willing to act on the basis of only 1 year's data. Many of these critics and others continued to express reservations, even after the second-year data, released in mid-February, confirmed the earlier results,* because 1.5% of patients were reported to experience adverse reactions to the drug, including a potentially serious side effect -- the lack of a sufficient leukocytic response to central nervous system viral and bacterial infections.

*The phase 3 natalizumab AFFIRM monotherapy trial achieved the 2-year primary end point of slowing the progression of disability in patients with relapsing forms of MS (42% reduction compared with placebo), demonstrating a 67% reduction in the rate of clinical relapses over 2 years; other data from AFFIRM at 2 years, including MRI measures and immunogenicity, were similar to previously reported results.

Nevertheless, prior to the February disclosure, in a survey of 53 neurologists and 5 reimbursement specialists, Navigant Consulting found that nearly half of the neurologists indicated that they were likely to prescribe natalizumab as a first-line treatment to their patients, and would switch at least 30% of their patients currently taking the other disease-modifying drugs to natalizumab. Apparently, many neurologists viewed this new drug, an agent that has evoked thoughts of a "magic bullet" for MS, as already having a secure place in the treatment of this debilitating disease. Some were even asking what this would mean for patients who were stable and experiencing only minor side effects with their current prophylactic regimens.

And perhaps the most vexing conundrum, the one that often ultimately exerts the greatest influence on physician behavior, was the harsh economic reality related to any new drug's administration. Who was going to pay for the drug? Would the costs of administration exceed the reimbursement? Would the variability in payer responses be too difficult for the practitioner to manage? In a healthcare environment where so many issues have turned topsy-turvy, rather than asking who would fit the bill, many were first asking who would foot the bill?

But on February 28, 2005, those questions were put on hold when the manufacturers announced the voluntary suspension of natalizumab due to reports of 2 serious adverse events that had occurred in patients treated with natalizumab in combination with interferon beta-1a -- 1 fatal, confirmed case and 1 suspected case of progressive multifocal leukoencephalopathy (PML), a condition known to be associated with immunosuppression. Natalizumab is an immunosuppressant drug different from the interferons or glatiramer acetate. Its mechanism of action prevents the slowdown of peripheral circulating leukocytes by blocking the antigens that attach themselves to the arterial walls in response to central nervous system (CNS) myelin breakdown and inflammation. In this way, fewer leukocytes enter the CNS and the degree of CNS inflammation during an exacerbation is thus attenuated. As with any form of immunosuppression, there exists the potential for infection or tumor or, in this case, PML, but in fact PML has not heretofore been reported on any of the MS immune-altering agents when used alone.

Looking back at the months following the initial hype, advice ranging from misleading to illegal was disseminated to physicians in practice. What can we learn from this experience and how can we handle future predicaments when experimental treatments look so promising?

Natalizumab, like many new treatments, was quite expensive, and because it was available only in the injectable intravenous form, it was also quite labor-intensive. The main caregivers for patients with MS are neurologists who usually lack the personnel to administer the equivalent of chemotherapy on an outpatient basis. Herein arise questions of coding and payment for the drug itself and for its administration. A solo or group private practice neurologist could have ended up absorbing the costs of this drug, marketed at $1808 per dose, totaling $23,504 per year.

To date, no uniformity of policy had been formulated among the various payers regarding coverage for this drug. Although FDA-approved and Medicare-sanctioned, it was nevertheless considered either experimental or a second-line drug by many insurance companies.

When confusion abounds, bad advice follows. In the few months after the hype, the following information reverberated in physicians' offices.

In the aftermath of drastic intravenous immunoglobulin (IVIG)-related cuts in reimbursement, infusion companies welcomed natalizumab as a new market opportunity, with preexisting channels of delivery. Already poised to provide comprehensive services to neurologists, including procurement of the drug, provision of related supplies and nurses, and billing and administrative services, they had hoped to leverage these contacts by touting their expertise and selling simplicity to providers who, in turn, would supply patients and facilities. This was especially appealing to those practitioners who had gambled on the longevity of IVIG reimbursement policies and were seeking alternative means to offset their investment losses and the fixed costs of their infusion suites.

Contracts such as these, however, need to be reviewed very carefully. Payer policies were not explicit enough to ensure a positive financial return, raising troublesome questions of who would shore the burden for potential losses. The lessons from IVIG are still fresh. Practitioners who redefined their specialty focus, or who added square footage to create the physical space or staffing to provide the care, are now faced with the backlash of new reimbursement policies. Last year, Medicare determined that reimbursement for infusions administered in physician offices would be less than the cost of the drug. Although it has made a slight adjustment, because it still reimburses far better in the hospital setting, Medicare has shifted the outpatient market to more costly hospital-based care. Furthermore, even if outsourced, the consequences of improper coding fall squarely on the physician and may include audits, fines, and even criminal charges. Yes, it may be complicated, but private medical practices that engage infusion company services for such services ultimately shoulder the principal responsibility and must factor in the cost for remaining informed.

No unified, national policy for reimbursement exists in the United States. In fact, the multiple-payer system is not only independent but proprietary and confidential. Variations range from nonreimbursement for drugs not in the formulary to differing uses of drug and procedure codes with varying reimbursements. Some insurers announced that they were switching from flat copayments to percentage systems, making even a 20% copayment of natalizumab, at approximately $360/month, unaffordable to many patients. Some allowed concurrent evaluation and management codes to offset the reduced payments, but even these varied from payer to payer. Many payers mandated treatment failure with 1 or more existing drugs before allowing treatment with natalizumab.

Whereas other industries are constantly engaged in cost accounting and have mechanisms to measure each aspect of doing business, medical practices often neglect to consider such expenses. The time spent engaging in a laborious precertification process, with the reproduction and transmission of documentation, the creation of letters of medical necessity, and extensive telephone interactions, may in fact outstrip the margin of profit and make such transactions money-losing propositions.

It is easy to rationalize that if the payers reimburse for a code, it must be acceptable to bill it that way. However, this is far from the truth. Physicians would all be well served by attending coding courses and gaining a basic understanding of current evaluation and management, procedural, and the International Classification of Diseases, Ninth Revision ( ICD-9 ) coding. Unfortunately, most medical schools and residency training programs do not yet provide young doctors with formalized business training. Documentation rules are complex in and of themselves, and when new treatments are added to the mix, the potential for errors can be expected to rise.

Pleading ignorance to correct coding rules is not an acceptable response for an auditor. Some payers are now requesting repayment on the basis of extrapolations of small sample size and multiple historical years. Demands for refunds can run into the tens of thousands of dollars, and engaging the services of attorneys to challenge such requests is not inexpensive.

Some practices hedged their bets by asking patients to sign a waiver accepting responsibility for the cost of the drug if reimbursement failed to materialize. Although physicians have been forced by the current healthcare environment into a constant tension between making a living and wanting to help patients, this is often a poorly thought-out strategy. Patients, desperate for the right treatments for their conditions, may sign anything placed on their clipboards and hope for the best. But when the bill arrives, they may feel misled.

Additionally, MS patients are among the most vocal and active online users of Internet chat rooms and discussion boards, according to studies by the Pew Internet & American Life Project. Current forums have been abuzz with complaints about the glitches and delays in the precertification process. If a drug is not being covered, they are sure to spread the word quickly, and if they are not pleased with their care, physicians may become the unintended targets of their discontent.

Sadly, current reimbursement policies are only loosely tied to clinical guidelines or patient benefit. Although physicians are trained to rely on evidence-based medicine, corporate policy may diverge if the treatment is costly and a less expensive and adequate alternative exists. The influence of such policies on physician behavior is insidious. Battered and fatigued by fighting the system, it is all too easy to give in. On a pragmatic basis, there are just not enough hours in the day to argue on behalf of every patient. Ethical dilemmas ensue. Traditional medical wisdom teaches that dire situations may require drastic measures. MS exacerbations may result in significant incremental disability, but even with its relatively high rate of adverse reactions, natalizumab could have hardly been classified as a drastic treatment. A patient receiving a less costly regimen who had incurred the 2 required natalizumab preauthorization "treatment failures" may well have wondered whether the chief executive officer of the insurance company would accept a similar impediment with respect to his or her spouse's cancer chemotherapy.

Other medical-ethical-legal pitfalls exist for the neurologist in a disease-drug combination, such as this one. A practice cannot afford to absorb the out-of-pocket costs of purchasing a drug, such as natalizumab, but any time lost in giving even an experimental drug as a result of financial questions may result in a worse outcome for the patient. The US Supreme Court has ruled that managed care companies cannot be held liable for failure to treat under these circumstances, so the actual liability quickly falls on the physician. The physician is also potentially liable, probably jointly with the drug's manufacturer, for unexpected or even expected adverse effects of the drug, which in this case, even prior to the adverse events leading to its withdrawal, were greater than with the older disease-modifying drugs.

And what are physicians to do, if pending further study, natalizumab comes back on the market as an approved drug for use as a single agent only, that is, without concomitant use of other immunosuppressants? The forms of MS (and Crohn's) for which natalizumab would be used are not benign diseases. They carry their own morbidity and mortality. In contrast to the recent cyclooxygenase 2 (COX-2) inhibitor controversy, we are dealing not only with potential morbidity from both the disease and the treatment, but also with competing mortalities.

The legal and financial morass that complicates this system often requires, at this point, that individual physicians pass the responsibility in these situations along to the larger institutions. Most practices would probably have told their MS patients who qualified medically for natalizumab that they should have had the drug but that they would unfortunately have had to seek this therapy elsewhere.

With a reimbursement system that often makes no sense, one that continues to overweight the rewards for procedures while creating disincentives for cognitive services, and whose policies limit, without any clear logic, the locations in which services will be paid, who would wonder why physicians are becoming increasingly dissatisfied? In the end, of course, it is the patients who will bear the ultimate burdens resulting from the lack of medical consensus, the proliferating bureaucratic roadblocks, and the uncertainties surrounding new drugs.


Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.