1 
 
                 DEPARTMENT OF HEALTH AND HUMAN SERVICES

 
           ADVISORY COMMITTEE ON BLOOD SAFETY AND AVAILABILITY 
 
                           Twenty-First Meeting

                                Volume II

 
                                8:32 a.m. 
 
                         Friday, August 22, 2003

                     Hyatt Regency Capitol Hill Hotel 
                               Capitol Room 
                          400 New Jersey Avenue 
                         Washington, D.C.  20001 

                                                                  2 
 
                         P A R T I C I P A N T S 
 
       Mark Brecher, M.D., Chairman 
 
       Larry Allen 
       Judy Angelbeck 
       Celso Bianco, M.D. 
       Ronald Gilcher, M.D. 
       Edward D. Gomperts, M.D. 
       Paul F. Haas, Ph.D. 
       William A. Heaton, M.D. 
       Christopher Healey, J.D. 
       W. Keith Hoots, M.D. 
       Jeanne Linden, M.D. 
       Karen Shoos Lipton, J.D. 
       Lola Lopes, Ph.D. 
       Gargi Pahuja 
       John Penner, M.D. 
       S. Gerald Sandler, M.D. 
       Mark Skinner, J.D. 
 
       Non-voting Government Representatives 
 
       James S. Bowman III, M.D. 
       Jay Epstein M.D. 
       Mathew Kuhnert, M.D. 
       Harvey Klein, M.D. 
       Captain Lawrence McMurtry 
       LTC Ruth Sylvester 

                                                                  3 
 
                             C O N T E N T S 
 
       AGENDA ITEM                                             PAGE 
 
       Call to Order                                             4  
 
       Committee Discussion                                      5  
 
       New Technology Potentials 
        Terumo - Jeff Miripol                                   17  
        Haemonetics - Jerry Holmberg                            47  
 
       Comments of Steve Binion, Baxter                         75  
 
       Public Comment                                           77  
 
       Committee Discussion                                     77  
 
       CMS Prospective HOPPS 
         American Association of Blood Banks                   120  
         America's Blood Centers                               150  
         American Red Cross                                    166  

                                                                  4 
 
                          P R O C E E D I N G S 
 
                 DR. BRECHER:  Here's another public 
 
       service announcement that's related. 
 
                 [Videotape played.]

                 DR. BRECHER:  Okay.  It's a good thing a 
 
       little dog didn't get it before the big dog. 
 
                 With that little diversion, we're going to 
 
       move on to looking at new technology potentials, 
 
       and the first speaker is Jeff Miripol from Terumo,

       if he's here. 
 
                 Jeff is not here.  Why don't we--who's the 
 
       next one?  Why don't we get Jerry Holmberg?  Is he 
 
       here? 
 
                 Oh, this is good.  Anyone got any other

       film clips? 
 
                 [Pause.] 
 
                 DR. BRECHER:  So much for the best laid 
 
       plans.  Well, we could go ahead and have some 
 
       public comment, if there are any--nobody here for

       that either, huh? 
 
                 Anyone got any good jokes?  This is a 
 
       joke. 

                                                                  5 
 
                 I apologize.  It's looks like we're going 
 
       to just go on hold until 9 o'clock.  So much for 
 
       the best laid plans.  Is there anyone for public 
 
       discussion?  Anyone want to make a public comment?

                 [No response.] 
 
                 DR. BRECHER:  We tried.  Does the 
 
       Committee want to discuss what we've heard so far? 
 
       We could start on that.  Presumably we're going to 
 
       hear about some alternative technologies, updates

       from Haemonetics on the frozen deglycerolized red 
 
       cells. 
 
                 MS. LIPTON:  I was just going to suggest 
 
       that in light of everything we've heard to date, I 
 
       didn't see any need for a resolution on the part of

       this Committee with respect to the reserves.  But I 
 
       offered to take all of the comments that we heard 
 
       yesterday back to the disaster task force and ask 
 
       them to consider and then to come to this Committee 
 
       perhaps with a recommendation or a series of

       recommendations for consideration, if that would be 
 
       helpful. 
 
                 DR. BRECHER:  Further comments?  Jeanne? 

                                                                  6 
 
                 DR. LINDEN:  In the discussions yesterday, 
 
       I was giving some thought to our most recent modest 
 
       disaster, you know, the great power outage in the 
 
       Northeast, and thinking about what happened there

       and the possible ramifications had that been more 
 
       extended, because the transportation options were 
 
       extraordinarily limited, with no planes, no trains, 
 
       and gridlock traffic-wise with a lot of the bridges 
 
       closed.  And since most of the businesses, in fact,

       really all of the businesses closed, there couldn't 
 
       be new collections, and we lost several thousand 
 
       potential units that could have been collected and 
 
       weren't.  So that was another example of what--you 
 
       know, the blood we were using is the blood on the

       shelf.  And it would have been possible to get more 
 
       blood in over time.  But had that been extended, 
 
       that was really an issue.  And I think it was a 
 
       good learning experience to look at, well, when we 
 
       lost the infrastructure, you know, what can we do

       in those situations? 
 
                 I think examples like that and certainly 
 
       some of the ones that Ron has shared are really 

                                                                  7 
 
       good learning experiences.  We can look at the 
 
       actual issues that came up. 
 
                 Something else that came up with the loss 
 
       of power is the loss of computer services.  We even

       in Albany lost access to the Internet.  In New York 
 
       City, they had nothing, no phones, although AOL was 
 
       working so people could use their home e-mail.  But 
 
       because the laboratory testing is all done in the 
 
       state, we have no laboratories doing infectious

       disease testing for blood donations in New York 
 
       State, we couldn't get the test results back.  And 
 
       in small numbers for certain emergency donations, 
 
       you could get them by phone or fax in some cases, 
 
       if you had phone or fax.  Those of you who read my

       article about faxing, you know, know that faxing is 
 
       fraught with a lot of problems.  And, obviously, 
 
       when we're talking about thousands of units, that 
 
       can't be done.  It would be very error-prone if you 
 
       were to do manual transcriptions and basically a

       lot of units that were even on the shelf couldn't 
 
       be used because the test results couldn't be 
 
       accessed. 

                                                                  8 
 
                 So there's all sorts of ramifications as 
 
       we rely on electronic technology that, when you 
 
       lose the power, you all of a sudden lose that 
 
       electronic technology.  So it's just something I

       was thinking about over the last day or so that, 
 
       you know, I think is a good learning experience. 
 
                 DR. BRECHER:  Karen? 
 
                 MS. LIPTON:  Well, in fact, because the 
 
       disaster task force convened immediately, we were

       aware of these issues, and we're developing some 
 
       modules, particularly, as I said, on the water and 
 
       the computer situation. 
 
                 I think it was Ron who said this, that, 
 
       you know, planning for a disaster isn't the plan.

       It's knowing--it's really knowing how you react and 
 
       who you get to.  And so I don't think that we can 
 
       understand every situation.  I think the most 
 
       important thing we now do is at least we have a 
 
       communications hierarchy that allows us to

       communicate even if all those systems go down.  And 
 
       we just have to know that we're in touch. 
 
                 But we are aware of that, and we're 

                                                                  9 
 
       actually doing a debriefing on this.  Every time 
 
       something happens, we do a debriefing on it, and we 
 
       will go out to the regions as part of the process 
 
       to ask them what their experiences were that they

       could share with other blood centers. 
 
                 DR. BRECHER:  Ron? 
 
                 DR. GILCHER:  What I wanted to say was 
 
       that, in fact, that's absolutely correct.  The 
 
       disaster never fits the plan, and we've learned

       that from the two major disasters we've had in 
 
       Oklahoma.  But, in fact, the process of planning is 
 
       so important because you really then have to--you 
 
       have things in place so you can make the plans as 
 
       the disaster is in progress.  It's critical that

       all the staff know exactly where to go, what to do; 
 
       when something happens everybody has a place to go, 
 
       and then having redundant systems in place. 
 
       There's just no generator, fuel supplies and so 
 
       forth.  We have done that at our blood center so we

       can operate literally for a couple of weeks without 
 
       any additional power.  But that's a big problem to 
 
       us because we do take power outages in Oklahoma 

                                                                 10 
 
       quite frequently during the summer months. 
 
                 MS. LIPTON:  We just figured we're just 
 
       going to establish New York Blood Center as our 
 
       test case for everything because it always seems to

       happen to them. 
 
                 DR. BRECHER:  It makes you wonder if in 
 
       their disaster plan--I imagine there was huge 
 
       gridlock in Manhattan--if they include bicycle 
 
       messengers to deliver the units of blood around the

       city. 
 
                 We'll take a 30-second pause while they 
 
       fix the lines. 
 
                 [Pause.] 
 
                 DR. BRECHER:  Jerry, you're on.

                 DR. SANDLER:  Yesterday we didn't have a 
 
       chance to ask a lot of questions to Dr. Williams, 
 
       and I was wondering if I could pick up on that. 
 
                 Prior to the presentation, many people 
 
       correctly identified the fact that we don't have a

       nationwide information system that tells us how 
 
       much blood we have and where. 
 
                 On the other hand, we really have three.  

                                                                 11 
 
       For years, Marian Sullivan's operation has been 
 
       functioning.  The Office of the Secretary has 
 
       sponsored the sentinel sites, and Dr. Goldfinger 
 
       and myself and other blood bank directors have been

       participating and sending our information, and 
 
       there's been publications, and now FDA has taken an 
 
       initiative.  And I was wondering if you could 
 
       perhaps define if there's different functions for 
 
       each of these national data collecting systems that

       aren't. 
 
                 MR. WILLIAMS:  I don't have the advantage 
 
       of having the slides here, but in one of the early 
 
       slides, what I did was set out what I thought would 
 
       -- [sound out] -- of a national system.  And, yes,

       we have several systems in place.  Each one of 
 
       those measures a certain aspect of the blood supply 
 
       and is useful for a specific purpose but doesn't 
 
       cover the whole waterfront of what we might need. 
 
                 For instance, the NBDRC program, as I know

       it, speaking to the monthly data collection, is 
 
       from 26 sentinel sites.  It's rather comprehensive 
 
       data on collections and supply and variations over 

                                                                 12 
 
       time. 
 
                 The one aspect of that is that the data is 
 
       available sometime after the reports are actually 
 
       issued, so it's not realtime.  And, Karen, if you

       want to correct me on any of these, I'm going from 
 
       memory here.  But one disadvantage is that it's not 
 
       realtime information.  It's a good sample, but it 
 
       is a sample.  It's not a national population-based 
 
       assessment that will really give assessments at the

       local and regional level. 
 
                 The HHS program also is a sentinel program 
 
       at 29 sites.  It measures hospital inventory for 
 
       all blood types in inventory by a standardized 
 
       definition.  This is published on a daily basis.

       Again, I think one potential shortcoming of that 
 
       design is that it, again, doesn't represent the 
 
       local and regional shortages that might occur. 
 
       While it does give a national picture of, you know, 
 
       when things go up, when things go down, if you have

       a crisis in a specific area you really still don't 
 
       know what's going on.  And Mac is closest to that 
 
       and might wish to comment as well. 

                                                                 13 
 
                 The program that was described in some 
 
       depth at an earlier meeting--and I just went over 
 
       it very quickly yesterday--the TRANS-Net program is 
 
       specifically designed at the current time to

       measure shortages at primarily the transfusion 
 
       service level, although it would also function at 
 
       the blood center level.  It's designed to be a 
 
       population-based voluntary program so that--let's 
 
       assume for the moment we had 100 percent

       participation, which is unlikely.  We would be able 
 
       to capture individual local and regional shortage 
 
       issues, have that available in both the database 
 
       and a geospatial map so that we would be able to 
 
       pinpoint when trends were beginning to develop,

       compare them with a historical record, and be able 
 
       to do some predictive modeling, and really have an 
 
       in-depth perspective of how the nationwide picture 
 
       looks.  If there's a shortage in one area, there 
 
       may be a worse shortage in another area.  And I

       think one big advantage of the TRANS-Net program is 
 
       it gives an assessment of what impact those 
 
       shortages are having rather than just saying, okay, 

                                                                 14 
 
       there's a shortage in this area. 
 
                 If it starts to approach a point where 
 
       patient care is actually being compromised, you 
 
       know that through this program, and I think that's

       one advantage. 
 
                 None of these are ideal systems which 
 
       capture all of the elements, and I think, you know, 
 
       the plea that was being made is to build a 
 
       comprehensive system that as efficiently as

       possible through a combination of these programs 
 
       will capture the elements that we need, both to 
 
       assess what's going on in a routine situation as 
 
       well as in extreme crisis, just so it can be 
 
       managed efficiently.

                 DR. BRECHER:  Mat? 
 
                 DR. KUHNERT:  Mat Kuhnert from CDC.  I 
 
       just wondering in sort of thinking about the 
 
       discussions yesterday about what analogies there 
 
       are and sort of comparable systems in other fields.

       You know, there was some mention about Wal-Mart and 
 
       business models, which I don't know if we can hope 
 
       to model those efficiencies, but also to other 

                                                                 15 
 
       systems in health care like pharmaceuticals, 
 
       vaccines, but also other biological products like 
 
       organs.  There's an organ transplant network and 
 
       sort of--it's a different, I think, scale.  This is

       a far greater scale.  But I wonder if that could be 
 
       looked at and compared to as far as whether there 
 
       could be any analogies to blood from the experience 
 
       of organs and also tissues. 
 
                 The other thing I wanted to mention, it

       seems like there's a lot of existing efforts for 
 
       reserves, and, you know, maybe there isn't one 
 
       answer.  There's no one hemovigilant system in the 
 
       United States, and maybe it is going to end up 
 
       being that there's going to be different

       approaches.  But the key point will be connecting 
 
       those together, and the key point will be whether 
 
       the systems can talk to each other.  So I think 
 
       data exchange is going to be the biggest issue, I 
 
       think, to tackle.

                 DR. BRECHER:  Mark? 
 
                 MR. SKINNER:  I just want to make a 
 
       comment, and it's not really the focus of this 

                                                                 16 
 
       discussion, but we did have a presentation by Julie 
 
       yesterday afternoon on PPTA, on kind of the related 
 
       issues.  It wasn't the focus of all the 
 
       discussions, but I hope the Committee is mindful

       that the issues--there are a lot of parallels 
 
       between the discussions.  And while the nature of 
 
       the shortage may be different because of the supply 
 
       in the system for the plasma-based therapies, we 
 
       have experience with facing sustained shortages,

       like the two-year shortage of recombinant products. 
 
       And there really aren't the same kinds of 
 
       contingency and back-up plans there, as well as the 
 
       same issues of getting product to the rural 
 
       hospitals and other places when you need

       recombinant products.  That whole infrastructure 
 
       and that side of the equation in managing a 
 
       sustained shortage on the plasma products as well 
 
       as the emergency need in areas that don't have 
 
       ready access for certainly the coagulation

       therapies, that piece doesn't exist as well.  So 
 
       not that this is where we're going to answer that 
 
       question, but I just wanted to kind of point out 

                                                                 17 
 
       what was behind the rest of what Julie said 
 
       yesterday from my impression. 
 
                 DR. BRECHER:  Okay.  I think we're ready 
 
       to move on to our morning speakers on the new

       technology potentials.  Jeff, are you ready to go? 
 
                 MR. MIRIPOL:  Yes.  It looks like we 
 
       actually have some technology that might work.  of 
 
       course, I think like a lot of you, I had the So Big 
 
       virus as well.  I'll just give this a moment.  It's

       thinking.  It's going through the... 
 
                 DR. BRECHER:  While it thinks, if anybody 
 
       would like that little public service announcement, 
 
       let me know.  I can e-mail it to you. 
 
                 MR. MIRIPOL:  Good.  All right.  Again,

       thank you very much for the opportunity to speak to 
 
       you.  When Mac McMurtry called me and asked me to 
 
       speak, I sent him a little outline as to what I was 
 
       going to talk about, and he said that's fine.  So I 
 
       hope this is fine.

                 I wanted to give you an overview, at least 
 
       from a manufacturer's perspective, of issues as we 
 
       see issues in terms of I guess what one would 

                                                                 18 
 
       broadly call the availability of products for the 
 
       blood supply, to ensure the blood supply. 
 
                 Just as a little overview, you know, blood 
 
       is a unique product.  It's obviously the basic raw

       material that comes from humans.  It's a complex 
 
       drug, non-homogeneous product, blood component 
 
       therapies obviously required for a broad range of 
 
       medical conditions.  But it is a unique product in 
 
       that it's treated as a drug, but it's not a

       homogeneous drug. 
 
                 Blood products have a very finite shelf 
 
       life, and this is the big issue in terms of 
 
       ensuring supply.  Platelets have a five-day storage 
 
       period at room ratepayer; red cells, 42 days at 4

       degrees; plasma, obviously, frozen, fractionated, 
 
       et cetera.  And then the availability itself is an 
 
       uncertain, very unclear situation often, very 
 
       tenuous, as obviously the reason for this 
 
       conference.

                 Collecting blood, obviously, requires that 
 
       the donor is available, the donor is willing, and 
 
       the donor hasn't been frightened off.  I think one 

                                                                 19 
 
       of the problems we're seeing in this country is 
 
       that the donor is often in short supply for a 
 
       variety of reasons.  And I think a lot of times 
 
       it's because of fears within the donor community.

                 There's a unique interaction between the 
 
       donor and the blood center.  Obviously, the blood 
 
       center tries to appeal and does appeal to the 
 
       donor's sense of community, helping others, et 
 
       cetera, and the first dictum, which certainly

       applies to medicine and applies here, is, you know, 
 
       you don't want to do any harm to the donor and you 
 
       don't want to drive the donor away. 
 
                 The products required for blood collection 
 
       are various, and there's a large number of them.

       This just lists a few things that are used in blood 
 
       collection:  obviously, the collection bags, the 
 
       materials you need to do the skin preps, the 
 
       phlebotomy equipment, processing equipment, 
 
       apheresis equipment, testing equipment, test kits,

       labels, computer systems, refrigerators, freezers, 
 
       et cetera.  That just scratches the surface.  But 
 
       essentially to collect, store, inventory, ship, 

                                                                 20 
 
       transfuse blood, it's a very, very elaborate 
 
       process.  In some ways, it's obviously much more 
 
       complex than just making a vaccine or making a 
 
       specific drug because of the need for the raw

       material and how you have to process it, et cetera. 
 
                 Many elements of the supply, in terms of 
 
       the suppliers, the materials, the supply chain, are 
 
       really concentrated in a few companies.  This holds 
 
       for both the blood bag suppliers, holds also for

       the testing companies, the apheresis companies, et 
 
       cetera. 
 
                 This is clearly a very specialized 
 
       industry, and it has very clear specialized 
 
       manufacturing expertise.  The systems required are

       specialized to collect blood, and, of course, all 
 
       of this must meet stringent regulatory requirements 
 
       and oversight.  I'm not telling anything new to you 
 
       folks, but I thought it was helpful to at least 
 
       kind of summarize some of the issues that face all

       of us, all of you, in the area of blood 
 
       availability. 
 
                 The entry barrier for new suppliers is 

                                                                 21 
 
       relatively high.  This is a business where the 
 
       margins aren't that great from a supplier 
 
       standpoint.  If you were to get into a business, 
 
       this is not a business I recommend you get into.

                 There certainly are some companies that 
 
       are looking at the U.S. marketplace.  Certainly 
 
       MacoPharma in France is.  There's other companies 
 
       that are looking at the marketplace.  But I think 
 
       if, you know, one is rationally focused in a

       business model, this is not a business you'd get 
 
       into. 
 
                 There's a lot of regulatory oversight, and 
 
       the regulatory requirements do provide a very 
 
       important area of consistency, and they do limit

       variability.  But this is not a free-for-all 
 
       industry, and the supplier-user relationships are 
 
       extremely close, whether it's the apheresis 
 
       manufacturers, the blood bag manufacturers, the 
 
       manufacturers of the test kits, et cetera.  The

       relationships with us and the blood center, blood 
 
       center organizations, is extremely close. 
 
                 I want to focus now in the areas that 

                                                                 22 
 
       Terumo specifically deals in, and that's blood 
 
       bags.  There are right now in the U.S. three FDA-approved 
 
       suppliers:  Baxter, Pall, and ourselves. 
 
       So I guess one could say that you've got at least

       an assured supply of product because of the variety 
 
       and variability of suppliers. 
 
                 Terumo's capacity to supply is probably in 
 
       the neighborhood of 5 million bags to the U.S.  We 
 
       supply about 3, 3.1 million right now.  Baxter

       clearly has a larger supply capability for the 
 
       U.S., and I'm not sure what Pall's capacity is. 
 
                 The blood bag suppliers, our blood bags 
 
       are drug products.  They're unique products in many 
 
       respects.  The manufacturing facilities to make

       blood bags are quite unique and expensive 
 
       manufacturing operations to build and to maintain. 
 
       Essentially we're making IV solutions of small 
 
       volumes under very stringent FDA control and 
 
       requirements.

                 Many supply elements--and it's not just 
 
       for Terumo because our blood bags are made in 
 
       Japan, but many supply elements even with our 

                                                                 23 
 
       competitors are made outside of the continental 
 
       U.S.  This is something you have to consider 
 
       because the whole supply chain is, in my view, one 
 
       of the key issues in terms of supply of blood and

       blood products.  The requirement in the U.S. is for 
 
       over 15 million blood bags a year, so we're not 
 
       talking about an insubstantial number of products. 
 
                 The raw materials that are required, the 
 
       plastics, the solutions, et cetera, also must meet

       very specific requirements.  And the suppliers of 
 
       the raw materials, at least certainly of many of 
 
       the raw materials, are also specialized, and their 
 
       raw materials have to meet certain requirements 
 
       that are much more stringent than, say, the

       plastics use to make beach balls or things like 
 
       that. 
 
                 So, as I indicated, you have to look at 
 
       the total supply chain.  It's a very, very crucial 
 
       and critical element.

                 Also, the quality systems that we and our 
 
       competitors have are very complex and they're very 
 
       detailed and have very extensive oversight from the 

                                                                 24 
 
       FDA and other regulatory agencies. 
 
                 So what I'm getting at here is that from 
 
       the manufacturing standpoint, I think that the 
 
       public has a high level of assurance that, say, the

       blood bags or apheresis kits, if you will, or 
 
       whatever, have a very high level of quality and 
 
       assurance.  And one I guess might be asking:  Are 
 
       we concerned about sabotage?  Are we concerned 
 
       about some other issues?

                 The manufacturers all have plans for 
 
       various emergency situations, and I understood that 
 
       that was one of the things that, you know, Mac 
 
       wanted me to sort of address.  However, what 
 
       happens when transit is completely shut down?

       September 11th, no flights were flying, no trucks 
 
       were running, et cetera.  We actually were able to 
 
       supply blood bags, even though our bags come from 
 
       Japan, because we had large inventories in the U.S. 
 
       You know, we had folks getting in vans and bringing

       blood bags to blood centers, et cetera. 
 
                 But this is a critical element in terms of 
 
       planning and supply.  We need to have, I think, a 

                                                                 25 
 
       better plan to ensure that, you know, products are 
 
       made available. 
 
                 Now, that's just the raw material.  The 
 
       blood itself then, getting the blood from the blood

       centers to hospitals, that was probably also 
 
       affected to some degree. 
 
                 Also, what happens when you have rumors of 
 
       contamination?  And what happens when donors become 
 
       fearful of donating?  Again, just recently, in

       January and February, this issue of white 
 
       particulate--you know, blood is non-homogeneous 
 
       substance.  This was not an issue of contamination. 
 
       But, again, it's an issue of, I think, direction 
 
       and understanding the whole supply chain and also

       leadership. 
 
                 So what are the present issues in 
 
       supplies--or problems in terms of supply assurance, 
 
       at least from our view?  One of the major issues I 
 
       am obviously speaking about here is getting the

       blood bags and supplies from outside of the U.S. to 
 
       the U.S.  It takes twice as long now as it used to 
 
       prior to 9/11 for us to get blood bags, for 

                                                                 26 
 
       instance, into the U.S.  I think some of our 
 
       competitors and other suppliers are also seeing 
 
       situations much like this. 
 
                 We believe we have to simplify, develop a

       list of ways to release incoming products so that 
 
       the customs officials and the FDA, et cetera, can 
 
       work together to ensure a more assured supply and a 
 
       more simplified supply chain.  Again, it's 
 
       important to ensure safety, but if the product is

       not available, then it's obviously counterproductive. 
 
                 Also, we believe--I guess to that point, 
 
       we believe we need a better coordination of the 
 
       regulatory and customs processes and procedures. 
 
       Certainly this conference has been discussing

       yesterday and I'm sure more today the issue of 
 
       donor availability.  This is not our area of 
 
       expertise, but certainly one would think that we 
 
       need better national programs for donor awareness 
 
       and recruitment.  We also think that we need better

       media integration of the blood resource needs, and 
 
       we also need to reduce hysteria.  I think every 

                                                                 27 
 
       time there is a new pathogen--you know, West Nile, 
 
       et cetera--from every indication I have from our 
 
       colleagues in the blood centers, this leads to a 
 
       reduction in donors.  And, again, I think this has

       to do with perhaps multiple messages or a lack of a 
 
       consistent message. 
 
                 As you've been hearing here, blood is 
 
       available but it's not available in the right 
 
       places.  So the systems are complex, the response

       times are reduced, and, frankly, there's no 
 
       national coordination of blood policy.  To that 
 
       point, in terms of a national blood resources 
 
       disaster plan, from our perspective there really is 
 
       no plan.  There's a lot of efforts, and certainly

       this is a very good attempt to try to bring this 
 
       together.  But we don't really have a unified 
 
       process or unified group that gets together and 
 
       really pulls together the requirements chain, the 
 
       blood chain, and the supply chain.

                 So what is the real concern?  The concern 
 
       is bioterrorism.  Well, what does the bioterrorism 
 
       concern really mean?  Does it mean the blood bags 

                                                                 28 
 
       or the test/assay materials, et cetera?  Are they 
 
       being sabotaged?  I don't think so, and they're 
 
       very closely controlled during manufacture.  I 
 
       think that's the least of anybody's worries.

                 You know, is the fear of sabotage of blood 
 
       products once the products have been made in the 
 
       blood center or sent to the hospital?  Well, that's 
 
       a complex and, I think, a very, very difficult 
 
       question.  And I'll make a few points subsequent to

       this on that, but I think it's going to be very, 
 
       very difficult to try to develop systems to ensure 
 
       that every unit of blood has not been in some way 
 
       sabotaged by an unhappy worker or something like 
 
       that.

                 So, again, as I pointed out earlier, as 
 
       you all know, blood is a complex product, and it is 
 
       not homogeneous.  So if you see white cells in it, 
 
       don't get upset. 
 
                 In terms of our suggestions and our

       thoughts on this area, certainly we believe a 
 
       national blood resource plan would be important 
 
       and, frankly, mandatory as things become more 

                                                                 29 
 
       complex and fearful in our world.  However, we 
 
       believe that this ought to be a very simple plan in 
 
       its basics. 
 
                 Remember that you may not have power.

       Look at just what happened last week in New York. 
 
       We have colleagues here, of course, who are going 
 
       to talk about certainly freezing systems and other 
 
       kinds of systems, even apheresis systems, et 
 
       cetera.  Blood bag collection is low-tech and

       reliable.  You don't need a lot of equipment. 
 
       That's a big advantage.  It's easy to do in lots of 
 
       different places.  You don't have to have complex 
 
       environments to collect blood in blood bags. 
 
                 We believe there should be a supply depot

       situation in the U.S. based--sort of similar to 
 
       what the military did some years back, where this 
 
       is coordinated amongst all the suppliers and the 
 
       blood centers.  This could be done at blood 
 
       centers, probably most appropriately done at blood

       centers. 
 
                 We think that a centralized national group 
 
       with clear leadership to coordinate blood 

                                                                 30 
 
       availability and these plans should be put 
 
       together, should obviously include the military, 
 
       blood centers, suppliers, the providers, the 
 
       regulatory agencies, et cetera.  But--and this is

       something, I think, that became very clear 9/11--I 
 
       think we need to have a single focal point or a 
 
       single voice to give clear information in these 
 
       situations.  And I think that's a very, very key 
 
       issue in terms of the donor assurance and making

       sure that the donors are coming in and are willing 
 
       to donate under these kinds of circumstances. 
 
                 In terms of new technologies, we believe 
 
       that the major issue is actually patient safety, 
 
       and certainly one of the biggest problems is the

       mistransfusion of blood products.  So we believe 
 
       that resources ought to be put at the transfusion 
 
       area in terms of assuring the safety of the blood 
 
       products there, and really it has to do with the 
 
       assurance that someone who is an A patient gets an

       A unit of blood and not a B unit of blood and so 
 
       forth. 
 
                 New technologies in terms of bacteria 

                                                                 31 
 
       testing, admirable.  We ourselves are not working 
 
       directly in this area.  We believe it's important. 
 
       Virus testing procedures and making sure that 
 
       viruses or bacteria or other pathogens are

       inactivated, useful, expensive, and, again, does 
 
       not answer the issue of sabotage of blood products. 
 
                 Our thinking is that one of the areas, 
 
       although we ourselves are not working directly in 
 
       this area, that should be looked at and perhaps

       funded more strongly is the area of bio-sensors. 
 
       We think that there are some technologies out there 
 
       that are very, very promising that could be applied 
 
       to blood products, both to identify pathogens and 
 
       perhaps other kinds of drugs, et cetera.

                 Our efforts in terms of technologies are 
 
       basically fairly straightforward and relatively 
 
       simple.  In the blood bag collection systems, we've 
 
       developed a diversion blood bag system, as our 
 
       other colleagues have.  The intent here, of course,

       is to remove the initial bolus of blood from the 
 
       donor, that bolus perhaps being one that has more 
 
       bacteria, et cetera, associated with it.  A simple 

                                                                 32 
 
       system that we believe does improve safety. 
 
                 We obviously also are working on and have 
 
       approval for some blood filter systems, for white 
 
       cell removal.  This we believe increases some

       marginal safety from the standpoint of transfusion 
 
       reactions, et cetera, but certainly doesn't address 
 
       the kinds of things that I think you're concerned 
 
       about from a bioterrorism standpoint. 
 
                 And the other area that we're involved in

       is to continue efforts to optimize the logistics 
 
       and transport operations. 
 
                 And just as a summary of this, in terms of 
 
       our plan, we maintain a six- to eight-week supply 
 
       of blood bags in the U.S.  We have three domestic

       warehouses and shipping points.  We keep in transit 
 
       in terms of blood bags from our manufacturing 
 
       facility in Japan, four to six weeks for the 
 
       product in transit via boat.  We have three 
 
       domestic trucking firms that we work with, plus

       DHL, FedEx, et cetera.  We have computer back-up 
 
       systems and so forth, although I've got to tell 
 
       you, with that So Big virus, it slowed things down 

                                                                 33 
 
       quite a bit.  But it didn't shut us down. 
 
                 So that's really kind of the summary that 
 
       I wanted to give you in terms of our view of blood 
 
       resource availability.  I think the take-home for

       me, I guess, or from my perspective is keep the 
 
       system simple and provide a more centralized, if 
 
       you will, leadership situation so that the donors 
 
       get a clear message as to what's necessary and how 
 
       they should respond.

                 Thanks for your attention. 
 
                 DR. BRECHER:  Thank you, Jeff. 
 
                 Questions or comments?  Andy? 
 
                 DR. HEATON:  This is Andrew Heaton, 
 
       Chiron.  Jeff, do you have a minimum lot

       requirement for maintenance in country?  And do you 
 
       have a lot release process as well? 
 
                 MR. MIRIPOL:  Oh, absolutely, yes.  In 
 
       fact, you saw it.  To that point, with regard to 
 
       the manufacturing safety or manufacturing

       processes, Terumo, Baxter, Pall--I'm sure we're all 
 
       quite equivalent in this way--we have very 
 
       extensive lot release quality assurance 

                                                                 34 
 
       requirements.  And, actually, to get into our 
 
       manufacturing facilities is very, very difficult. 
 
       I think if we're talking about secure systems from 
 
       soup to nuts, you have to have special IDs; it's

       all kind of--doors are controlled electronically, 
 
       et cetera.  This is both in the U.S. and in our 
 
       manufacturing facility in Japan. 
 
                 You know, we vet our employees to a 
 
       reasonable extent.  We're not doing, you know, CIA-type

       vetting of employees.  But, you know, we have 
 
       a very high level of quality assurance. 
 
       Essentially, our philosophy is to have quality 
 
       built into the product.  Every blood bag, for 
 
       instance, is inspected by special photo systems

       that, you know, ensure the labels are properly 
 
       placed and needles are properly placed, et cetera, 
 
       et cetera. 
 
                 So I think from the standpoint--to your 
 
       point, Andrew--of quality systems and assurance of

       the raw material that goes in the blood bags, the 
 
       solutions and the bags themselves, that's an 
 
       extremely high level. 

                                                                 35 
 
                 DR. BRECHER:  Lola? 
 
                 DR. LOPES:  I have a question about the 
 
       margins that you mentioned.  It seems that in an 
 
       industry where there are few specialized

       manufacturers, you're making a critical product. 
 
                 MR. MIRIPOL:  You're right. 
 
                 DR. LOPES:  And it really doesn't cost 
 
       very much in the context of, say, an open heart 
 
       surgery, something like that.

                 MR. MIRIPOL:  That's right. 
 
                 DR. LOPES:  Why are your margins small? 
 
                 MR. MIRIPOL:  Well, there is competition. 
 
                 DR. LOPES:  But you don't have many--this 
 
       is not a commodity product.

                 MR. MIRIPOL:  Well, in some folks' eyes--I 
 
       look around at some of my folks that I supply.  In 
 
       some folks' eyes, they believe at least blood bags 
 
       and certain types of products are almost a 
 
       commodity product.  I mean, it's a very good

       question.  Obviously, we're not colluding with Pall 
 
       or with Baxter in terms of trying to maintain 
 
       prices.  I wish I could because it would make 

                                                                 36 
 
       things a lot easier. 
 
                 [Laughter.] 
 
                 MR. MIRIPOL:  Well, at least they'd be 
 
       more stable.  Let's put it that way.

                 You know, I think the real problem is 
 
       this, as I see it:  AdvoMed has kind of approached 
 
       this.  I know AABB, et cetera, have approached this 
 
       in terms of reimbursement for blood products.  And 
 
       if you take that chain all the way down, you know--blood is

       kind of neglected as a product within, you 
 
       know, our health care system.  And so, really, it's 
 
       a small percentage of the total cost of the medical 
 
       care, which is one of the reasons why, you know, 
 
       the payee system is really kind of ignoring it to a

       great degree, because it's kind of in the, you 
 
       know, decimals or the dust of the total cost. 
 
                 But, in reality, to a blood center and, of 
 
       course, to us, it's a major part of, you know, the 
 
       whole economic equation.  But the problem is blood

       bags as a technology is a relatively old 
 
       technology, and a lot of folks are in the business 
 
       worldwide, although not in the U.S.  And there are 

                                                                 37 
 
       some companies that are looking to get into the 
 
       U.S. market, and, frankly, they may have a lower 
 
       cost structure and believe that they can make some 
 
       money in it.

                 DR. BRECHER:  Jay? 
 
                 DR. EPSTEIN:  Dr. Lopes raised the issue 
 
       of market concentration.  I just would like to hear 
 
       your thoughts.  It seems as if the market forces 
 
       favor concentration in many areas related to blood

       products, but that the security of the system 
 
       actually favors more redundancy.  And even where 
 
       you have multiple manufacturers, you also have 
 
       system incompatibilities.  So, you know, the user 
 
       really does end up committed, both through contract

       mechanisms and through system incongruities. 
 
                 I just wonder what your thoughts are about 
 
       the problem of lack of redundancy and how the 
 
       market forces play out and whether there's anything 
 
       that could be done in that situation.

                 MR. MIRIPOL:  Right, right.  Well, you 
 
       know, to that point, actually if we're talking 
 
       about blood bags themselves, although they're not 

                                                                 38 
 
       all identical, they are fairly interchangeable.  If 
 
       you start talking about things like apheresis kits 
 
       and equipment, absolutely correct.  I mean, you 
 
       know, a Gambro kit will not work on a Baxter

       device, et cetera.  And certainly our blood bags, 
 
       you know, will work with everybody's centrifuges, 
 
       as will Pall's and Baxter's and that kind of thing. 
 
                 So I think from the products that are 
 
       simpler, i.e., blood bags, they are more

       interchangeable, which may be, again, one of the 
 
       reasons why the margins are lower, as opposed to 
 
       the apheresis kinds of equipment. 
 
                 I think that in many respects I actually 
 
       would argue that the FDA requirements and the kind

       of oversight have been very effective and 
 
       appropriate to have at least enough competition 
 
       while at least providing a consistency of products. 
 
       That is, I am not sure we want to have, you know, 
 
       20 different kinds of additive systems and, you

       know, blood that can be stored for 28, 35, 42, 49 
 
       days, because that can get more complex.  Right now 
 
       we basically have two red cell products:  CPDA-1, 

                                                                 39 
 
       which is stored for 35 days, and additive systems 
 
       which are stored for 42 days.  But as you well 
 
       know, probably--what?--85 percent of the blood in 
 
       the U.S. is stored in additive systems, maybe even

       more than that. 
 
                 So I would say that consistency in the 
 
       types of products is appropriate, at least to the 
 
       point that it doesn't stifle technology innovations 
 
       or improvements, and that from my perspective, at

       least on the blood bag side, you know, having three 
 
       suppliers gives the nation a fair security and 
 
       redundancy that if, you know, the Terumo plant 
 
       blows up or the Pall plant blows up, somebody else 
 
       can step in and supply the product.  Certainly we

       couldn't supply all the U.S.  I don't think Pall 
 
       can supply all the U.S.  And I doubt that Baxter 
 
       could supply all the U.S. right now. 
 
                 Does that answer your question? 
 
                 DR. EPSTEIN:  It's helpful.

                 MR. HAAS:  I was listening to the 
 
       presentation, but the word "complex" I think fits 
 
       here on multiple levels.  We talk about market 

                                                                 40 
 
       forces, and that gets my ears perked up really 
 
       quickly, and it's awfully hard for me to understand 
 
       the word "market forces" at the same time we have 
 
       reimbursement issues, which are directly counter to

       what a typical market force would be doing 
 
                 The idea of a few sellers, typically, the 
 
       idea is that, okay, that's bad because of potent--you know, 
 
       that we can't collude, but yet there's a 
 
       word in my discipline of "conscious parallelism,"

       but in this type of marketplace you want the 
 
       consistency.  I agree with that term quite a bit; 
 
       the whole sense of what is the relationship between 
 
       the reimbursement and technology. 
 
                 Well, there's an awful lot of literature

       that tells us that when reimbursement was rich and 
 
       full, technology thrived in the medical industry, 
 
       and now we have a situation where the reimbursement 
 
       levels are constantly being ratcheted down, so the 
 
       question becomes one of what's the impact of that

       in the future? 
 
                 And then I think there's another issue 
 
       that connects with this, too, in that here we're 

                                                                 41 
 
       talking about--I'll be unfair--but blood bags.  We 
 
       talked a lot yesterday about the blood products, 
 
       and then we started thinking of plasma or 
 
       components coming from the products, and then we

       think of the recombinant, which isn't a blood 
 
       product, but it certainly is important in that 
 
       area. 
 
                 And then the question is, all right, 
 
       what's the interaction among these?  What happens

       if in one of these areas there is a problem? 
 
       What's the spillover effect on all of the other 
 
       areas?  We have cascading effects in multiple 
 
       issues. 
 
                 And I guess, as I'm sitting here, I'm

       saying to myself, well, I can't pull this all 
 
       together, but this is something I think that we 
 
       need to be looking at. 
 
                 MR. MIRIPO:  Well, let me make a comment, 
 
       if I may.  You know one of the bad things about

       blood is that every individual unit is a separate 
 
       lot.  Every donor is different, but that's also, 
 
       you could say, a good thing because, to your point 

                                                                 42 
 
       about, you know, like a blood product that was 
 
       derived form a recombinant product, if you had a 
 
       bad lot, you're really up a creek.  You're talking 
 
       about a lot of product that's bad, and that's

       happened with IBGG, et cetera.  While if you have 
 
       some blood bags or let's say blood in a bag that's 
 
       bad, you've got one bad unit. 
 
                 So you might argue that having blood as a 
 
       product, in some sense, offers a lot of redundancy,

       as opposed to something that's made in a drug 
 
       environment, where one lot is many, many doses. 
 
       And if there's something wrong with that, you've 
 
       lost many doses, and that could have a major 
 
       impact.

                 MR. HAAS:  A quick follow-up.  I think 
 
       you're absolutely right, but then that again 
 
       triggers another thought in my head.  If we think 
 
       in terms of the recombinant market, for instance, 
 
       if the hemophilia users were to go almost

       exclusively to recombinant, that affects the blood 
 
       market in the sense that now the plasma products 
 
       aren't being used to make clotting factors. 

                                                                 43 
 
                 Does, and I'll say in quotes, the "market" 
 
       then tell the blood sector to stop making clotting 
 
       factor and then a clotting, a recombinant plant 
 
       goes down, the suite goes down, then where's the

       back-up?  And we just went through a situation like 
 
       that, where, if the plasma, the Red Cross hadn't 
 
       been there to step in, there would have been 
 
       terrible problems.  So, yes, I think this, we've 
 
       got to look at this stuff.

                 MR. MIRIPO:  Other questions? 
 
                 DR. BIANCO:  Jeff, that's been stimulating 
 
       discussion, but you didn't talk much in terms of 
 
       technology potential, in terms of that could 
 
       facilitate availability.  I have one that is my

       favorite, a needle that doesn't hurt. 
 
                 [Laughter.] 
 
                 DR. BIANCO:  But other things--how do you 
 
       see that facilitating or not availability, 
 
       particularly if we want to build a reserve in the

       country? 
 
                 MR. MIRIPO:  You're right.  I didn't spend 
 
       a lot of time, in terms of new technologies 

                                                                 44 
 
       because, frankly, as I did point out, the things 
 
       that we're doing are relatively low-tech, and I 
 
       think the things that we're also doing don't really 
 
       relate to sort of safety so much, except for

       perhaps the diversion bag, and you could certainly 
 
       argue filters are helpful to some degree. 
 
                 You know, I could, and we've had this 
 
       discussion, argue that some of the things that are 
 
       being proposed to improve blood safety will make

       availability worse; i.e., pathogen reduction 
 
       technologies, et cetera.  That, actually, even if 
 
       they work, a platelet product is now less 
 
       efficacious, and you've got to use more of it.  So 
 
       you've got to get more platelets, et cetera.

                 So one may see that some of these 
 
       technologies could have a negative impact, and 
 
       perhaps a substantial negative impact on blood 
 
       availability.  So it's the old story of, you know, 
 
       unintended consequences.  I think you need to think

       some of these things through, which is the reason 
 
       I'm interested in, even though I'm no expert in, 
 
       the bio sensor area.  I think that that could be a 

                                                                 45 
 
       very interesting way of maybe assuring safety of 
 
       the products in a simpler fashion. 
 
                 And the real problem is getting the donors 
 
       and getting the donors in the right place.  So I

       think it comes down to kind of a better national 
 
       program, perhaps, better coordination.  As you well 
 
       know, Celso, with your members, there are some 
 
       members that don't appear to have a problem getting 
 
       donors and others that do.  Why is that?

                 Well, it's complex.  It has to do with 
 
       populations, and urban/nonurban, this, that, and 
 
       the other thing.  There's a lot of variations in 
 
       that, but certainly there are some best practices 
 
       that could, perhaps, help improve donor

       availability and donor collections. 
 
                 I'm not sure if I answered your question, 
 
       but it's a complex situation, and I think new 
 
       technologies could have a negative impact on blood 
 
       availability.

                 DR. BRECHER:  Last question, Chris? 
 
                 MR. HEALEY:  Yes, I'd just like to echo 
 
       what Paul said.  I think it's completely 

                                                                 46 
 
       appropriate for the Committee to consider those 
 
       factors, the relationship of the plasma therapies, 
 
       and all of the ingredients that go into making 
 
       those in the blood sector, and how those

       relationships work. 
 
                 You pointed to the role of reimbursement, 
 
       and I guess we're going to hear more about that 
 
       this afternoon, and the importance of that to 
 
       preserving the viability of the blood industry and

       the plasma industry.  And, Jeff, you mentioned some 
 
       of the regulatory issues and cost factors, and I 
 
       think that's the other side of that coin, that also 
 
       this Committee might want to consider is what are 
 
       the cost factors that go into producing these

       therapies in these blood components, and how could 
 
       those costs be managed better.  Because, obviously, 
 
       you have the cost, and you have the reimbursement 
 
       side, and those need to balance out to make the 
 
       industries healthy.

                 MR. MIRIPO:  Right.  Thank you. 
 
                 DR. BRECHER:  Thank you. 
 
                 Our next speaker is Jerry Holmberg from 

                                                                 47 
 
       Haemonetics. 
 
                 DR. HOLMBERG:  While things are getting 
 
       set up, I just need to make a point of 
 
       clarification.  When Mac asked me to speak, I had

       to quickly tell him that I was no longer employed 
 
       by Haemonetics.  So please bear that in mind, when 
 
       I go through my presentation, that I do not 
 
       represent Haemonetics.  I will be showing you a few 
 
       slides, with their permission.  However, I've been

       involved with frozen blood, and especially the ACP-215, for 
 
       many, many years. 
 
                 By the way, can Drs. Haas and Penner 
 
       identify?  Okay. 
 
                 Dr. Haas, I just wanted to tell you that I

       send greetings to my schools, my alumni.  I did a 
 
       master's at Michigan State, and I will be talking a 
 
       little bit about my experience at Michigan State 
 
       years ago back in the '70s, and Bowling Green, I 
 
       obtained my Ph.D.  So I haven't been back to either

       institution for a long time, but one of these days 
 
       I'll get back there. 
 
                 I was invited back for the medical 

                                                                 48 
 
       technology reunion a few years ago and was unable 
 
       to attend that due to my son's wedding. 
 
                 DR. PENNER:  We won't forget you. 
 
                 DR. HOLMBERG:  Thank you.

                 DR. BRECHER:  See, that gets to the point 
 
       that the alumni offices can always track you down. 
 
                 DR. PENNER:  Oh, yeah. 
 
                 DR. HOLMBERG:  What I'd like to do today 
 
       is to go through some of my experience, both in the

       civilian world and in the military world.  After I 
 
       left academia and I decided that what I wanted to 
 
       do was to get a little bit more management 
 
       experience.  So I went into the military, and, boy, 
 
       did I get management experience.  So I went into

       the military relatively late in life and recently 
 
       retired about three years ago and joined 
 
       Haemonetics at that time. 
 
                 One of the things that I want to talk 
 
       about, first of all, I want you to keep in mind, as

       I go through this presentation, because I will be 
 
       giving you an historical presentation on the 
 
       history of frozen blood and where we are today with 

                                                                 49 
 
       some new technologies. 
 
                 But two things I want you to keep in mind, 
 
       especially as you look at the task force for 
 
       reserve of blood and even of frozen reserve, and

       that is--and I learned this from the military--keep 
 
       it simple and practice every day like you're going 
 
       to war.  Okay?  I would tell my people, and I ran 
 
       one of those facilities in Okinawa, Japan, that had 
 
       40 freezers and 40 M115s, and we practiced on a

       quarterly basis with a disaster drill activation of 
 
       my augmentation teams, and we also integrated 
 
       frozen blood on a daily basis.  So just keep those 
 
       two premises in mind. 
 
                 Yesterday, I think you heard that frozen

       blood has been around for three decades, but really 
 
       it's been around longer than that.  Dr. Valeri 
 
       actually has done or did frozen blood transfusions 
 
       back in Vietnam, back in the '60s.  It's been 
 
       primarily used in this country as a source for rare

       cells. 
 
                 And one of the things Dr. Valeri and I 
 
       have great philosophical discussions on, and I 

                                                                 50 
 
       think that where we might be missing the boat is 
 
       that it is a strategic, a quarantine strategic 
 
       reserve.  There are places around the world that 
 
       continue to suffer with high rates of HIV, and

       blood tends to still be a vector for that 
 
       transmission. 
 
                 Whether that's feasible to supply that to 
 
       those Third World developing countries is beyond my 
 
       financial means and also I think a lot of other

       supporting World Health Organizations or whatever. 
 
       But it is a quarantine strategic reserve. 
 
                 It's also been looked at for many, many 
 
       years as a strategic source for high-quality red 
 
       cells, such as red cells high in ATP and 2-3 DPG.

       This is one of the reasons why you notice in 
 
       yesterday's presentations they talked about--Commander 
 
       Bartley mentioned about six-day-old 
 
       blood.  Routinely, six-day-old blood is frozen, and 
 
       if you do go on for expiration and rejuvenate the

       whole thing that you're trying, the target that 
 
       you're trying to do is to regenerate the ATP and 
 
       the 2-3 DPG levels. 

                                                                 51 
 
                 Forty years ago, there was also, and I put 
 
       this, I want you to understand this was 40 years 
 
       ago that deglycerolized red cells were viewed as 
 
       washed cells to remove the plasma, also to remove

       white cells because they will reduce white cells 
 
       down to a two-log reduction.  It doesn't meet our 
 
       current standards today, and so therefore that 
 
       claim cannot be held. 
 
                 But also back in the '70s, it was thought

       to really, it was thought maybe this was the blood 
 
       that would be free of hepatitis.  And what we did 
 
       find was that it did reduce viral load, but it did 
 
       not eliminate the risk for those--for hepatitis. 
 
       And then also CMV, many of us years ago used to use

       CMV as a frozen blood, deglycerolized blood, as a 
 
       source of CMV-free cells. 
 
                 Some of the historical disadvantages of 
 
       using frozen blood is that it's been time-consuming, very 
 
       costly.  Up to now, it's been

       limited to 24 hours due to the open system.  And 
 
       while it reduces the viral load, it does not 
 
       eliminate the viral risk.  And also we have new 

                                                                 52 
 
       required tests that have become available.  So, 
 
       therefore, it does require that a cryo sample is 
 
       maintained to be able to retest those units. 
 
                 A little historic graph here is that

       frozen blood really became popular in the '70s, as 
 
       far as a lot of hospitals, local hospitals, blood 
 
       centers using it.  I refer back to my days at 
 
       Michigan State, back in the '70s, and our small 
 
       community of Lansing and East Lansing, Michigan.

       We had the American Red Cross with the frozen red 
 
       cell program, and Ingham Medical Center and also 
 
       E.W. Sparrow Hospital.  So three locations in that 
 
       one small area had frozen blood available. 
 
                 What happened, though, was towards the end

       of the '80s, when the DRGs started kicking in, the 
 
       hospitals found that this was very costly, and they 
 
       could not really support the cost of a frozen blood 
 
       program. 
 
                 You see my graph continues to go up

       because in the early '80s the military really got 
 
       into a process of thinking about, and what the 
 
       document was called, it was called Military Blood 

                                                                 53 
 
       Program 2004.  What would the blood community look 
 
       like in 2004?  Well, guys, we're one year away. 
 
       And one of the things that the military really 
 
       pushed back then was that we needed to have a

       frozen reserve available--pre-positioned, pre-tested in 
 
       strategic locations throughout the world. 
 
                 Also, throw in there that we have the 
 
       GMPs.  GMPs came on in the early '90s, and that may 
 
       have had some effect on the popularity of using

       frozen blood, also the Gulf War.  The Gulf War, we 
 
       had a lot of frozen blood available, but one of the 
 
       things was that it was not used that much because 
 
       we had plenty of time, and the liquid blood supply 
 
       was able to be put into place.

                 Then, 9/11 kicks in, 2001, and then we 
 
       start seeing another surge in interest with the 
 
       frozen blood, and both the military and the 
 
       American Red Cross and NIH have looked very 
 
       seriously and have purchased equipment to try to

       move for a closed system. 
 
                 Today, if you look at the frozen blood 
 
       that's available.  About 38 percent worldwide of 

                                                                 54 
 
       red cells, rare red cells, of the frozen blood 
 
       inventory poses 38-percent rare cells, about 60 
 
       percent is a reserve by the military, and that's 
 
       not only the U.S. military, but other NATO

       countries such as Belgium and the Netherlands, and 
 
       then 2 percent is actually autologous. 
 
                 So is the concept of strategic frozen 
 
       blood reserves still viable after 30 years?  Well, 
 
       my answer to that is, yes, but re-engineering is

       needed.  I think in the conversion of moving my 
 
       slide to the hide drive here, it sort of got messed 
 
       up, and you see some of my points early, but let me 
 
       just walk you through some of my points. 
 
                 Re-engineering was needed.  Boy, putting

       in a hard drive really messed this up, so bear with 
 
       me. 
 
                 You need to be able to freeze all 
 
       anticoagulants and additive solutions.  Currently, 
 
       the device that has been cleared, which was cleared

       back in May of 2001 by the Food and Drug 
 
       Administration, was a closed system for Haemonetics 
 
       based on CPDA-1 red cells frozen within six days 

                                                                 55 
 
       and also stored at minus 80 degrees Centigrade. 
 
                 Subsequently, upon thawing, those cells 
 
       are washed and then an additive solution, AS-3 is 
 
       added to them, and because it's a closed system, it

       would be 14 days. 
 
                 The current problem is that the 
 
       requirements that the company built the device on, 
 
       and also did the clinical studies, was based on 
 
       what the military was using at that time.  And the

       military was using CPDA-1. 
 
                 Now, this is where I have a disagreement, 
 
       and again this is my personal view, and please take 
 
       it as  personal view, but this is my personal view 
 
       as a problem that is currently being brought before

       the FDA is that, once you take a unit of red cells 
 
       that are six days old and you remove the additive 
 
       solution, and you add glycerol through a process to 
 
       get to a 40 percent, then that's a glycerolized red 
 
       cell.  And yet there has been a requirement to go

       back and to test all anticoagulants and all 
 
       additive solutions to ensure that the quality is 
 
       there and also that the survival times are 

                                                                 56 
 
       comparable.  So that's where the manufacturers are 
 
       at the present time--are going back to qualify the 
 
       other anticoagulants and additive solutions. 
 
                 Another issue that is currently being

       brought is the whole issue of temperature because 
 
       of the original studies were presented to the FDA 
 
       at minus 80, however, the CFR and the American 
 
       Association of Blood Bank standards say minus 65 or 
 
       colder.  And so the FDA is requiring the

       manufacturer to go back and to qualify that 
 
       temperature, also. 
 
                 We also need a closed system, which the 
 
       new system that I'll show you in a few minutes 
 
       does.  A closed system, from the very beginning,

       from adding the glycerol to removing the glycerol, 
 
       it needs to be automated, it needs to be simplified 
 
       for minimal training.  Again, keep the kiss system 
 
       in place, keep it as simple as possible.  Reduce 
 
       the solutions.

                 One of the things that we learned in the 
 
       military was that, you know, when you're aboard 
 
       ship, you can't have a lot of fluids, and the whole 

                                                                 57 
 
       top deck of the two hospital ships is primarily for 
 
       fluids, for supplies.  And so if you can reduce the 
 
       amount of solutions that you have, you can move 
 
       your army or your sailors better.

                 The storage conditions.  I already 
 
       mentioned mechanical freezers.  The CFR and the 
 
       AABB currently say minus 65 or colder, but the 
 
       hang-up right now with this closed system is minus 
 
       80.

                 Reduce breakage.  Dr. Valeri had an 
 
       excellent article this last I think it was March, 
 
       in Transfusion, that showed, with the Merryman 
 
       method, with the stericon bag, that the breakage 
 
       was very high, as opposed to the PVC, and Dr.

       Valeri strongly recommends the PVC bag, the Baxter 
 
       PVC bag, that is qualified at minus 80. 
 
                 One of the things that I would, and I'll 
 
       show you in some of my recommendations, is that 
 
       when you have extended storage, you reduce the need

       to be able or to have to move frozen blood.  You, 
 
       the logistics change, the logistics now change to a 
 
       deglycerolized red cell that you could ship as you 

                                                                 58 
 
       normally would ship a unit of packed red cells or 
 
       whole blood at 4 degrees or a temperature of 1 to 
 
       10 degrees Centigrade in the shipping. 
 
                 The extended dating for the post-thawed

       shelf life.  Again, with AS-3, documentation has 
 
       been 14 days, although there have been studies that 
 
       show that could even go out to 21 days or even 
 
       longer. 
 
                 And then my pet peeve is that many times

       when people have frozen reserves, they ignore this 
 
       last principle, and that is integrating it into 
 
       normal, routine use.  If you integrate it in, you 
 
       get the hospitals, you get the physicians, you get 
 
       the technicians used to using it.  This is the ACP-215, 56

       pounds.  It looks like very many of the 
 
       other devices that Haemonetics has on the market. 
 
                 On the left-hand side is a shaker, and on 
 
       the right-hand side is a printer that will record 
 
       all of the critical information that takes place

       during the process.  It tries to keep in mind all 
 
       of the requirements for the GMP and record those 
 
       data points. 

                                                                 59 
 
                 This is a set-up with the glycerol.  The 
 
       glycerol is hanging on the side, and it gets mixed 
 
       to what the military uses as a primary collection 
 
       bag, and this would be the 800 ML PVC bag.

                 I know yesterday there were a few 
 
       questions on the productivity for glycerolization--the 215 
 
       well-glycerolized red cells within 11 
 
       minutes.  You could do four units per hour, and the 
 
       only solution that you use is glycerol.  Now, the

       thing that you do not understand here and is not 
 
       clear from the picture is that I mentioned in one 
 
       of my earlier slides that the requirement was to 
 
       reduce solutions, and in order to reduce the 
 
       solutions, again, trying to make things simplified

       on the other end, when you want to deglyce the unit 
 
       of red cells is that you need to remove the 
 
       supernatant glycerol.  So there is an additional 
 
       step here of spinning the red cells down, removing 
 
       the supernatant glycerol and getting the hematocrit

       back to a 60-percent volume. 
 
                 If you reduce that supernatant glycerol, 
 
       then, on the other side, when you deglyce, then you 

                                                                 60 
 
       can use only two solutions, the 12-percent sodium 
 
       chloride, and the .9 .2-percent sodium chloride to 
 
       remove the glycerol and then your AS-3 for an 
 
       additive solution.

                 The procedure time for deglycerolization 
 
       is about 45 to 60 minutes, depending on the size of 
 
       the unit.  A larger unit will be going a little bit 
 
       longer.  It takes I think, for a rough estimate, we 
 
       heard this yesterday about one hour.  There's one

       kit involved, and there's three solutions--re-agents, I 
 
       should say. 
 
                 I apologize for the color on this.  It was 
 
       all black, and I don't know what happened in the 
 
       transfer, but the protocol, if we look at an 8-hour

       shift, you could glycerolize 20 to 24 units.  To 
 
       deglyce one person per machine, and that's just, I 
 
       should just say one machine is 20 to 24 and 5 to 6. 
 
       For 16 hours, you could go 40 to 48 for 
 
       glycerolization and deglyce 10 to 12.

                 Now, as was mentioned yesterday, if you 
 
       had multiple devices, one person could operate 
 
       quite a few devices.  And the process is that if 

                                                                 61 
 
       it's going to take 45 minutes to 60 minutes to run, 
 
       you could set it up, start it, and move on to the 
 
       next device and set the process going. 
 
                 So let me ask you, strategic reserve, is

       it a pipe dream or is it reality?  And one of the 
 
       things I just would like to add, and again please 
 
       remember that my comments are my comments and not 
 
       recommendations from anybody else, other than Jerry 
 
       Holmberg, but I would have to say, as far as the

       task force, the comments that Karen mentioned 
 
       yesterday, I think that a better approach would be 
 
       to have a, I shouldn't bipartisan, but a 
 
       pluralistic approach, I should say a pluralistic 
 
       approach to the reserve, a pluralistic approach

       being liquid blood and also frozen blood. 
 
                 When you have an emergency, you don't want 
 
       to be collecting blood at that time because it's 
 
       going to take you hours, days to get it completely 
 
       tested.  You don't want to, you want to be able to

       immediately get the blood off your shelf and get it 
 
       to where it's needed. 
 
                 The frozen blood, as was mentioned 

                                                                 62 
 
       yesterday by Commander Bartley, is a stop gap, and 
 
       it is to back-fill the needs of the local 
 
       facilities.  I think strategic reserves are 
 
       necessary for our seasonal shortages, such as

       holidays.  We all, this last year, we had some, 
 
       here in the D.C. area, had some tremendous 
 
       snowstorms.  I bought a snow-blower the 1st of 
 
       February, and I used it for three major snowstorms, 
 
       and I thought I left that when I left Bowling Green

       and Michigan State. 
 
                 And by the way, I think Bowling Green is 
 
       worse than Michigan State, as far as the amount of 
 
       snowfall because at Bowling Green you get the 
 
       drifting.

                 [Laughter.] 
 
                 DR. HOLMBERG:  You know, illnesses we all 
 
       face ever year, we face the colds and the flus and 
 
       things that come up.  So I think that strategic 
 
       reserve is a great way to sort of take out the

       valleys in our blood supply. 
 
                 I think that it's needed for both local 
 
       and national disasters.  I hear all the time people 

                                                                 63 
 
       saying, well, you know, in Oklahoma City or in 
 
       Kansas City or in New York, New York, with the 
 
       Trade Centers, you know, they didn't really use 
 
       that much blood because of the casualties.  Well,

       you know, that's unfortunate, and big disasters 
 
       like that, yes, there's going to be a lot of 
 
       casualties.  But from time to time there is going 
 
       to be that local need for a surge in the blood 
 
       supply, and there's going to be a surge--there's

       going to be a need to backfill that surge. 
 
                 The strategic reserve I believe is needed, 
 
       again, for homeland security, in addition to local 
 
       and national disasters, and also as we face this 
 
       year emergent pathogens such as SARS--and West Nile

       has been with us for a few years--I think it would 
 
       help even in taking care of those kinds of 
 
       situations. 
 
                 Again, my personal opinion, but what is 
 
       needed?  I think we need a strategic national plan.

       And this may be heresy to my colleague sitting over 
 
       here in the blue uniform, but I strongly believe 
 
       that there should be a strategic complement to the 

                                                                 64 
 
       military system.  The military system, we need to 
 
       have a ready reserve within the military at all 
 
       times.  That does not mean that from time to time 
 
       the civilian sector, which all of us are taxpayers,

       could not, should not be hindered from going to 
 
       that reserve and saying, hey, look, we need blood, 
 
       let's move some of the inventory and work that. 
 
                 The whole idea is keeping it going, making 
 
       sure that the total defenses of our country are

       met, and the first priority is to the military, but 
 
       I say secondary responsibility is to the civilian 
 
       sector. 
 
                 We need strategic locations.  I don't 
 
       think that we're talking just one or two locations.

       We're not talking the military has two locations, 
 
       one outside of San Francisco, the other one at 
 
       Maguire in New Jersey, which is Philadelphia and 
 
       New York City.  I think that 16 is probably 
 
       unmanageable, but I think that some strategic

       locations with a workable number, on the coasts, on 
 
       both coasts, and also in the mid would be very 
 
       beneficial. 

                                                                 65 
 
                 I also agree with Dr. Gilcher, and that is 
 
       that the reserve--I think we should look towards 
 
       Group O blood and having those reserves available 
 
       for and eliminating any potential problems in a

       disaster of Group O mismatches and just work with 
 
       the Group Os, both positive and negative. 
 
                 The next comment that I would like to 
 
       raise, as was mentioned the other day, the 10,000 
 
       units came up as a target level.  That was sort of--I think

       that was speculation or just a guess.  But 
 
       we do need to come up with target levels.  What 
 
       could we be able to have available, both liquid and 
 
       frozen, to be able to move to strategic locations? 
 
       And remember again that in 9/11, we did not have

       our air traffic.  And that created a major problem. 
 
       So we have to make sure that we do have target 
 
       levels and we also have strategic locations set up. 
 
                 Also, I would strongly recommend that 
 
       instead of sitting on a frozen reserve and let it

       just sit there, I think that you need to constantly 
 
       be rotating it and replenishing it.  I think one of 
 
       the problems that the DOD had early on was that 

                                                                 66 
 
       they collected a large bolus of blood back in the 
 
       early 1990s for frozen inventory and then the ten 
 
       years came and without the subsequent replacement. 
 
       And I think we all know that criticism there, but

       it's an idea that you have to constantly be 
 
       replacing your frozen inventory. 
 
                 So I'll conclude with questions that you 
 
       might have for me. 
 
                 DR. PENNER:  Jerry, just a quick question,

       because this hasn't been handled, but I'm presuming 
 
       the information is there.  Red cell survival in the 
 
       frozen products now with the present additives is 
 
       comparable to what we would see in most cases with 
 
       the liquid blood, and the other thing would be the

       oxygen delivery of the frozen blood once 
 
       reconstituted. 
 
                 DR. HOLMBERG:  Well, as far as--the FDA 
 
       does have a requirement for red cell survival, and 
 
       that must be the 70 percent or 75 percent--the 75

       percent.  And so, you know, there will be a little 
 
       bit lower red cell survival than with fresh blood, 
 
       if you were using fresh blood. 

                                                                 67 
 
                 Now, as far as--but, still, any 
 
       anticoagulant or additive solution has to meet that 
 
       requirement for the expiration period of time.  The 
 
       2,3-DPG and the ATP levels, if you collect this at

       day six and you freeze those red cells, the levels 
 
       of ATP and 2,3-DPG are maintained at those--in the 
 
       frozen state. 
 
                 DR. PENNER:  As I recall, though, the 70 
 
       percent, is that 24 hours, wasn't it?

                 DR. HOLMBERG:  Seventy-five percent, 24 
 
       hours later, 75 percent of the red cells must be in 
 
       circulation. 
 
                 DR. PENNER:  We never really checked the 
 
       survival time, half-life, 25 days, something like

       that, so--and that data is around someplace, but it 
 
       never was focused on as whether the cells really 
 
       survived 48 hours or 72 hours. 
 
                 DR. HOLMBERG:  That's a good point, and I 
 
       would direct you to the article by Dr. Valeri.  It

       appeared July 2001 in Transfusion, and I know that 
 
       the most recent study that the American Red Cross 
 
       and Haemonetics is doing is looking specifically at 

                                                                 68 
 
       that, not so much from an FDA requirement but for 
 
       publication purposes to be able to put that in a 
 
       publication. 
 
                 To answer your question, I don't have that

       data right off the top of my head. 
 
                 DR. PENNER:  Okay.  And maybe one other 
 
       question if I can.  That is, outdating on a 
 
       contingency, what would your feeling be to extend 
 
       outdating for liquid blood under certain

       circumstances, an emergency use, to 47 days, to 50 
 
       days, to 60 days?  We know that at 42 days 
 
       everything doesn't dissolve, that the red cells are 
 
       still red cells, and we've got plenty of data that 
 
       show that if you extend it on out, you lose

       something.  But you don't lose everything.  You 
 
       still have an oxygen delivery system. 
 
                 DR. HOLMBERG:  Well, I would caution you 
 
       there, and you just hit a nerve with me; that is, I 
 
       think it's wrong to manage an inventory based on 42

       days, primarily because although the ATP levels--or 
 
       I should say although the 2,3-DPG levels will come 
 
       back within 24 to 48 hours to the normal level, the 

                                                                 69 
 
       problem is that if you have an acute situation and 
 
       you have trauma patients, do you really want to be 
 
       pumping them with that kind of blood, or do you 
 
       want to give them fresher blood that has more

       readily available oxygen offload capability? 
 
                 And so my question is that, again, I would 
 
       frown against going beyond the 42 days, extending 
 
       that.  I think that we need to manage our donors 
 
       and manage our inventories so that we're working

       with a shorter inventory. 
 
                 DR. BRECHER:  Andy? 
 
                 DR. HEATON:  Yes, I have some comments on 
 
       blood storage.  The new additives have very high 
 
       post-transfusion recoveries of 42 days.  They run

       about 85 percent, between 80 and 85 percent.  And 
 
       as for the DPG issue, DPG has a half-life, once you 
 
       collect the unit, of about ten days.  So at six 
 
       days you've lost 50 percent of your 2,3-DPG.  The 
 
       reality is it's regenerated with a half-life of six

       hours when it's been transfused, and there's 
 
       absolutely no evidence that long-stored blood 
 
       doesn't transmit oxygen.  There are many other 

                                                                 70 
 
       factors of oxygen offloading and onloading that 
 
       would suggest that even long-dated additive stored 
 
       blood will be quite effective, even in a casualty 
 
       situation.

                 So I don't see that there's a quality 
 
       issue here.  It's really a matter of just recording 
 
       the integration of the new additives with the old 
 
       frozen storage solutions and getting that on the 
 
       record.

                 DR. BRECHER:  Jeanne? 
 
                 DR. LINDEN:  Jerry, could you educate as 
 
       to what's involved with the validation of the 14-day shelf 
 
       life for the other additives and 
 
       temperature conditions and so forth?  And did I

       understand you correctly that such studies are 
 
       underway for the presently used additive solutions? 
 
                 DR. HOLMBERG:  Yes.  Studies have just 
 
       been completed for AS-1 and AS-3 at the various 
 
       temperature ranges.  The AS-5 is currently in the

       process, waiting on the military, and the funding 
 
       for that, I believe, to study that. 
 
                 What is required to complete those studies 

                                                                 71 
 
       has been to be able to prove at two different 
 
       temperature ranges, at both a 70 plus or minus 5 
 
       and at an 80 plus or minus 5, to make sure that the 
 
       range of, you know, minus 65 or colder based on the

       minus 80 is equivalent and that there is no problem 
 
       with that.  Also, in-vivo survivals are required 
 
       along with red cell quality parameters. 
 
                 I think that answers your question. 
 
                 DR. BRECHER:  Jay?

                 DR. EPSTEIN:  Are you also studying use of 
 
       rejuvenation solutions to permit delayed freezing 
 
       with the system? 
 
                 DR. HOLMBERG:  Currently I am not.  I know 
 
       that the Red Cross is looking at a pilot study, but

       I can't elaborate any more on that. 
 
                 DR. BRECHER:  Keith? 
 
                 DR. HOOTS:  Just a logistical question in 
 
       terms of disaster relief and that sort of thing. 
 
       You had suggested that you'd use frozen supply to

       replenish, just as the military proposed, the acute 
 
       liquid supply that was used for the immediate 
 
       management.  How do you foresee the coordination to 

                                                                 72 
 
       occur?  For instance, if there's a major disaster 
 
       in New York, and Philadelphia immediately ships X 
 
       percent of their available supply to New York to 
 
       provide the second wave of supply, who should be

       responsible then for freeing up the frozen supply 
 
       to replenish Philadelphia?  That's one of the 
 
       things I guess, when you're talking about how to 
 
       fit this whole thing together, is this something 
 
       where it would just be--you would just requisition

       it because there was a need?  Or should there be 
 
       some supervisory planning group that says, okay, 
 
       fine, can Philadelphia release X thousand units 
 
       and, therefore, we immediately within 24 hours 
 
       could use the frozen supply?

                 DR. HOLMBERG:  Well, I agree with you.  I 
 
       think that there needs to be a guidance, some sort 
 
       of group or consortium coming together, whether 
 
       that is mandated by the government or just on the 
 
       volunteer or the blood agencies out there.  And I

       think the first big step is the task force that 
 
       Karen mentioned.  And I think that it would have to 
 
       be worked out with agreements.  Ideally, if 

                                                                 73 
 
       Philadelphia had their own frozen inventory, they 
 
       would dip into that and start replacing that. 
 
                 Now, as far as who covers the cost, I 
 
       think we need to work--those are issues that need

       to still be worked out. 
 
                 DR. HOOTS:  But I understood you to say 
 
       that you thought 16 depot sites were probably too 
 
       many.  So, logistically, you might be talking about 
 
       eight around the U.S.  So, presumably, if you

       really were talking about a depot system, then 
 
       Philadelphia might be a site, but in that sense it 
 
       wouldn't belong just to Philadelphia. 
 
                 DR. HOLMBERG:  No.  And, again, that goes 
 
       along with my concept of the civilian and the

       military working together. 
 
                 You know, I would view a kind of a concept 
 
       like that that it would actually be--it would 
 
       really be--the primary goal, the primary objective 
 
       is our armed forces, but secondary would be our own

       internal security.  And working out of that 
 
       inventory, and whether it's, you know, six places 
 
       or eight places, there may be a requirement to 

                                                                 74 
 
       backfill Philadelphia with liquid blood for a 
 
       period of time until they could get their deglyce 
 
       done. 
 
                 But I firmly believe that during a

       disaster is also not the time to be collecting 
 
       donors.  I think you need to be redirecting some of 
 
       your energy in other locations. 
 
                 COLONEL SYLVESTER:  I'd just like to make 
 
       a comment.  I think some of what Jerry is talking

       about and other people alluded to already exists. 
 
       There is much communication between the military 
 
       and the AABB, the ABC, the ARC, and we have at 
 
       times, when necessary, shared our inventory.  We 
 
       purchase from them, and then we'll turn around and

       supply them when we have excess and they're short. 
 
       That occurs now.  So I don't want the panel to 
 
       think that our inventory is never touched by 
 
       anybody else.  We do rotate our inventories in and 
 
       out and share them when necessary, as happened

       after September 11th, because we did have the ASWA 
 
       at Maguire, which was driving distance to New York 
 
       City.  We were ready to push whatever was needed at 

                                                                 75 
 
       Maguire forward into New York City.  It just wasn't 
 
       needed.  But it was stationed there and ready to be 
 
       put on, and we do the work through the task force 
 
       and we do the work informally in our coordination

       with the other agencies. 
 
                 DR. BRECHER:  If there are no other 
 
       questions or comments, we'll take a break until 
 
       10:15. 
 
                 [Recess.]

                 DR. BRECHER:  Okay, if we can take our 
 
       seats? 
 
                 We're going to allow one other company rep 
 
       to make a comment.  Steve Binion I believe wanted 
 
       to make a comment from the previous talks from

       Baxter. 
 
                 MR. BINION:  Thank you, Dr. Brecher and 
 
       the Committee.  Just very quickly, two comments as 
 
       a follow-up to the industry comments earlier. 
 
                 I did want to just bring to the

       Committee's attention that from the standpoint of 
 
       new technologies related to potential improvement 
 
       in availability of blood products, in addition to 

                                                                 76 
 
       apheresis systems for collection of red cells on 
 
       the market by other manufacturers, Baxter does 
 
       produce an ALYX apheresis system.  This is a mobile 
 
       system which is available for simultaneous

       collection of two units of leukoreduced red cells, 
 
       with a total collection time of 20 to 30 minutes. 
 
                 And then just a quick follow-up to the 
 
       commentary regarding blood pack unit manufacturing 
 
       capabilities and supply, Baxter does maintain

       multiple redundant manufacturing plants and 
 
       capabilities, and, in fact, our total capacity is 
 
       sufficient to supply the current U.S. market 
 
       requirements in the range of 15 to 20 million blood 
 
       pack units per year.

                 So I just wanted to add those comments to 
 
       the record from the standpoint of manufacturers. 
 
       Thanks. 
 
                 DR. BRECHER:  Okay.  Thank you, Steve. 
 
                 We'll now move into the public comment

       portion.  Are there any public comments? 
 
                 [No response.] 
 
                 DR. BRECHER:  If not, we're going to move 

                                                                 77 
 
       to the--oh, I'm sorry. 
 
                 MS. O'DAY:  I'm Miriam O'Day, and I'm here 
 
       on behalf of the alpha one community and the immune 
 
       deficient community.

                 DR. BRECHER:  Pardon me, ma'am.  Just a 
 
       minute.  Is this about the HOPPS thing or-- 
 
                 MS. O'DAY:  It is. 
 
                 DR. BRECHER:  Okay.  We're not there yet. 
 
                 MS. O'DAY:  Okay.

                 DR. BRECHER:  We're going to talk about 
 
       HOPPS a little bit later.  We just want to do the 
 
       discussion from what's already happened. 
 
                 MS. O'DAY:  Okay.  My apologies. 
 
                 DR. BRECHER:  Then we'll open it up again.

                 MS. O'DAY:  Thank you. 
 
                 DR. BRECHER:  Okay.  If there are no 
 
       comments about the previous discussions--I'm sorry 
 
       I didn't clarify that--what I'd like to do is 
 
       discuss two things.  One is what has already ben

       discussed or presented in the meeting about supply, 
 
       reserves, et cetera, and there's already been one 
 
       motion that there may not be any resolutions we 

                                                                 78 
 
       want to make.  And then I want to just move on to 
 
       an update over the question of the Dr. Carmona 
 
       letter and the question of recombinant factors. 
 
                 Let's just first deal with the question of

       do we need to have a resolution or do we just need 
 
       to take this as information and then go on to other 
 
       meetings to expand and get further feedback from 
 
       the interorganizational task force as to what their 
 
       status is, et cetera.  Mark?

                 MR. SKINNER:  During the brief Committee 
 
       discussion earlier, I had two questions I wanted to 
 
       ask, and the second one I didn't ask.  And it came 
 
       up, I think, in two different presentations 
 
       yesterday, and I think it's a piece of information

       that at least would be helpful to me as a consumer. 
 
                 The discussion was around when there are 
 
       new tests that are developed after the products are 
 
       frozen.  I think the statement was made that, with 
 
       the authorization of the physician, they could use

       a non-tested product, like when the West Nile virus 
 
       was implemented.  I didn't hear anywhere in that 
 
       context under what conditions the physician can use 

                                                                 79 
 
       it, if it was emergency only, or if the consumer 
 
       was ever informed that they were using it, if it 
 
       could be used on a routine basis, you know, after 
 
       you had given your general assent.  But I think we

       need to probe that area a little bit if we're using 
 
       products that have not been tested with the latest 
 
       tests. 
 
                 DR. BRECHER:  Anybody want to respond? 
 
       Celso?

                 DR. BIANCO:  I can try, Mark.  There are 
 
       routines established in all blood centers, 
 
       collecting facilities, that involve an emergency 
 
       release, and this occurs regularly with an 
 
       extremely rare unit of blood that is being stored

       for many years when other tests come.  And it's 
 
       going to be--there are several levels.  The first 
 
       level is obviously the notification and acceptance 
 
       of that unit by the hospital and the physician that 
 
       needs that unit.  And that physician, in

       conjunction with the patient, will obtain an 
 
       informed consent, will then discuss.  Frequently 
 
       it's not even a question of informed consent about 

                                                                 80 
 
       the patient.  Those units are used in extremis. 
 
       And so it's the family of the patient actually that 
 
       ultimately will be--it's like a life-and-death 
 
       decision that will lead to something like that.

                 But, actually, in all FDA guidances that 
 
       you will find in all materials, there is always a 
 
       small chapter, a small paragraph that will discuss 
 
       what kind of labeling--that unit that doesn't 
 
       conform to the current specifications, how it

       should be labeled and what the requirements for an 
 
       emergency release. 
 
                 DR. BRECHER:  Karen? 
 
                 MS. LIPTON:  I also just wanted to add 
 
       that under the AABB standards there's a section on

       it called emergency release for what we call non-conforming 
 
       product, and that would require that you 
 
       get the--that you inform the physician.  Now, you 
 
       know, as to whether the physician goes back and 
 
       says something to the patient is really between the

       physician and the patient.  In most cases, though, 
 
       once you go to emergency release, the physicians 
 
       aren't accepting the blood, anyhow.  So it's--you 

                                                                 81 
 
       know, it would really have to be dire circumstances 
 
       before they would do that. 
 
                 I think your question, though, Mark, also 
 
       goes to this question of how do you rotate

       inventory when we're introducing a new test.  And 
 
       that is generally something when we're introducing 
 
       a new test that we do discuss with the FDA, and a 
 
       lot depends on really the significance of the test, 
 
       whether you would go back and test all of your

       inventory.  There are different circumstances with 
 
       West Nile.  I think when we were talking about not 
 
       so much the testing but even some of the questions, 
 
       some of the issues related to whether there really 
 
       was any different risk as of the day we started

       testing or not.  But testing inventory is 
 
       generally--it actually is something that's always 
 
       addressed as a new test comes up as to whether 
 
       that's something that needs to be done. 
 
                 DR. BIANCO:  And, actually, just to

       complete what Karen said, very appropriately, it is 
 
       that for the most important tests introduced in the 
 
       last 15 years, I would say, there was always an 

                                                                 82 
 
       attempt by the testing facilities to test them 
 
       within the first day or two, notify the hospitals 
 
       to hold their inventories, not to transfuse during 
 
       that period until they could replace the inventory

       in the hospital with a tested inventory. 
 
                 MR. SKINNER:  I think just the issue that 
 
       I was trying to get to was whether there was a 
 
       difference between an emergency situation or 
 
       whether they could be routinely put back into the

       supply with just the doctor's assent.  And it 
 
       sounds like what we're talking about is the 
 
       emergency situation.  So that wasn't clarified in 
 
       either of the comments yesterday, and maybe that 
 
       was just information that was assumed.  But I

       wanted to-- 
 
                 DR. BRECHER:  Yes, West Nile virus 
 
       testing, of course, has been somewhat of an 
 
       exception because it was a seasonal illness, and so 
 
       it wasn't felt that we had to go back and test the

       prior inventory.  But I can tell you, for example, 
 
       we had a patient with six antibodies.  We searched 
 
       the whole country for units of blood, and the 

                                                                 83 
 
       patient needed a liver transplant.  And some of the 
 
       only units we could identify in the country were 
 
       collected last summer and were not tested for West 
 
       Nile virus.

                 We were prepared to use those if we needed 
 
       to.  The patient actually didn't make it long 
 
       enough to get the liver transplant.  But it was an 
 
       extreme situation. 
 
                 Other questions or comments?  Is it the

       Committee's feeling that we do not need to have a 
 
       resolution that comes out of the presentations made 
 
       so far in this meeting? 
 
                 DR. BIANCO:  I may disagree with Karen 
 
       that we don't need--it's not necessary--it doesn't

       have to be called a resolution, but I think that 
 
       marching orders to the disaster task force to 
 
       address the issue and come to us within a certain 
 
       reasonable period of time. 
 
                 MS. LIPTON:  We could certainly do that.

       I mean, they're going to do it no matter what this 
 
       Committee does.  So if they'd like to say we 
 
       encourage your--you know, support your efforts, but 

                                                                 84 
 
       it was--it's in the process, and it's not going to 
 
       stop. 
 
                 DR. BRECHER:  Right, and we anticipate an 
 
       update in the January meeting.

                 Yes, Chris? 
 
                 MR. HEALEY:  I'm neither in favor nor 
 
       opposed to a resolution per se, but the one comment 
 
       that I heard repeatedly yesterday was the need for 
 
       Federal funding for a reserve if there indeed is

       one created.  So that might be the basis upon which 
 
       to carry something. 
 
                 DR. BRECHER:  Well, I think until we have 
 
       a firm plan as to what kind of reserve, I think 
 
       that may be premature.  I think that would be the

       intent of the Committee, but we need to know 
 
       exactly what it is that we want to encourage. 
 
                 Okay.  Mat? 
 
                 DR. KUHNERT:  Being new to the Committee, 
 
       I saw there was a history of this issue being

       discussed in the past and that there was in the 
 
       past a need to develop systems for monitoring, and 
 
       now it seems there are multiple systems for 

                                                                 85 
 
       monitoring.  So the only thing that I think would 
 
       be wise to urge is to have one system, or at least 
 
       if there are different systems, that they have 
 
       clearly different purposes.  So I'm not sure if

       that's something the Committee can do to urge, but 
 
       it just seems with all these different systems 
 
       there is some need to integrate them. 
 
                 DR. BRECHER:  Mac? 
 
                 CAPTAIN McMURTRY:  If I may, I'm not

       really prepared to talk about the monitoring. 
 
       There's stuff going on.  I just wanted to let you 
 
       know that the idea that had been out there for a 
 
       while, which was to look at the current DHHS system 
 
       to have it analyzed to see how accurate it was, how

       relevant it was, that analysis is ongoing.  We have 
 
       gotten a couple of the deliverables.  Those are 
 
       sort of ricocheting around in the Department right 
 
       now.  No action has been taken, but we're 
 
       anticipating it.  But it's a little premature to be

       saying what that action is going to be.  But the 
 
       thought is to consolidate what the Department has. 
 
                 DR. BRECHER:  Maybe we can ask for an 

                                                                 86 
 
       update as to what the status is at the next 
 
       meeting. 
 
                 CAPTAIN McMURTRY:  It would be mature at 
 
       that point.

                 DR. BRECHER:  John? 
 
                 DR. PENNER:  I agree, just from political 
 
       aspects, that maybe not making a statement until 
 
       we're ready to come up with something solid and 
 
       concrete would be better than delivering a lot of

       small resolutions along the way, which then will be 
 
       diluted out. 
 
                 DR. BRECHER:  And we can set a precedent 
 
       that we don't have to have a resolution. 
 
                 Lola?

                 DR. LOPES:  I see a connection between the 
 
       monitoring and the problem that was discussed a 
 
       little yesterday of identification of individual 
 
       units.  It seems like if we can get to the point 
 
       where units are bar coded, that monitoring could be

       linked in a single system so that it would occur 
 
       automatically any time a unit moved from inventory 
 
       to another place, came into the system, it would 

                                                                 87 
 
       all be done at once. 
 
                 I think this is something that is worth 
 
       hard consideration because I think that that in 
 
       some ways might be simpler to do than the kind of

       monitoring that we do with human reports. 
 
                 DR. BRECHER:  We have a very fragmented 
 
       system, and it's a huge system.  There are some 
 
       countries that do a much better job of tracking 
 
       that maybe we can get some further information

       about in the future.  But they tend to be a 
 
       fraction of the size of our system. 
 
                 Karen? 
 
                 MS. LIPTON:  I wanted to mention that all 
 
       the units--they are bar coded, but I think what

       you're talking about is a single, and there is a 
 
       system that has been implemented in some places, 
 
       but not all, and it's the 128 ISBT, which would 
 
       assign a unique code to every single unit and 
 
       product.  And that is something that has--it's been

       on hold.  It is not as simple as you could imagine, 
 
       because to make something that would work for 
 
       everyone would require everyone's computer systems 

                                                                 88 
 
       to be able to handle this.  And that is, frankly, 
 
       the huge bar to this because changing a computer 
 
       system in a blood center is--it's a very regulated 
 
       function, and it's something that just--it just

       takes time. 
 
                 So we're aware of it.  I think it's 
 
       something that could contribute to it.  It's a huge 
 
       financial commitment.  It's also from many blood 
 
       centers requires a tremendous commitment of

       resources to change.  And we've said this before. 
 
       This is a very fragile industry, and we don't just 
 
       have--you know, you pick your priorities.  And I 
 
       think the sad truth right now is that this is not 
 
       the top priority given some of the other things.

       If we had a different reimbursement system, if we 
 
       had something that said this was very important, it 
 
       could work. 
 
                 So, as I said, I think it's out there.  I 
 
       think it's a matter of resources, and it's a matter

       of priorities. 
 
                 DR. BRECHER:  That was a good choice of 
 
       words:  "a bar to bar coding." 

                                                                 89 
 
                 Mac? 
 
                 CAPTAIN McMURTRY:  I'd like to comment 
 
       once again on the monitoring issue.  As Karen said, 
 
       it's a very fragmented system, and what we have

       found, when you go from a pilot test of nine sites 
 
       to 29 sites to 5,000 hospitals, and then another 
 
       however many community blood collection centers 
 
       there are, the computer systems are so different 
 
       across the spectrum that coming up with any kind of

       a monitoring system is going to be very difficult. 
 
                 DR. BRECHER:  Well, it certainly wouldn't 
 
       be an automated system.  You probably would have to 
 
       input at the Internet level daily. 
 
                 Jay?

                 DR. EPSTEIN:  I just want to come back to 
 
       the issue of making recommendations.  I tend to 
 
       agree that I may be premature for us to make 
 
       additional recommendations at this meeting, 
 
       especially given the history that we've repeatedly

       made recommendations in the area. 
 
                 On the other hand, I think that there's a 
 
       core issue where the Committee could provide a 

                                                                 90 
 
       useful service to the Department by coming to 
 
       closure, and that's on the question of the need for 
 
       what Jerry Holmberg called a strategic national 
 
       plan.  And I think it's one thing to call for, you

       know, studies of the issue and to call for support 
 
       for development, but the central question, it seems 
 
       to me, is:  Do we want/need a strategic national 
 
       plan?  And what is the government's role in that? 
 
                 I think that it's a bigger question than

       the way we've approached the issue in the past. 
 
       There have been many times when the question has 
 
       been raised who should manage blood in emergencies. 
 
       I remember more than a decade ago that the same 
 
       question was asked in the development of what is

       currently the FEMA plan, and, you know, we've 
 
       revisited it in the wake of various natural 
 
       disasters, and then we've been revisiting it in the 
 
       mind-set of counterterrorism. 
 
                 And each time the answer has come around

       to, well, industry can take care of this.  And 
 
       that's okay, but I think that what we need to ask 
 
       is:  Are the right things happening?  And is there 

                                                                 91 
 
       a more directive role needed by government?  Or 
 
       even is it just a question of financing? 
 
                 And I think that the role of government in 
 
       this remains unclarified, the necessary role of

       government in this remains unclarified.  And I 
 
       think that although the existing efforts within the 
 
       AABB Interorganizational Task Force are notable and 
 
       commendable, it bears some examination whether 
 
       we're getting the thing that we want done.  And

       what are the obstacles?  And is there a barrier 
 
       based on the current relationship with the Federal 
 
       Government?  In other words, are there some things 
 
       missing that should be there? 
 
                 So I just kind of think that what we're

       really dancing around is a core issue, which is the 
 
       role of government, and that we need to come to a 
 
       point of advising on that. 
 
                 DR. BRECHER:  Karen? 
 
                 MS. LIPTON:  I agree with you, Jay.  I

       don't think the time is now, though, because I 
 
       think for us to make recommendations about the role 
 
       of government or not, when we don't even understand 

                                                                 92 
 
       what we're dealing with.  I do think that at a 
 
       point when, you know, private industry could come 
 
       back and say, well, this is what we've come up 
 
       with, and then you can say, all right, what are the

       whole--you know, is there a better way to do this? 
 
       Will this satisfy?  What are the purposes? 
 
                 I think we need something concrete to deal 
 
       with, and, you know, to sort of start right now and 
 
       to make a suggestion, well, we think someone should

       study national strategic reserves would frankly 
 
       make me--or a national strategic plan would make me 
 
       very nervous, because it has to be, you know, built 
 
       on a system that we know we can handle.  And at 
 
       least when we come back from the disaster task

       force--and we're going to be very honest about what 
 
       we think the barriers are.  And if some of the 
 
       barriers are we're too fragmented and somebody 
 
       needs to step in here, I think it will be pretty 
 
       apparent.

                 DR. BRECHER:  Jay? 
 
                 DR. EPSTEIN:  Well, I wasn't trying to 
 
       advocate recommendations now, so I agree with you, 

                                                                 93 
 
       Karen.  But I think the implication of what you're 
 
       saying is that the Committee ought to ask the AABB 
 
       Interorganizational Task Force to come back and 
 
       present its current thinking.

                 DR. BRECHER:  Right.  We have already said 
 
       that they were going to--you may have been out of 
 
       the room when we did that. 
 
                 I think Jay raises an interesting question 
 
       about what is the role of government, and maybe

       it's a bigger question, not just for emergencies 
 
       but what should the role of government be in 
 
       managing the blood supply on a daily basis.  And 
 
       that may be something the Committee could visit at 
 
       some point.

                 Celso? 
 
                 DR. BIANCO:  I certainly--I want to 
 
       express a certain concern about the question.  I 
 
       think that the difficulties that we have been 
 
       having in shortages and issues of this kind, they

       exist.  And I think that many of the reviews and 
 
       studies that have been done have shown that the 
 
       entire system is underfinanced.  It is not a 

                                                                 94 
 
       question of management of the system. 
 
                 Whenever we find the resources, we get the 
 
       donors, and actually I must say that while some 
 
       areas cry a lot that we don't have the blood, we

       don't have the blood, but we recovered even from 
 
       the substantial donor loss that we had since last 
 
       year with multiple deferrals, including the vCJD 
 
       deferrals, that they total about 10 percent of our 
 
       donor base.  And it was very serious.

                 We have been able to address shortages 
 
       that were caused by natural disasters and other 
 
       disasters, and we hear Dr. Gilcher every time, 
 
       beautiful systems and the beautiful ways he has 
 
       been able to deal with it.

                 Yes, I'd like it to be discussed, but I'd 
 
       like us to think of the role of government as a 
 
       supportive, probably some coordination, 
 
       facilitating communication, but mostly supportive. 
 
       I think that the blood banking community has shown

       that they dealt with a lot of difficult situations, 
 
       and with that, the patients have blood. 
 
                 DR. BRECHER:  Paul? 

                                                                 95 
 
                 DR. HAAS:  I think the question of private 
 
       sector versus government, as always, is very 
 
       difficult.  I hope I'm not misconstruing your 
 
       words, Karen, but having industry decide what it

       can do and then ask where the help is is a 
 
       different question than saying there's an 
 
       interactive relationship and we start out the 
 
       process thinking in terms of where the interaction 
 
       takes place.

                 I don't know how you start that.  Someone 
 
       has got to come up with the first step, which is 
 
       maybe what the task force is doing.  But if 
 
       government is always what comes in to plug the 
 
       holes, the probability, I think, is that the

       government will do that poorly because it wasn't 
 
       part of the integrated approach to things.  And so 
 
       somehow we have got to be meshing the two 
 
       constantly. 
 
                 DR. BRECHER:  Karen, does government have

       a seat in the Interorganizational Task Force? 
 
                 MS. LIPTON:  Yes.  The FDA and the CDC are 
 
       on tier one. 

                                                                 96 
 
                 DR. EPSTEIN:  And the Department. 
 
                 MS. LIPTON:  Excuse me? 
 
                 DR. EPSTEIN:  And the Department. 
 
                 MS. LIPTON:  And the Department, that's

       right.  HHS, Jerry Hauer.  So there is definitely 
 
       an opportunity for the government to play a key 
 
       role in this as we deliberate in terms of what we 
 
       think the roles and responsibilities and needs for 
 
       the government.

                 I mean, the one thing I will tell you is 
 
       that, having worked with HHS during these times of 
 
       deliberation, they're not so much in a command and 
 
       control mode right now.  They want systems to work. 
 
       But everybody's got their hands full, and I think

       they're really looking for and working with a lot 
 
       of private-government partnerships.  It's more 
 
       along the FEMA line, you know, where the rubber 
 
       hits the road is in the local communities, not 
 
       sitting up in Washington, D.C.

                 I think, again, I would encourage us as a 
 
       first step to let this group come back and have HHS 
 
       and FDA and CDC sitting at the table, and then if 

                                                                 97 
 
       it just doesn't look rational or if we want to pass 
 
       it on up to HHS and say, well, maybe you want to 
 
       take a look at this, but here's just some 
 
       background thinking, I think that's fine.

                 DR. BRECHER:  Other questions or comments? 
 
                 DR. BIANCO:  I just want to support what 
 
       Karen said.  I didn't want to sound negative about 
 
       what I said.  I just wanted to express concern. 
 
       And this task force has been working in a simply

       spectacular way.  I couldn't say anything less than 
 
       that.  It has been always there, everybody has 
 
       contributed tremendously, and it includes not only 
 
       the blood banking--the collection facilities and 
 
       the government, but also manufacturers.  And so it

       is the entire--as Jeff Miripol was saying this 
 
       morning, the entire supply chain is there.  And 
 
       that's very, very important. 
 
                 DR. BRECHER:  Okay.  If there are no 
 
       further comments, I think we can move on to discuss

       the issue of one of our prior recommendations.  As 
 
       many of you recall, in January of this year the 
 
       Committee made a recommendation that--I'm going to 

                                                                 98 
 
       just hit the highlights, where we recommended that 
 
       the CMS carrier manual provisions regarding 
 
       reimbursement for hemophilia clotting factors, that 
 
       it includes outdated terminology such as "heat-treated

       variety" and "non-heat-treated variety" 
 
       clotting factors; and that it was requested that 
 
       the terminology be updated. 
 
                 The Committee also wished to reaffirm at 
 
       that time its previous recommendation regarding

       recombinant clotting factors and recommended to the 
 
       Secretary that the Secretary direct CMS to promptly 
 
       revise the manual provisions regarding 
 
       reimbursement for hemophilia clotting factors, to 
 
       remove all insurance barriers to recombinant

       terminology. 
 
                 This led to a response from Dr. Carmona, 
 
       who was the Acting Assistant Secretary at the time, 
 
       whereby he wrote us in April, wrote the Committee 
 
       regarding "your recommendation about reimbursement

       for recombinant clotting factors.  I asked NHLBI 
 
       for an evidence-based review of the effectiveness 
 
       of recombinant factor versus native or monoclonal 

                                                                 99 
 
       factor.  NHLBI reported that its initial review 
 
       found no studies that showed a definite advantage 
 
       of one over the other." 
 
                 Then, the last, he said he would recommend

       to the Centers for Medicare & Medicaid that they 
 
       study the cost-effectiveness of recombinant 
 
       clotting factor to determine if the language 
 
       contained in its carrier manual should be modified--which is 
 
       not quite, I think--it was not quite the

       intent of the original resolution. 
 
                 This led to some consternation on the part 
 
       of a variety of players:  the National Hemophilia 
 
       Foundation, ABC, AABB, et cetera.  So that Mac 
 
       McMurtry, myself, Art Lawrence, and Dr. Beato, we

       all got together in June to discuss this.  And this 
 
       led to a second letter from Dr. Beato, which is 
 
       included in your package, and maybe we should take 
 
       a minute to allow people to read that, if they 
 
       haven't read it already.

                 [Pause.] 
 
                 DR. BRECHER:  Okay.  I'd like to open this 
 
       topic for discussion by the Committee.  Jeanne? 

                                                                100 
 
                 DR. LINDEN:  Well, I just have a question. 
 
       Do we know who wrote this?  Because people at this 
 
       level in my experience never write their own 
 
       letters, and it looks like the other one was

       written by Mac. 
 
                 I mean, if we knew who wrote it, then we 
 
       could find out better the intent, rather than 
 
       perhaps overinterpret or misinterpret a few words 
 
       here.

                 DR. BRECHER:  I think it's fair to say 
 
       that the content reflects input from a variety of 
 
       sources to Dr. Beato, who then incorporated this 
 
       into a letter that she felt comfortable signing. 
 
                 Is that political?

                 CAPTAIN McMURTRY:  Yes. 
 
                 DR. BRECHER:  Is the Committee satisfied 
 
       with this response?  I think that is the first 
 
       question.  Jeanne? 
 
                 DR. LINDEN:  Well, in follow-up to that,

       can you give us a little bit more information about 
 
       the discussions at this meeting and, you know, the 
 
       language about "while remaining fiscally 

                                                                101 
 
       responsible," what that is intended to mean? 
 
                 DR. BRECHER:  HHS felt that their mandate 
 
       is to be fiscally responsible and that they cannot 
 
       direct CMS to pay for, for example, a product that

       was out of the ballpark in terms of cost.  They 
 
       have to be fiscally responsible to the citizens of 
 
       the U.S.  And, therefore, they felt that for drugs--and they 
 
       consider this a drug--they have to look 
 
       at this in the bigger cost-effectiveness picture,

       although they are mindful that there are other 
 
       ramifications of this particular issue, and that is 
 
       where they--in the second paragraph, the Department 
 
       talks about their being acutely aware of the 
 
       concerns of the hemophilia community and they're

       mindful of the lost generation due to HIV and HCV. 
 
                 I would be curious what the hemophilia 
 
       community feels about this letter.  Mark, maybe you 
 
       could comment. 
 
                 MR. SKINNER:  I would be happy to comment,

       and my comments are not on behalf of NHF or any of 
 
       the hemophilia organizations.  But I did author--I 
 
       shouldn't necessarily say "author," but I did carry 

                                                                102 
 
       the original resolution. 
 
                 The letter that we received back, and 
 
       certainly read in companion with the letter to Dr. 
 
       Katz, I think is appropriate for where we are now.

       There certainly remain issues, and the letters 
 
       highlight the issues that we've talked about on 
 
       this and others, that there's a lot of economic 
 
       issues that spread the gamut.  And whether we 
 
       debate those points in terms of the economics and

       the priority and what does and doesn't deserve 
 
       reimbursement, on this point this isn't the place. 
 
                 I think the important thing about these 
 
       two letters together is the strong safety 
 
       statement, which was not in the original response,

       which was very gratifying to see that affirmed, the 
 
       commitment to address the outdated language, which 
 
       was the essence of the original resolution.  And, 
 
       of course, we recognized that that has to go 
 
       through a process.

                 And then I think equally importantly is I 
 
       interpret these that the Committee's original 
 
       recommendations which gave rise to the 

                                                                103 
 
       identification of this barrier in the CMS language, 
 
       which we were seeking removal of, remain intact; 
 
       that they have not refuted the Committee's original 
 
       recommendations and said recombinant shouldn't be

       made available.  They've talked about the 
 
       importance of the therapies.  They recognize the 
 
       economic costs.  They recognize the safety. 
 
                 So I think on balance, when you read it in 
 
       context with the full debate, it's a reasonable

       response at this time, but it clearly highlights 
 
       there's challenges and there are still issues that 
 
       this Committee needs to address. 
 
                 DR. BRECHER:  Keith? 
 
                 DR. HOOTS:  Just to add to that, I agree

       with Mark.  I think probably the most important 
 
       sentence is the second one:  "There was never any 
 
       intent to discourage the use of recombinant..." 
 
                 I think regardless of what happens 
 
       economically down the road, I think this sentence

       can be brought back to say, since discouragement 
 
       can come in any form, including economic 
 
       discouragement, to remind anyone that HHS' own 

                                                                104 
 
       record is saying they did not mean to discourage 
 
       recombinant. 
 
                 DR. BRECHER:  Now we'll take a public 
 
       comment.

                 MS. HAMILTON:  Jan Hamilton, Hemophilia 
 
       Federation of America.  I agree with what Mark said 
 
       and the other comments, too. 
 
                 I do want us to be cautious, though, 
 
       because it may not have been the intent to

       discourage payment for recombinant.  However, as we 
 
       all know, the states are in a tremendous economic 
 
       bind right now, and if that letter had gotten into 
 
       any of the Medicaid systems, we could have been 
 
       torpedoed, because we're already fighting that on

       many state levels right now where they're not 
 
       wanting to pay for recombinant product. 
 
                 And I can understand it wasn't the intent, 
 
       but I think we still need to be careful, very, very 
 
       careful and very, very much in a monitoring state

       to see that our feelings about safety are carried 
 
       through to the proper levels and that there's 
 
       education on those levels. 

                                                                105 
 
                 When we talk about economics, if you add 
 
       up the economic impact of what we went through to 
 
       get recombinant product and the lost generation and 
 
       the lawsuits and the Ricky Ray money and all of

       that, it's far more than any difference in paying 
 
       for recombinant therapy is.  And I think that we 
 
       really have to take that into consideration. 
 
                 DR. BRECHER:  I think this Committee has 
 
       gone on record multiple times in support of

       recombinant factor, and I don't think-- 
 
                 MS. HAMILTON:  We appreciate that. 
 
                 DR. BRECHER:  And I don't think the 
 
       Committee has any intent of stepping back from 
 
       those recommendations.  However, we can make those

       recommendations, and HHS can choose to accept them, 
 
       ignore them, or countermand them. 
 
                 In this case, I think on balance this is a 
 
       letter of support for our recommendations where 
 
       they do not wish to discourage the use of

       recombinant factor. 
 
                 Lola? 
 
                 DR. LOPES:  Just a little question about 

                                                                106 
 
       how the system works.  In the states that are not 
 
       paying for recombinant, does that mean that a 
 
       person who wants to use the recombinant gets 
 
       nothing, or do they get what would have been paid

       for the plasma-derived product? 
 
                 DR. BRECHER:  Could you answer at the 
 
       mike?  Otherwise, it will not go into the record. 
 
                 MR. SKINNER:  While Jan is walking up, I 
 
       think the practical effect is that because you're

       talking about Medicaid patients, they really have 
 
       no other options.  So they're forced to accept what 
 
       the government would provide for.  Whether they 
 
       just receive the differential and pay the 
 
       difference out of pocket, I don't know.  They

       probably couldn't and still qualify for Medicaid if 
 
       they have those kinds of resources. 
 
                 DR. LOPES:  But if someone else could come 
 
       up with the differential, are we talking about the 
 
       whole price or just part--

                 MS. HAMILTON:  Well, yes, if somebody else 
 
       could come up with the differential, they could. 
 
       But if you think about it, if a patient is on 

                                                                107 
 
       Medicaid, they can't come up with the difference. 
 
       You know, just like every patient who's on Medicare 
 
       they can't really come up with the 20 percent 
 
       either.  You can come up with 20 percent of a

       lesser product, but not of these products. 
 
                 DR. LOPES:  The reason I'm asking this is 
 
       because this is a case where it's clear that one 
 
       product is much superior to the older form of the 
 
       product.  And so the decision is being made that

       this is not a sort of vanity product or one-- 
 
                 MS. HAMILTON:  No. 
 
                 DR. LOPES:  It's being made purely on the 
 
       fact that it costs a lot.  But we do pay for other 
 
       treatments that cost a lot if they're based on

       other technologies, like, you know, liver 
 
       transplants cost a lot, and yet there is no problem 
 
       about paying for liver transplants. 
 
                 MS. HAMILTON:  And the thing about that, 
 
       too, is the decision on what kind of product they

       get then ultimately is not being made by the 
 
       patient and the physician.  It's being made by 
 
       whoever is paying for it. 

                                                                108 
 
                 DR. LINDEN:  It's my understanding with 
 
       Medicare and Medicaid that they cannot balance bill 
 
       the patient for additional things that aren't 
 
       covered, other than established copays.  So I think

       the Medicaid patient basically might in that 
 
       situation you're describing only have access to the 
 
       plasma-derived product.  I don't think they can 
 
       say, oh, but I want recombinant because I have this 
 
       other payer to add additional funds.  I don't think

       that legally can happen. 
 
                 So I just don't want to leave a 
 
       misimpression.  I believe that's the answer to your 
 
       question.  They would just have limited access to 
 
       certain types of products.

                 DR. BRECHER:  Chris? 
 
                 MR. HEALEY:  We're lucky to have a 
 
       representative from CMS here.  I wonder if he could 
 
       elucidate without putting him on the spot too much. 
 
                 DR. BRECHER:  Dr. Bowman?  Welcome to the

       Committee. 
 
                 DR. BOWMAN:  Thank you.  I'm not very 
 
       familiar with the regulatory issues for the 

                                                                109 
 
       Medicaid balance billing issues, which this 
 
       question was addressing.  I don't believe--I think 
 
       Jeanne is correct.  I don't believe that there's 
 
       any provision under the standard Medicare program

       for any type of balance billing. 
 
                 DR. BRECHER:  What about availability in 
 
       terms of the fraction that is recombinant versus 
 
       derived from plasma?  Will this cause--is there 
 
       enough plasma-derived factor?  So there's an

       availability--the answer I'm getting is that 
 
       there's not enough plasma-derived factor currently 
 
       in the market to meet the needs of hemophilia, and 
 
       so there comes a question of what can you purchase. 
 
                 Keith?

                 DR. HOOTS:  There would not be enough 
 
       plasma-derived Factor VIII in the present market. 
 
       If everyone who was on recombinant were converted, 
 
       I mean, that's--there's no question about that. 
 
       There would be the potential to ramp up production

       if that were the case.  But, again, as I said last 
 
       time, the implications go far beyond the United 
 
       States.  This is a worldwide market, so it's not 

                                                                110 
 
       something where you could just say, oh, well, that 
 
       would be what would happen.  It would be one of 
 
       those expanding entropy problems if that were to--you know, 
 
       if someone were to try to undertake that

       experiment. 
 
                 Furthermore, I think it probably would 
 
       have then cascading--as Mark talked about earlier 
 
       this morning, it would have cascading effects in 
 
       the other direction to things like IVIg and things

       that drive other plasma collections and stuff. 
 
                 So I don't even think that is in the realm 
 
       of availability possible, at least in the present 
 
       milieu of production.  It would require expanding a 
 
       lot of production facilities that don't presently--that are

       not presently online, to put it that way. 
 
                 DR. BRECHER:  Larry? 
 
                 MR. ALLEN:  Well, I've been hesitant to 
 
       bring up this issue about perspective or perception 
 
       again.  This letter does leave the door open, in my

       perspective, in terms of if there was some reason 
 
       there was an increase in the cost of, say, 
 
       recombinant, for whatever the reason.  It seems to 

                                                                111 
 
       me that the door has been left open for there to be 
 
       some other people excluded from getting the type of 
 
       drug or treatment that they need. 
 
                 That concerns me because although they're

       saying they understand what's happened in the past, 
 
       this issue of remaining fiscally responsible leaves 
 
       a big perception in a lot of people's eyes that if 
 
       one thing--if something does develop and the cost 
 
       changes, that they're going to be a lot more people

       that are going to be excluded from buying and using 
 
       this product.  And the mere fact that, as was 
 
       mentioned earlier, this is not a choice of the 
 
       patient or the doctor, this is a choice, once 
 
       again, of the insurance company or the people who

       are actually paying the bills, then I'm concerned 
 
       about that. 
 
                 I'm also concerned about the number of 
 
       patients who may want to use it but cannot because 
 
       they're in a state right now that won't pay for it.

                 DR. BRECHER:  I think that it's fair to 
 
       say that the Committee is concerned about that as 
 
       well. 

                                                                112 
 
                 Chris? 
 
                 MR. HEALEY:  Just a comment.  I know we're 
 
       talking about some disaster planning today, and 
 
       there's no doubt it would be a catastrophe if

       recombinant weren't available and everyone had to 
 
       switch to plasma-derived therapies.  There aren't 
 
       enough on the market today or facilities available 
 
       to meet the demand that exists.  But I think our 
 
       efforts might be equally well directed at making

       sure that doesn't occur, and I think that is a 
 
       possibility, that we can make sure it doesn't occur 
 
       through outreach with the payors, through outreach 
 
       with CMS and through working with our congressional 
 
       representatives and so forth.

                 So it's a disaster of a different ilk than 
 
       bioterrorism or other things like that, and I think 
 
       it's something that we do have an opportunity to 
 
       influence. 
 
                 DR. BRECHER:  Yes?

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

		at this committee meeting.
	
	I'm with HRSA, Health Resources and Services 
 
       Administration on the Maternal Child Health Bureau, 

                                                                113 
 
       and I'm the Director of the National Hemophilia 
 
       program, and we've been hearing from consumers and 
 
       tracking this issue, and one of the main goals for 
 
       our federal agency is to ensure equal access to

       quality care.  I think the concern that I see 
 
       possibly happening is that there is going to be two 
 
       different standards of care, and that those who do 
 
       no have sufficient dollars are not going to get 
 
       access to what MASAC considers to be standard of

       care. 
 
                 So what appears to be happening is that 
 
       there really could be two different levels, or 
 
       standards of quality of care.  So I just wanted to 
 
       share that since we represent all vulnerable

       populations. 
 
                 MR. ALLEN:  Any options that you could 
 
       come up with that-- 
 
                 MS. HAGOPIAN:  I don't have any options at 
 
       this point, but I know that we certainly are very

       eager to collaborate with CMS and bring together 
 
       various individuals to let them know how we 
 
       perceive things and what we--how we perceive the 

                                                                114 
 
       impact could be.  And we're very eager, very much 
 
       so, and we'd certainly try to be responsive to CMS 
 
       whenever they seek our opinion. 
 
                 MR. ALLEN:  Just so I understand, you are

       saying you're hearing from patients who cannot get 
 
       the product that they and their doctor choose to 
 
       use? 
 
                 MS. HAGOPIAN:  What we're seeing is that 
 
       with some of the Medicaid proposed changes,

       patients will not be able to access recombinant. 
 
       It's definitely true what this person said over 
 
       there.  I mean, for whatever reason, that is the 
 
       reality and will be the reality.  We don't have--I 
 
       can't represent HRSA and say we have a position.

       I'm just telling you what I hear and what I see. 
 
                 DR. BRECHER:  Chris then Mark. 
 
                 MR. HEALEY:  One of the major ways that 
 
       states limit access is through a vehicle that's 
 
       called prior authorization, where you have to get

       prior approval for administration of the therapy. 
 
       One of the major ways that states could limit 
 
       access is through this prior authorization process. 

                                                                115 
 
       I know that a lot of the stakeholders, including 
 
       industry,  including NHF and other organizations, 
 
       HFA and others, have been very active at the state 
 
       level, lobbying and advocating against including

       blood clotting factors and other plasma therapies 
 
       from these prior authorization processes.  So we 
 
       can get an exemption and a carve-out from these 
 
       prior authorizations so there won't be any delay in 
 
       access to the therapy, there won't be any major

       constraints on access to the therapy. 
 
                 One success that was recently obtained 
 
       through a collaborative effort was up in Minnesota 
 
       where there was a wholesale carve-out of blood 
 
       clotting factors from the prior authorization

       requirements.  I think there are six or seven 
 
       states now that carve out clotting factors or blood 
 
       component products in general.  So there's still a 
 
       lot of work to be done but there has been some 
 
       progress made.  And I know there's a lot of

       outreach to various stakeholders to try and 
 
       collaborate to get that done across the board. 
 
                 DR. BRECHER:  Mark. 

                                                                116 
 
                 MR. SKINNER:  Shifting back a little bit, 
 
       kind of what's been a theme of some of my comments 
 
       and discussions that I've had with some of you, if 
 
       we went back to look at this kind of as a global

       issue, because the plasma therapies are really 
 
       different than the blood, we're looking at a global 
 
       market where products move and we're looking at 
 
       global manufacturers.  I think understanding the 
 
       consequences of these impacts globally, the ripple

       effects back to the U.S., might actually help drive 
 
       other arguments to the safety of the economic issue 
 
       in terms of just the capacity to make these 
 
       decisions.  I've suggested a couple times looking 
 
       at the plasma issue and looking at it in relation

       to blood and what the global market dynamics are, 
 
       what the impacts, the benefits, and kind of the 
 
       constraints that are presented, and how we perhaps 
 
       ought to really be looking at the plasma market and 
 
       the plasma therapies in the U.S., and not look at

       them just simply as a U.S. reimbursement structure, 
 
       but to understand the economics.  It's beyond just 
 
       the reimbursement.  We really need to have a better 

                                                                117 
 
       understanding of the global dynamics of the market. 
 
                 If we do that, then that's really part of 
 
       our role as an education process, and devising a 
 
       secretary, and that gives us perhaps a stronger

       basis and another argument that maybe we haven't 
 
       used to date, as we talked about the availability 
 
       of both the recombinant therapies, but all the 
 
       other advances in technology that have come forward 
 
       in the plasma field.

                 DR. BRECHER:  Other comments, questions? 
 
                 [No response.] 
 
                 DR. BRECHER:  I think we could move on to 
 
       the question of HOPPS, and Pierre, I think there 
 
       will be some resolutions coming from the Committee.

                 DR. BIANCO:  Mark? 
 
                 DR. BRECHER:  Yes, Celso? 
 
                 DR. BIANCO:  What I see is that in the 
 
       schedule it's for 1:00 p.m.  So for instance, Jim 
 
       McPherson that will speak for ABC is not here.  I

       don't know who Red Cross would be speaking, and I 
 
       don't know.  Karen? 
 
                 MS. LIPTON:  Well, actually, the person we 

                                                                118 
 
       were going to have is presently speaking at CMS. 
 
       So we actually have a substitute speaker. 
 
                 DR. BRECHER:  Why don't we go to lunch, an 
 
       early lunch.

                 MR. HEALEY:  If you did want to make some 
 
       progress on the topic, we were going to request 
 
       that there be an opportunity to present some of the 
 
       plasma issues and how HOPPS impacts them.  We do 
 
       have a brief presentation ready to go, and Julie

       Birkofer, your favorite star, is ready to do it. 
 
       So-- 
 
                 DR. BRECHER:  All right, Julie.  You're up 
 
       to bat, and then we'll go to lunch.  Thank you. 
 
                 MS. BIRKOFER:  Sorry I didn't have this

       teed up.  I was going to do it at the lunch break. 
 
                 DR. BRECHER:  That's okay.  We're used to 
 
       this. 
 
                 [Laughter.] 
 
                 MS. BIRKOFER:  Maybe we do want to go to

       lunch while we wait. 
 
                 [Laughter.] 
 
                 DR. LINDEN:  I just have a sort of 

                                                                119 
 
       gratuitous suggestion while we're waiting.  There's 
 
       been a lot of problem with identifying who's who. 
 
       Can we next time maybe have name tags that are more 
 
       block letters and not so difficult to read?

                 CAPTAIN McMURTRY:  I've gotten that 
 
       comment also.  I think we need to make the tent 
 
       cards more legible. 
 
                 DR. BIANCO:  It's the aging of the 
 
       Committee.

                 [Laughter.] 
 
                 DR. LOPES:  I wanted to make a suggestion 
 
       too, since we've got a few extra minutes.  It seems 
 
       that we've had, coming from lots of different areas 
 
       over the last two days, curiosity about--expressions--and we

       don't know how it works--about 
 
       how markets, regulation, innovation and safety come 
 
       together in this area, and I just wonder if this 
 
       might be a topic for one of our meetings. 
 
                 DR. BRECHER:  Interestingly enough, there

       is an Agenda Subcommittee, and we did get together 
 
       after the close of business yesterday, and market 
 
       issues, market forces was probably the highest item 

                                                                120 
 
       on our list of possible new topics. 
 
                 [Pause.] 
 
                 DR. BRECHER:  To begin your talk, maybe 
 
       give a little background to everybody as to what

       exactly HOPPS is, since you're to be the first 
 
       speaker on the topic. 
 
                 MS. BIRKOFER:  Okay, Dr. Brecher.  I'd be 
 
       happy to. 
 
                 My name is Julie Birkofer.  I'm the

       Director for Health Policy for the Plasma Protein 
 
       Therapeutic Association, PPTA, and we are very 
 
       appreciative of the Committee to allow us to share 
 
       with you our views on this Medicare reimbursement 
 
       methodology.  I am not a reimbursement expert by

       training.  Since being at PPTA October 2001, I have 
 
       learned a lot, and one of the things I've learned 
 
       is that the outpatient prospective payment system, 
 
       PPS, is a system that was put in place by Congress 
 
       through the budget reconciliation in the mid '90s,

       late '90s, and it was further improved in BIPA. 
 
                 The intent of PPS is to be responsive to 
 
       the Medicare Trust Fund and to assure the viability 

                                                                121 
 
       of the trust fund into the future.  The intent of 
 
       PPS is to group, bundle, lump therapies, biologics, 
 
       vaccines, high-tech, drugs into categories.  One of 
 
       the issues that the plasma protein therapeutic

       industry has been very active on is assuring that 
 
       our therapies are paid and maintained in separate 
 
       APC or ambulatory payment classifications.  Again, 
 
       all of our approaches in Medicare and in the state 
 
       strive to express the unique critical life-saving

       nature of our therapies, and the fact that they 
 
       cannot be bundled or clustered or lumped--and the 
 
       new term of art is "functional equivalents"--that 
 
       these therapies, because of the unique nature and 
 
       the critical access points to the user communities,

       need to have adequate reimbursement. 
 
                 So HOPPS is a system that is an annually 
 
       rule-making process that CMS issues a proposed 
 
       rule, and the intent is to, on an annual basis, 
 
       ratchet down and control cost.  There is pain

       across the board.  There are rarely any winners. 
 
       One of the first questions I asked my consultant 
 
       when the proposed rule came out August 6th, is, I 

                                                                122 
 
       said, "Are there any winners," because that's one 
 
       of the first things that our stakeholders are 
 
       interested in, and the answer was no.  The oncology 
 
       category got a little better treatment, but again,

       drugs, devices, biologicals, high-tech.  It also 
 
       has a system called a pass-through, which is a 
 
       dedicated pool of money where CMS placed these 
 
       high-tech drugs and devices, biologics that they 
 
       weren't quite sure how to price.

                 When HOPPS first came in in 2000 the rates 
 
       were based on manufacturer-reported pricing.  '01 
 
       was the first year that the payment system used 
 
       actual claims data, and this caused a lot of bumps 
 
       and reverberations in the market because of some of

       the inaccuracies and data problems.  And as you all 
 
       who are experts more than me in this area can 
 
       appreciate, it is very complex and very difficult 
 
       to do claims-based data collection from hospitals 
 
       across the United States.

                 CMS is trying to perfect their data 
 
       analysis in their claims system, and this year the 
 
       proposed rule for 2004 that again was just 

                                                                123 
 
       released, of course when I was on vacation the 
 
       first week of August, is based on 2002 claims data. 
 
       So you have a little lag in your data, and you also 
 
       have some problems in the accuracies of the data.

                 As you can imagine, hospital claims, 
 
       billing clerks, it's kind of like, the way I boil 
 
       it down, garbage in, garbage out.  If you have 
 
       errors in the fundamentals of the billing level 
 
       within the hospital, for example, these are all

       infused drugs.  If they only bill for the infusion 
 
       code and not for the drug or the therapy as well, 
 
       then your claims data will not reflect the cost of 
 
       the drug, and this is what we are finding, and this 
 
       is where PPTA has engaged consultants and

       economists to analyze this claims data, and I think 
 
       we're about ready for the presentation, so we will 
 
       be on script in a second. 
 
                 Basically, the comment period is 60 days. 
 
       The final rule will likely come out November 1.

       And we will then launch into a more aggressive 
 
       strategy.  We're now going to go on screen and now 
 
       you will see repetition. 

                                                                124 
 
                 By overview, PPTA is a standard-setting 
 
       and advocacy organization.  We represent the 
 
       world's leading manufacturers of plasma protein 
 
       recombinant analog therapies, and as the Committee

       discussed earlier, the global nature of our 
 
       industry as well as the economic viability of the 
 
       industry.  We coordinate strategic outreach to our 
 
       stakeholder organizations, Congress and the 
 
       administration.

                 Again, this is the time frame and it's an 
 
       annual process.  The issues that we are primarily 
 
       focusing on are rates and classification, 
 
       classification meaning blood and blood products 
 
       categories, pass through, new technologies.  The

       impact on our therapies is, you know, people 
 
       wonder, well, we have small populations.  For 
 
       example the Alpha-One community has 6,000 
 
       diagnosed.  Well, that's 6,000 total population. 
 
       38 percent of that 6,000 are Medicare eligible.

       Immune Deficiency Foundation, you have 
 
       approximately 50,000 people that have diagnosis of 
 
       PIDD, primary immune deficiency disease, 12 percent 

                                                                125 
 
       of that population.  And for hemophilia the numbers 
 
       are even smaller in Medicare.  People wonder why. 
 
       Well, not to be crass, but the sad fact of the 
 
       matter is that disabled you cover, but there are

       not a lot of people over 65.  Times have changed 
 
       the effectiveness of our therapies, but again, you 
 
       don't have large populations. 
 
                 People wonder, well, why do you care about 
 
       HOPPS?  Well, we care because Medicare, as you all

       know, is a model system, and the rates and the 
 
       strategies and the tactics that they impose on 
 
       paying for our therapies, private insurers--you'll 
 
       see Cigna and Aetna modeling their payment 
 
       structures.  And so for that, PPTA has actively

       worked with our plasma and recombinant users 
 
       community to assure that the rates assure access. 
 
       We firmly believe that access directly links to 
 
       availability of full choice, all products 
 
       available, and that that links to safety.

                 As you all discussed earlier, as Chris 
 
       noted, it would be a disaster, quote, unquote, of a 
 
       different magnitude, but a large magnitude if the 

                                                                126 
 
       full range of recombinant and plasma drive 
 
       therapies were not available.  And just to note, 
 
       the core therapies that we're focusing on are the 
 
       IVIG, the Alpha-One proteinase inhibitor and the

       blood clotting factors. 
 
                 I can't stress enough the unique life-saving 
 
       nature of the therapies, and you know, 
 
       people wonder, you know, why are the rates so 
 
       important, and why as an industry are we concerned

       that these rates are adequate, and you know, aren't 
 
       you making enough?  Well, what you have to 
 
       appreciate is that these therapies are manufactured 
 
       in a very complex and constantly evolving process 
 
       with constantly increasing regulatory requirements.

       We are very, very different than our brethren in 
 
       the pure pharmaceutical industry.  These therapies 
 
       are life-sustaining.  They treat chronic and often 
 
       primarily genetic diseases.  There are no 
 
       alternatives.  There are no generics available.

       These are must-haves.  Without these therapies, 
 
       people, their lives are impacted, and I'll leave 
 
       those arguments to my colleagues in the consumer 

                                                                127 
 
       and in our stakeholder organizations.  I think they 
 
       can best deliver those messages. 
 
                 IVIG, just to give you a quick overview, 
 
       the permanent APC is maintained, and this is

       important again because we were not bundled into an 
 
       infusion category.  The issue here is 
 
       classification.  As you recall in the May Advisory 
 
       Committee, you all expressed a resolution on blood, 
 
       on IVIG, that the therapy should be put into the

       blood and blood products category, defined as a 
 
       blood and blood product.  It is, with all due 
 
       respect to Dr. Bowman, ludicrous to me as a policy 
 
       person, that CMS does not recognize IVIG as a blood 
 
       product.  HHS has CMS and FDA underneath its

       umbrella.  FDA defines IVIG as a blood product and 
 
       a biologic.  CMS, for some reason, has a different 
 
       view, and will not recognize IVIG as a blood 
 
       product.  However, it does recognize, blood, blood 
 
       products, including hemophilia factor.  Hemophilia

       blood clotting factor, as we all know, can be 
 
       plasma derived or recombinant.  The new technology 
 
       recombinant does not include any proteins.  

                                                                128 
 
       Therefore, the new technology clotting factors are 
 
       not necessarily as pure a blood product as IVIG. 
 
       IVIG is 100 percent solely plasma derived. 
 
                 From a policy perspective your resolution

       and report language that was put in by the Labor, 
 
       HHS Subcommittee on Appropriations, the House 
 
       Subcommittee, mirrored your recommendation that CMS 
 
       include IVIG in the classification, blood and blood 
 
       products.  Naturally, part of our advocacy strategy

       in the next 60 days will be to meet with CMS and to 
 
       further make an attempt to enlighten them that IVIG 
 
       is a blood product. 
 
                 With regard to blood clotting factors, the 
 
       rates are inadequate to sustain access.  We

       realize, and we understand, that again it's an 
 
       annual intent to ratchet down costs.  For example, 
 
       plasma-derived Factor VIII had a 10 percent 
 
       reduction, and recombinant Factor VIII also had a 
 
       10 percent reduction.  Can the companies sustain

       this?  Perhaps.  Again, the economic viability of 
 
       the industry is at stake.  Those of you that look 
 
       at the plasma protein industry may be aware that 

                                                                129 
 
       we've had some consolidations, that there's been 
 
       some layoffs, there's been some reductions.  And 
 
       our industry isn't unique, the entire economy is 
 
       suffering.

                 The point is that again these rates have 
 
       to be adequate to sustain access and it all links 
 
       availability and safety. 
 
                 The Alpha One proteinase inhibitor was 
 
       really, I think, one of the major tragedies of this

       proposed rule.  It was an unexpected event.  Again, 
 
       noting in this rule, nothing in HOPPS, rather, is 
 
       forever.  In this annual rule-making process things 
 
       change.  In 2003 the final rule exempted Alpha One 
 
       proteinase inhibitor from HOPPS and put it into a

       cost-based system.  This year, because of political 
 
       pressure, other groups, other disease states, 
 
       trying to get their therapies exempt from HOPPS, 
 
       banged on the door and instead of shutting the door 
 
       to those other groups, CMS in turn rescinded the

       exemption for the Alpha One and the other three, 
 
       quote, unquote, true orphans, because again, CMS 
 
       defines an orphan drug different than the FDA.  

                                                                130 
 
       It's kind of a little bit more of that disconnect 
 
       in definitions going on.  We firmly believe that 
 
       the rate that is proposed is inadequate to sustain 
 
       access.  Reasonable cost for this population, the

       vulnerability, the fragile population, we feel 
 
       should have been given time to determine the impact 
 
       on that community. 
 
                 So in conclusion, we are keeping our eye 
 
       on October 6, the comment period on the proposed

       rule.  We have already begun the process of working 
 
       with our stakeholders.  We are already in the 
 
       process of engaging members of Congress to write 
 
       letters and to work with us in lobbying CMS to 
 
       hopefully enlighten them on some of these crucial

       issues to the plasma and recombinant user 
 
       community.  And again, what will give us 
 
       credibility, as it did last year when we were 
 
       successful in having CMS recognize the Alpha One, 
 
       what made us successful is, as an industry, we

       really stepped up and did some data collection and 
 
       analysis that focused on the inaccuracies of the 
 
       claims data.  Again, in April to December '02 time 

                                                                131 
 
       frame, it is not a robust enough data set. 
 
                 So that is where PPTA, that's our opinions 
 
       and our take on HOPPS, and November 1, final rule, 
 
       and hopefully if we're given the opportunity to

       update you all at your next meeting, we'll have a 
 
       better story. 
 
                 I thank you very much. 
 
                 DR. BRECHER:  Thank you, Julie. 
 
                 Comments or questions from the Committee?

                 Keith? 
 
                 DR. HOOTS:  Presumably these HOPPS rates 
 
       are based on the preceding year's outpatient 
 
       reimbursement rates; is that right?  It's not based 
 
       on hospital rates; is that correct?

                 MS. BIRKOFER:  It's based on hospital 
 
       claims data from the preceding year.  So for this 
 
       '03 proposed rule, CMS is using April 2002 to 
 
       December 2002 actual hospital claims data that they 
 
       take, they aggregate, and then in house they

       manipulate and apply methodologies and formulas to 
 
       get the rates. 
 
                 DR. HOOTS:  And why, since they've been 

                                                                132 
 
       paying on fee-for-service for these products, I 
 
       mean reimbursement per product, outpatient wise, 
 
       did they choose to inpatient data to arrive at 
 
       outpatient reimbursement?  Because you've alluded

       to one of the major issues which is particularly 
 
       germane, and I provide you actual personal 
 
       experience, where inpatient billing is far, far 
 
       less accurate for products of rare disease like 
 
       hemophilia, because again, you pointed out very

       astutely, that the people doing that are also 
 
       billing for cabbage(?) procedures and stuff, and 
 
       this is not something they know anything about.  By 
 
       contrast the billings that are done say for home 
 
       care companies are likely to--since that's their

       literal bread and butter--are much more likely to 
 
       be accurate and reflective than are inpatient data. 
 
                 Then of course the other thing is that 
 
       there are problems in terms of how they're used, 
 
       because they may be used quite differently in an

       inpatient than in an outpatient setting, so it 
 
       seems to me that that's a disconnect that at least 
 
       for the longer term might need to be suggestively 

                                                                133 
 
       addressed, particularly since annually it's going 
 
       to be updated.  But if they're going to do it, they 
 
       ought to do it the right way it seems to me. 
 
                 Secondly, in terms of--do they

       specifically, for instance, for IVIG, when they are 
 
       looking at those claims data, do they limit 
 
       themselves to a very specific DRG for reimbursement 
 
       to determine rates, and how accurate do you feel 
 
       those determinants are?  We all know, for instance,

       that IVIG may be used for everything from ITP to 
 
       primary immune deficiency, but clearly, if the 
 
       impact is on reimbursement for immune deficiency, 
 
       it's in that context that the data should be 
 
       collected.

                 MS. BIRKOFER:  Thank you, Dr. Hoots.  Your 
 
       point on IVIG, last year when we looked at the 
 
       data, we did not drill down into the ICD9 code. 
 
       This year when we look at it we are going to have 
 
       our consultant pull the entire 279 series.  That

       will hopefully bring to bear data for PIDD only, 
 
       and that is, our concern and our interest is to 
 
       assure that the IVIG that is used to treat chronic 

                                                                134 
 
       disease is accurately and adequately reimbursed. 
 
                 With respect to the disconnect in the 
 
       inpatient and outpatient, I appreciate your 
 
       comment.  I totally agree.  And Shannon Penberthy

       and I have spoken on that, and I know Shannon 
 
       Penberthy, who represents the NHF in town, is going 
 
       to be very deeply digging into that, and we will 
 
       work and support her in that effort.  So I thank 
 
       you for that.

                 DR. BRECHER:  Additional comments, 
 
       questions? 
 
                 DR. PENNER:  Just one quick.  There still 
 
       is only one source of supply for the Alpha One; is 
 
       that correct; the German company?

                 MS. BIRKOFER:  Actually, sir, just 
 
       recently within the past month, our member 
 
       companies, we've had two new entrants into the 
 
       Alpha One marketplace. 
 
                 DR. PENNER:  So there is a little

       competition there and maybe resources? 
 
                 MS. BIRKOFER:  It will be starting up, 
 
       yes.  Yes.  We're delighted with that. 

                                                                135 
 
                 DR. BRECHER:  Okay, thank you, Julie. 
 
                 Miriam, you want to make your comment now? 
 
                 MS. O'DAY:  Thank you.  I'm Miriam O'Day, 
 
       and I'm here on behalf of the Alpha One community,

       the Alpha One Foundation, Alpha One Association, 
 
       and immune deficient IVIG consumers. 
 
                 Really, Julie gave you the full overview 
 
       of what happened.  In terms of IVIG our biggest 
 
       concern is that this Advisory Committee did pass a

       resolution, sent a clear message to CMS.  Congress 
 
       echoed that message by picking up the language in 
 
       report language to CMS under their appropriations 
 
       bill, and requested that we be placed in blood and 
 
       blood products.

                 The effect of that really is that if there 
 
       are reductions in cost to the pool, we have a 
 
       dampening effect.  So there's only a certain 
 
       percentage that they can take us down, and we hope 
 
       that that would help to ensure access.

                 I'm really reporting back to the 
 
       Committee, echoing to you that CMS has not heeded 
 
       the call that you gave them.  We're not asking for 

                                                                136 
 
       action today, but we want you to know that that's 
 
       the status of IVIG. 
 
                 In terms of Alpha One, as you heard from 
 
       Julie, the proposed ruling is horrible.  We find

       ourselves in the same situation that we were in 
 
       when the proposed rule came out in '02.  We know 
 
       that these are populations that are widely 
 
       dispersed, that have low utilization in the 
 
       hospitals.  Again, we're very grateful to be

       working with the industry on this because they do 
 
       the technical review, they purchase the claims 
 
       data, they parse the claims data, and we're looking 
 
       forward to them drilling down into the ICD9 codes 
 
       because we think that we'll identify additional

       flaws in the data. 
 
                 So for us, again, we're not asking for 
 
       action from the Advisory Committee today.  We're 
 
       just here to tell you that all of the support that 
 
       you gave us in the past and the wins that we have,

       have now been pulled out from underneath us, and 
 
       we'll be working hard to try to reverse this rule 
 
       with CMS, and we may be here again in the fall when 

                                                                137 
 
       we see the final rule, to tell you that we had a 
 
       terrible outcome, and at that point we'll be asking 
 
       for action. 
 
                 But it's a terrible situation for these

       communities, particularly for the Alpha One 
 
       community.  As you've got more product into the 
 
       marketplace, you may have less access due to 
 
       reimbursement.  So thank you. 
 
                 DR. BRECHER:  Thank you, Miriam.

                 If there are no further comments or 
 
       questions, why don't we adjourn for lunch, and be 
 
       back at 12:30 or thereabouts. 
 
                 [Whereupon, at 11:35 a.m., there was a 
 
       luncheon recess.] 

                                                                138 
 
                            AFTERNOON SESSION 
 
                                                       [12:39 p.m.] 
 
                 DR. BRECHER:  Okay.  We're going to resume 
 
       our discussion of HOPPS.  Our next presentation is

       going to be from the American Association of Blood 
 
       Banks. 
 
                 MS. WIEGMANN:  I'm going to try to modify 
 
       the version of the statement I made earlier this 
 
       morning, and I believe that we've passed out a

       written statement to you, and I will try to 
 
       summarize since you all have--many of you have seen 
 
       me before, since this seems to be a recurring 
 
       problem, the annual payments that CMS is proposing 
 
       for hospital outpatient services, in particular for

       blood programs under this HOPPS program. 
 
                 This year we are particularly troubled 
 
       that once again the payments that CMS is proposing 
 
       for blood products are, in fact, being reduced 
 
       while we know that in reality the cost of blood

       continues to increase as we have new safety 
 
       advances introduced.  I'm going to use red blood 
 
       cells, leukoreduced red blood cells, as one 

                                                                139 
 
       example. 
 
                 In 2004, CMS is proposing to pay 30 
 
       percent less than what leukoreduced blood cells 
 
       cost in actual figures in 2001.  I'm using 2001

       figures because that's the last annual data that we 
 
       have on national-based hospital acquisition costs, 
 
       and those are drawn from the NBDRC's last biennial 
 
       survey. 
 
                 Under that survey, hospitals paid on

       average $155 for a unit of leukoreduced red blood 
 
       cells, whereas now CMS in 2004 is proposing to pay 
 
       $107.  Clearly, this is inadequate. 
 
                 A similar problem is seen in most all of 
 
       the blood products across the board.  For instance,

       platelets concentrate, CMS is proposing to pay 32 
 
       percent less than what we believe the actual cost 
 
       was in 2001, again, using the figures from NBDRC's 
 
       biennial survey. 
 
                 So given these low figures, we at AABB

       propose that the problem is, again, because CMS is 
 
       using inadequate hospital claims data, and at your 
 
       last meeting we heard of the problems that 

                                                                140 
 
       hospitals have in accurately billing for blood. 
 
       AABB is trying to address this problem by going out 
 
       on the road and educating hospitals about how to 
 
       appropriately bill for blood.  We have issued our

       reimbursement guide, which we hope will help in 
 
       this effort.  And, in addition, we're actively in 
 
       conversations with CMS about how to improve their 
 
       guidance documents. 
 
                 But since those efforts will all take a

       number of years to reach our goal of improving 
 
       hospital data, we propose that in the interim CMS 
 
       go to a system under which they'll pay for blood 
 
       products based on a reasonable cost basis rather 
 
       than under the APCs which they're currently using

       and under which they have to draw from their 
 
       inadequate existing cost data. 
 
                 So AABB continues to appreciate the 
 
       support of this Committee in pointing out the 
 
       problems that we as a community are facing in the

       reimbursement arena, and we would urge you to urge 
 
       the Secretary to have CMS address this problem 
 
       before the outpatient rule is finalized and goes 

                                                                141 
 
       into effect in January 2004. 
 
                 Thank you. 
 
                 DR. BRECHER:  Thank you. 
 
                 Any comments or questions?

                 DR. PENNER:  Just in view of our similar 
 
       discussions at the last meeting, I checked with two 
 
       of my hospitals that were not submitting any 
 
       information whatsoever on blood costs because it's 
 
       all bundled and they didn't care and they didn't

       think there was any need for it.  So I don't know 
 
       how they're getting these figures from areas around 
 
       the country as to what the actual costs are when 
 
       many of them are not submitting them. 
 
                 MS. WIEGMANN:  Right, and, in fact, as I

       think it was maybe pointed out during the last 
 
       meeting, CMS itself noted in an inpatient rule a 
 
       couple years ago that in 1997, only 48 percent of 
 
       hospitals billed for blood using appropriate cost 
 
       centers.  So, obviously, this is a problem, and our

       answer to that is we're trying to reach out to the 
 
       hospitals to fix that and make them cognizant of 
 
       the fact that they need to bill for blood because 

                                                                142 
 
       all of this is a prospective payment system; and 
 
       although it may not affect what they're being paid 
 
       this year, down the road it's going to make a 
 
       difference on how blood is paid for.

                 Here in the outpatient setting, which we 
 
       know is not nearly as significant as the inpatient, 
 
       but it is something, and it's important that we 
 
       have as accurate of reimbursement figures as 
 
       possible; and then also in the inpatient arena,

       where we know most of our attention is, that the 
 
       DRGs that use the most blood are accurately 
 
       recalibrated in the future to take into account the 
 
       rising costs of blood. 
 
                 So, yes, we're hearing the same issue,

       and, you know, it's just an uphill battle in trying 
 
       to make hospitals see why this matters.  And many 
 
       of them are, you know, turning to us, I think, 
 
       increasingly to try to get some help on this 
 
       complicated matter.

                 DR. BRECHER:  Chris? 
 
                 MR. HEALEY:  Teresa, that was really my 
 
       question.  I don't know if this is more appropriate 

                                                                143 
 
       for you or for Dr. Bowman or whom, but whose 
 
       responsibility is it to teach people about the 
 
       proper way to submit claims?  I don't know the 
 
       answer to that?

                 MS. WIEGMANN:  You know, I would argue 
 
       that it's many of our shared responsibilities.  It 
 
       was funny.  I was just at a CMS Advisory Committee 
 
       this morning, and the Chair of that committee, 
 
       troublingly to me, to the group said, well, he had

       some reservations about whether hospitals even read 
 
       CMS guidance documents. 
 
                 Well, I would argue that they do, and so 
 
       it's important on one level to have the agency 
 
       issue clearer guidance, but at the same time we in

       the community have responsibilities.  We at AABB 
 
       are trying to reach out to our hospital members to 
 
       work with them in getting a grasp of the issue. 
 
       And then blood centers also can play a role in 
 
       helping to explain to some of their hospital

       consumers how this all works. 
 
                 DR. BRECHER:  Keith? 
 
                 DR. HOOTS:  Just a comment about 

                                                                144 
 
       unforeseen consequences of this kind of slippery 
 
       slope, and you kind of alluded to it in terms of--and so did 
 
       John, in terms of the bundling, kind of 
 
       not even unbundling.  I think particularly

       institutions that are focused on providing care to 
 
       Medicaid and Medicare patients are so used to just 
 
       kind of getting hit and hit and re-hit and trying 
 
       to just survive, particularly academic institutions 
 
       and that sort of thing.

                 Each time it doesn't look like much 
 
       compared to the time before, but if you take a 
 
       subset of individuals like hypertransfusion for 
 
       sickle cell or something like that, where they're 
 
       coming in once a week--I mean once every two or

       three weeks to get hypertransfused, and you've got 
 
       half a dozen of them, suddenly--you know, a $30 
 
       loss to a service doesn't look much, but you 
 
       multiply it, even for small numbers, and suddenly 
 
       you get--what happens is the unintended consequence

       of people who are having to try to make ends meet 
 
       saying:  Why are we taking care of these patients? 
 
       Why don't we send them across the street? 

                                                                145 
 
                 And even if they do traditionally take 
 
       care of Medicaid patients, they may say, well, this 
 
       could go to the county hospital, which then moves 
 
       it one step down.  They keep getting hit.

                 And it's a real problematic issue that's 
 
       hitting all of our institutions that are public 
 
       supported, whether they be universities that are 
 
       tax-based or medical schools or county hospitals. 
 
                 But there's this movement--and we were

       talking a little bit over lunch about this, of 
 
       cherrypicking, the ones who have the most 
 
       discretion about which patients they see will 
 
       clearly say opt out of Medicaid or Medicare, and 
 
       they'll move it down one step.  And there may be

       then a distribution that's traditionally allowed it 
 
       to be spread out.  But then when the hit starts 
 
       being amplified, then it goes down to the very 
 
       lowest common denominator into the one institution 
 
       or the few institutions that have nowhere else to

       send the patients.  And those institutions then get 
 
       really problematically hit. 
 
                 I think that's one of the things we can't 

                                                                146 
 
       necessarily address in this Committee, but I think 
 
       we just need to keep all of these things in mind, 
 
       that it's more than just a $30 increment that gets 
 
       accounted against an entity.  It really does

       amplify, and the consequences are usually 
 
       unforeseen down the road. 
 
                 DR. BRECHER:  Lola? 
 
                 DR. LOPES:  I know that with our 
 
       university hospital, someone is watching literally

       pennies on things like pencils and notebooks in 
 
       their purchasing systems.  For biologics and other 
 
       expensive medical equipment, products, is no one 
 
       watching?  Why do we care more about a penny on 100 
 
       pencils than about these changes?

                 DR. HOOTS:  Primarily, I think, in all 
 
       true form--and, again, it's an evolving system, but 
 
       I think one of the reasons is that institutions are 
 
       committed by and large by their charter and mission 
 
       to do certain things.  But there comes a time when,

       if they can't break even, they don't exist. 
 
                 So up until the point that they hit that 
 
       essentially point of no return, their mission 

                                                                147 
 
       demands that they continue to take care of these 
 
       patients, even if they lose more and more money in 
 
       the process. 
 
                 And so it's a very insidious sort of

       thing.  It doesn't happen in a year.  It probably 
 
       doesn't happen in a decade.  But if you look at 
 
       what has happened across the country with 
 
       institutions like the ones I'm alluding to that are 
 
       usually tax-supported, they are--this past year

       large academic institutions have been laying off 
 
       large amounts of infrastructure first, staff 
 
       second, and, finally, faculty.  And all that does 
 
       is mean that now they don't have the faculty to 
 
       take care of some of these patients, even if they

       were to walk in the door.  So then they have a 
 
       moral justification for saying, well, we can't take 
 
       care of them, we're going to send them down the 
 
       street or across town or across the state or across 
 
       the country.

                 MS. WIEGMANN:  And I would add to that, 
 
       representing hospital transfusion services, that is 
 
       the issue that we do hear; that our members are 

                                                                148 
 
       hearing from their hospitals, you're a cost center, 
 
       and why do you costs keep going up and up and up? 
 
       And we try to explain it's because our product is 
 
       getting safer and safer and that is our duty to our

       patients, to provide them with the safest possible 
 
       unit. 
 
                 But, you know, your fear--I don't think we 
 
       have any hard data on it yet, but the fear is that 
 
       ultimately you're going to reduce the staff, you

       know, and we would argue that then you're going to 
 
       end up in a circle of problems, you know, potential 
 
       other blood safety problems of patients getting the 
 
       wrong unit, et cetera. 
 
                 DR. LOPES:  I'd just say it seems like at

       our hospital people are tuned to the big new 
 
       machines that cost more, obviously, but give better 
 
       results.  It's because blood is such a small price 
 
       thing that we don't see easily, I think, that the 
 
       reimbursement issue is a very important one for

       buying a better service.  I'm sure they're getting 
 
       reimbursed for all the new big technologies we 
 
       have, or better reimbursed. 

                                                                149 
 
                 MS. WIEGMANN:  It depends on the 
 
       technology, probably, but yes. 
 
                 DR. BRECHER:  I think what happens, Lola, 
 
       is they examine the reimbursement at the time they

       bring in that new technology, and then over time 
 
       the reimbursement ratchets down, and then they're 
 
       stuck losing money on that technology, too. 
 
                 MS. WIEGMANN:  So, in fact, for instance, 
 
       with blood, this year, you know, they say at CMS

       they're giving us some special treatment by only 
 
       reducing our payments by 10 percent.  How does that 
 
       square with reality?  It just doesn't.  And that's 
 
       a 10-percent reduction from what they already pay, 
 
       which is already lower, far lower than we in

       reality know what a unit of blood costs. 
 
                 DR. BRECHER:  Okay.  Paul? 
 
                 DR. HAAS:  This is a little bit 
 
       tangential, but I think it's come up before, and 
 
       it's important that even when institutions start

       trying to pay attention to the so-called 
 
       cost/benefit, it's not at all unusual for the 
 
       benefit--the cost to be absorbed, say, in the blood 

                                                                150 
 
       area, and the benefit is--maybe the patient has 
 
       gone home.  And that doesn't get calculated. 
 
       That's not in the hospital revenue sheet. 
 
                 DR. BRECHER:  Certainly there is cost

       shifting and blood is part of the infrastructure, 
 
       and we're going to have patients that we can 
 
       operate on now, we'll make money. 
 
                 Okay.  Thank you, Teresa. 
 
                 Now we'll hear from America's Blood

       Centers, ABC. 
 
                 MR. MacPHERSON:  You want me? 
 
                 DR. BRECHER:  Yes, you. 
 
                 MR. MacPHERSON:  I'm going to take a 
 
       slightly different tack and show you something that

       most of you have never seen before, and hopefully 
 
       you'll enjoy it.  Sometimes something you haven't 
 
       seen before isn't enjoyable. 
 
                 I'm going to first echo Teresa's comments 
 
       only because--or mainly because it's a problem

       we've been struggling with for the last three 
 
       years.  And, indeed, it wasn't two years ago, I 
 
       think, that the blood organizations met with CMS 

                                                                151 
 
       and they admitted that they didn't have the data on 
 
       which to base their APC rates, DRG increases.  And 
 
       we said the data exists.  We said between ABC and 
 
       Red Cross' data, you have 95 percent of the world

       in terms of cost to hospitals.  Why don't you use 
 
       that data?  And they said, well, we can't use 
 
       industry data. 
 
                 So I would urge this Committee, if it does 
 
       nothing else, to urge the Secretary to take the

       industry data and independently verify it and then 
 
       use that data as a more realistic basis, rather 
 
       than us complaining to CMS that their proposals 
 
       don't make any sense and CMS says, well, all we're 
 
       doing is reflecting what the hospitals are telling

       us in their billing tapes.  And as has already been 
 
       said, the hospitals have no incentive--at least 
 
       they don't think they have an incentive, certainly 
 
       in the short term, to correctly code the data 
 
       because they see this as such a long-term issue,

       and with the way money is appropriated these days 
 
       to Medicare and Medicaid, it's done in huge 
 
       amounts, on a bundled basis, based on what the 

                                                                152 
 
       hospitals' costs are.  And then the hospitals have 
 
       to figure out how to use it. 
 
                 But what I want to do is I wanted to show 
 
       you a few things that, as I said, you probably have

       not seen before, and hopefully you'll find it 
 
       interesting because I think it puts this whole 
 
       issue in perspective. 
 
                 This is the same slide that Scott Caswell 
 
       showed, so I'm not going to show it again.  I think

       you all have the handouts for this.  This just 
 
       tells you who we are. 
 
                 Okay.  For the last 20-some years, we have 
 
       been collecting the fees that our members charge 
 
       our hospitals and tracking that information on an

       annual basis, do it all perfectly legally and 
 
       within antitrust guidelines.  And we've never 
 
       shared this information until about two years ago 
 
       when MedPAC, sort of the investigative arm or the 
 
       research arm of CMS, asked us for our data.  And so

       we began to put some trend data together for their 
 
       purposes, and that's what I want to show you today. 
 
                 This data is collected yearly.  It's 

                                                                153 
 
       pricing as of September 1st.  We get--over 90 
 
       percent of the members participate every year, and 
 
       we actually--the data that I'm going to show you is 
 
       based upon a uniform database over the last 20

       years. 
 
                 The data is provided--we have provided 
 
       this data to other organizations before, but as I 
 
       said, I'm not sure you've ever seen it so I'm going 
 
       to show it to you.

                 This is probably the guts of it, and I 
 
       know it's hard to see.  But if you look, it goes 
 
       from 1984 to 2002.  Now, it gets sort of confusing 
 
       at--oops.  There we go.  It gets sort of confusing 
 
       at this end, but let me just explain this line

       first. 
 
                 This is the price of vanilla red cells, if 
 
       you will, over the last 20 years.  And what it 
 
       shows is that the increases were pretty low--and 
 
       I'll talk about that in a few minutes when I show

       you another graph.  But what we've superimposed on 
 
       this are major, if you will, safety measures that 
 
       have been implemented during that period of time.  

                                                                154 
 
       And despite the implementation of all these tests 
 
       over the years, what you're seeing is increases, up 
 
       until recently, in the neighborhood of less than 5 
 
       percent per year, which is kind of--which is,

       frankly, at or below the rate of inflation, which 
 
       I'll show you in a minute. 
 
                 Then you see this huge spike over the last 
 
       couple of years.  A lot of this is related to NAT, 
 
       quite honestly, and a lot of it is related to, if

       you will excuse the expression, catch-up.  Because 
 
       during this period especially, blood centers, both 
 
       Red Cross and ABC members, were losing money.  And 
 
       what I don't have a graph of and what I--we don't 
 
       have that database put together yet, but what we

       probably can show you at some point in the future 
 
       is actually the cash reserves or some other markers 
 
       for blood centers, for our members, over the last 
 
       20 years during this same period.  And what you 
 
       would see is that their reserves decreased

       dramatically during this period of time. 
 
                 So some of this increase, at least for the 
 
       ABC members--I can't speak for anybody else, but 

                                                                155 
 
       we're half the country--is related to, if you will, 
 
       frankly, catch-up, trying to staunch the losses and 
 
       to make up for it.  But a lot of it is related to 
 
       HIV NAT and some accumulated expenses that we

       didn't account for, HCV lookback, et cetera. 
 
                 This graph is kind of interesting because 
 
       now we've been tracking leukoreduced blood for the 
 
       last few years because that, of course, has become 
 
       more and more of an important product for our

       members.  In fact, it's about 50 to 60 percent at 
 
       this point.  I think it's about 60 percent. 
 
                 You'll interestingly note the gap between 
 
       the cost for regular red cells and leukoreduced is 
 
       narrowing.  As it becomes more and more a common

       product and as the learning curve goes away of 
 
       trying to ramp up, you'll see that narrowing, and 
 
       at some point probably the differential will be 
 
       fairly small if this product--if the vanilla red 
 
       cells continue to exist.

                 I won't even explain the green and the 
 
       yellow lines because it is sort of--it's something 
 
       new that we're tracking.  Just sort of ignore it 

                                                                156 
 
       because it really is proportionally the same as 
 
       here.  What it does show, though, is that if a 
 
       blood center supplies 80 percent of a hospital's 
 
       needs, their price is significantly lower, about 20

       percent lower, than the hospital that cherrypicks. 
 
       And that's just so that the blood centers can plan 
 
       much better in terms of what the needs are, and the 
 
       full-service hospital will pay a lower price than 
 
       the hospital that just does ad hoc shipping.  So

       these graphs are the list pricing. 
 
                 The next graph shows this data in a 
 
       different way, and this is probably hard to see the 
 
       numbers, but, again, they're in front of you.  This 
 
       shows you for the period of 1996 to '97, that the

       purple line is the consumer price index for health 
 
       care; the yellow line is the--I'm sorry, the green 
 
       line, which you can't see, except--I'm sorry.  The 
 
       yellow line is the producer price index for 
 
       hospitals, and that's another measurement of health

       care inflation.  And then the red line, which you 
 
       see here--but you don't see here because it's zero--is the 
 
       average red cell price increase for that 

                                                                157 
 
       year period, from this period to that period.  And 
 
       so, again, you'll see that it was relatively flat. 
 
       And if you go back--as I said before, it is very 
 
       flat.  And then in the last few years for the

       community blood centers, the price--the average 
 
       increases have been in the neighborhood of over 10 
 
       percent.  And this is 18.4 percent between 2001 and 
 
       2002.  And with West Nile virus and some other 
 
       improvements, that increase is probably going to be

       only slightly less for this past year when we 
 
       collect that data. 
 
                 There are regional differences, of course. 
 
       The most expensive blood in the country on the 
 
       average is Hawaii and California, neck and neck

       with the Southwest area.  The cheapest area in the 
 
       country is in the Northwest, interestingly.  That's 
 
       an artificial number, though, however, because most 
 
       of the blood centers in the Northwest also manage 
 
       the blood supply and do the hospital transfusions.

       And so their costs are bundled in very often with 
 
       the fact of not only providing the blood to the 
 
       hospital but actually running the hospital blood 

                                                                158 
 
       transfusion service.  But they are the lowest-cost 
 
       area, followed by the Southeast. 
 
                 So the average cost to collect and 
 
       process--now, let's put that in perspective.  Those

       are the charges.  The average cost to collect, 
 
       process, test, and distribute one unit of whole 
 
       blood is about $200 right now.  That's what the 
 
       cost is.  The majority of that cost is put onto the 
 
       red blood cell.  Additional costs are recovered on

       the plasma, both for that used for transfusion, 
 
       which is about half the plasma that's made, and the 
 
       other half is plasma for further manufacturing. 
 
       And then random platelets, if they are made, that's 
 
       another phenomenon that has caused the increase to

       red cells over the years, is because at one time 
 
       the average whole blood collection was turned into 
 
       three products:  a platelet, a plasma, and a red 
 
       cell. 
 
                 Well, over the years, the majority of

       platelets now are provided as pheresis platelets, 
 
       which have their own cost entirely, and so the 
 
       blood centers don't have random platelets anymore 

                                                                159 
 
       on which to load costs on.  So cost has shifted to 
 
       the red blood cells, which is another reason for 
 
       that big shift that you've seen in the last few 
 
       years, because there have been--most blood centers--the

       majority of blood centers, not most, have 
 
       switched entirely to pheresis platelets, or at 
 
       least the majority of the platelets that they 
 
       provide. 
 
                 And cost increases for 2003 will include,

       as I mentioned already, West Nile virus testing, 
 
       added recruitment costs to replace donors lost by 
 
       variant CJD deferrals, and, as Scott Caswell, my 
 
       associated, mentioned the other day, the impact on 
 
       that has been far larger than we actually thought,

       where the donors we're really losing are the repeat 
 
       good donors.  And so we're losing many more 
 
       donations a year than we're losing donors.  And 
 
       bacterial testing for platelets is going to have a 
 
       major impact over the next year or two.

                 The costs could double with pathogen 
 
       reduction technology.  We don't know where that is, 
 
       frankly, at this point in time.  It could be two 

                                                                160 
 
       years away.  It could be five years away or more. 
 
       It's going to come eventually.  But based upon the 
 
       technologies that are in the works, that could 
 
       double the price of whole blood collection alone,

       not talking about anything else.  And certainly 
 
       we'll keep doing testing because these technologies 
 
       are not foolproof. 
 
                 Now, double red cell collections could 
 
       help stabilize costs for a short period of time,

       and supply certainly, and it's estimated that about 
 
       20 percent of collections could be doubled.  But 
 
       that takes a lot of investment, different ways of 
 
       collecting blood, and the logistics are a bit 
 
       difficult.  You have to have better trained staff

       than just to do simple phlebotomies.  So that will 
 
       take a while to implement, but that will help give 
 
       us sort of, if you will, a one-time break in terms 
 
       of cost rises and perhaps supply problems. 
 
                 Now, as I mentioned before, this entire

       database is available to CMS for verification, and 
 
       we've said that before, and I know Red Cross has 
 
       the same figures we do.  And CMS could take that 

                                                                161 
 
       and have it independently verified and use that as 
 
       the basis for their reimbursements. 
 
                 We're willing to collect any other data 
 
       that CMS might want.  We can get it, at least on

       the blood center basis.  The hospital is a little 
 
       bit more difficult.  On the other hand, we have 
 
       about 20 members who are also the hospital 
 
       transfusion services, so at least we could get a 
 
       sampling of what those costs are.

                 As I mentioned, we represent about half 
 
       the blood supply, but we're also in 45 states, so 
 
       geographically it's a good database, distribution 
 
       as well.  And along with the Red Cross data, as I 
 
       mentioned, it should be used to help to determine

       the APC and the DRG market basket updates. 
 
                 Last, I wanted to thank Jane Starkey, who 
 
       some of you know, for putting together this data 
 
       and the slides.  She does a remarkable job in lots 
 
       of things, including writing the newsletter, which

       you may be familiar with. 
 
                 Thank you. 
 
                 DR. BRECHER:  Jim, thank you.  That was a 

                                                                162 
 
       very complete data set.  In fact, I'd encourage you 
 
       to publish it somewhere.  I think a lot of people 
 
       would be interested in seeing that. 
 
                 Questions or comments?  Ron?

                 DR. GILCHER:  Jim, your data is as of 
 
       September 2002. 
 
                 MR. MacPHERSON:  Correct. 
 
                 DR. GILCHER:  And, in fact, new fee 
 
       increases have been put in place probably by most

       blood centers as we speak.  Do you have an idea of 
 
       what that average percentage increase has been for 
 
       this year 2003-2004? 
 
                 MR. MacPHERSON:  For our members, our 
 
       understanding is that it's in the nature of around

       15 percent. 
 
                 DR. GILCHER:  Fifteen? 
 
                 MR. MacPHERSON:  Fifteen.  But there's a 
 
       large disparity because what we saw last year, even 
 
       though there was an average of an 18- or 19-percent

       increase, some only raised their fees 3 percent and 
 
       some raised their fees as much as 30 to 40 percent. 
 
       It all depends where they were in the cycle 

                                                                163 
 
       sometimes, but we're going to see a 15-percent 
 
       increase. 
 
                 One figure I didn't put on there--and I 
 
       don't know if it's important--is that the spread

       between the first quartile and the third quartile, 
 
       if you know math--I don't, but if you know 
 
       statistics--is only about $40.  So although the 
 
       range is big, the actual spreads in cost are pretty 
 
       narrow.

                 But costs are continuing to increase, and 
 
       West Nile virus is a very good example.  It costs a 
 
       lot in terms of infrastructure to get ready for 
 
       that test, and although maybe the test itself only 
 
       costs about seven or eight bucks to implement per

       donor, or per donation, if you think about it, that 
 
       alone is about 4 percent of an increase to the cost 
 
       of blood--or cost of collection. 
 
                 DR. BRECHER:  Lola? 
 
                 DR. LOPES:  Sorry for what is a really

       ignorant question.  From the public perception, the 
 
       Red Cross is a major national charity.  That means 
 
       it collects a lot of money other than for products 

                                                                164 
 
       it sells.  I don't think of blood centers like the 
 
       Mississippi Valley Center in our region as a 
 
       charity collecting money. 
 
                 Are there cost differentials between the

       Red Cross and the other nonprofit centers that 
 
       come-- 
 
                 MR. MacPHERSON:  I don't think I want to 
 
       answer the question as you've posed it. 
 
                 DR. LOPES:  Okay.

                 MR. MacPHERSON:  But I'll answer it a 
 
       different way.  Red Cross and ABC members have been 
 
       on cost recovery for blood and not having 
 
       charitable subsidies for probably since the early 
 
       1970s or late 1960s when United Ways were

       recognizing that the cost of blood was so expensive 
 
       that they couldn't keep up.  I come from Rochester. 
 
       I started my blood banking career in Rochester, New 
 
       York, at the Red Cross, and in 1968, 100 percent of 
 
       the blood supply was covered by United Way fees.

       By 1975, it was total cost recovery. 
 
                 MR. MacPHERSON:  There really is not much 
 
       difference in that.  Now, Mississippi Valley Blood 

                                                                165 
 
       Center and all of our members are not-for-profit 
 
       501(c)(3) organizations, and a lot of them do 
 
       fundraising, but not to subsidize the price of 
 
       blood, but to do buildings, to do equipment

       acquisitions, to do research, to do special 
 
       programs.  So not to subsidize operations. 
 
                 DR. BRECHER:  Ron? 
 
                 DR. GILCHER:  I want to get back to my 
 
       point, Jim.  I had asked you the question for a

       reason, and that is really for our Committee 
 
       members to realize that the number that you saw up 
 
       here is you need to I think take an average of 10 
 
       percent.  I just calculated our blood center 
 
       increase, which went into effect August 1st.  It

       was a 12.9-percent increase on the processing fee 
 
       for a red cell, which included our single-unit NAT 
 
       testing for West Nile. 
 
                 But for the Committee members, I would 
 
       take that number that you saw, like the 154 on the

       leukoreduced red cell and add an additional 10 
 
       percent on to that, and that will put you into the 
 
       ballpark, I believe, of where we're going to be for 

                                                                166 
 
       this coming year. 
 
                 MR. MacPHERSON:  It's a good point, Ron. 
 
       The other figure I didn't put in, and I'll just 
 
       mention, in 1990, the cost to collect a unit of

       whole blood was around $60, and as I mentioned last 
 
       year, the cost was around $200.  So, even if you 
 
       subtract inflation, you'll see some huge increases, 
 
       and many of them for or the vast majority of them 
 
       really are safety related or regulation related,

       one way or another. 
 
                 DR. BRECHER:  If there are no further 
 
       comments or questions, thank you. 
 
                 MR. MacPHERSON:  Thank you. 
 
                 DR. BRECHER:  Do we have a representative

       from the American Red Cross? 
 
                 MS. SULLIVAN:  Hi.  My name is Elaine 
 
       Sullivan, and I am the Director of Reimbursement 
 
       Policy at the Red Cross.  I'm here speaking on 
 
       behalf of the Red Cross today.  Obviously, I don't

       want to go through all of the information that both 
 
       Theresa and Jim have already shown you and talked 
 
       to you about.  We would support the comments of 

                                                                167 
 
       both Theresa and the AABB, as well as some of the 
 
       comments that Jim has made. 
 
                 But what I would like to talk to the 
 
       Committee about is the fact that both--and bring to

       your attention--both in September of 2002 and again 
 
       in May of 2003, this Committee has recommended to 
 
       the Secretary and CMS, that the reimbursement of 
 
       blood products be based on a methodology that 
 
       recognizes fair and appropriate payment for blood

       and blood products, and we would urge the 
 
       Committee, again, today, during this comment period 
 
       on the outpatient PPS proposed rule, to once again 
 
       resurface those recommendations and have them 
 
       consider an alternative method of payment, rather

       than the hospital claims data. 
 
                 Our data also shows data that is similar 
 
       to Jim's as far as payment.  We have shared that 
 
       data with CMS.  CMS has told us their concerns with 
 
       using industry data, and one of those concerns is

       that they're concerned about overpaying some 
 
       hospitals and underpaying some hospitals, based on 
 
       using average or median data. 

                                                                168 
 
                 One of the reasons why we, to the APC 
 
       panel this morning, as well as the AABB, have 
 
       recommended a reasonable cost carveout for blood 
 
       products out of the APC system is because an

       individual hospital will be paid their own 
 
       reasonable cost, and that satisfies one of CMS's 
 
       concerns with over- and underpaying hospitals based 
 
       on medians and averages. 
 
                 So I would encourage this Committee to

       take action, once again, during this comment 
 
       period.  The comment period closes October 6, but 
 
       also, at the same time, I just want to make sure 
 
       that the Committee understands that this is not an 
 
       unusual request to CMS.  CMS, last year, actually

       paid for orphan drugs through a reasonable cost 
 
       methodology simply because they did not feel that 
 
       the data was adequate to reflect the acquisition 
 
       cost of the product.  So it's not that we're asking 
 
       CMS to do something new that they haven't done

       before. 
 
                 So, with that, I will conclude my 
 
       comments, and I appreciate the Committee's time in 

                                                                169 
 
       listening to our concerns. 
 
                 Thanks. 
 
                 DR. BRECHER:  Questions or comments? 
 
                 [No response.]

                 DR. BRECHER:  I think I'll open the floor 
 
       to, if there's any public comments on the question 
 
       of HOPPS, if anyone else wants to make a comment. 
 
                 MR. SKINNER:  Mr. Chairman? 
 
                 DR. BRECHER:  I'm sorry?

                 MR. SKINNER:  Shannon Penberthy, with Mark 
 
       Associates, wasn't here this morning when you 
 
       covered the other plasma folks-- 
 
                 DR. BRECHER:  Okay. 
 
                 MR. SKINNER:  And she wanted to make some

       brief comments. 
 
                 DR. BRECHER:  Okay.  Shannon? 
 
                 MS. PENBERTHY:  I know we're at the end of 
 
       the meeting, and so I'll ask the Committee's 
 
       preference.  I do have a PowerPoint that we could

       quickly put up or we could pass--you'd rather have 
 
       that? 
 
                 Sir, we are going to do it. 

                                                                170 
 
                 [Pause.] 
 
                 MS. PENBERTHY:  I very much appreciate 
 
       this opportunity to talk about the impact of the 
 
       2004 HOPPS on clotting factor.  I know there were

       early presentations today when the Committee got a 
 
       bit ahead of schedule, so I will go through some of 
 
       the facts and get to the points we wanted to make 
 
       fairly quickly. 
 
                 This is very much a way a follow-up from

       the presentations that we had done in May to 
 
       further inform the Committee about the ways that 
 
       these products are reimbursed. 
 
                 Just a quick recap.  There are about 
 
       20,000 people in the United States with hemophilia.

       Five to seven percent are dependent upon Medicare, 
 
       about 1,100 persons, and we are uniquely recognized 
 
       in many of the Medicare payment systems.  We're the 
 
       only drug with a passthrough payment status in the 
 
       hospital inpatient setting, meaning that there's a

       separate reimbursement for clotting factor that's 
 
       used in a procedure for a person with hemophilia. 
 
                 We are one of the few self-administered 

                                                                171 
 
       drugs covered under Part B, which allows our 
 
       persons with hemophilia to home infuse, self-infuse 
 
       at home.  And then, under HOPPS, we've been 
 
       recognized, rather than being bundled with other

       APCs for drugs or procedures, we do have separate 
 
       APCs for each of our classification of drugs.  It's 
 
       classified by the HCPCS or J Code. 
 
                 Hospital outpatient system.  The 
 
       prospective system implemented in August 2000

       replaced the previous cost-based system.  Last 
 
       year, was the first year that our products had been 
 
       truly in the prospective payment part of that.  We 
 
       had been allowed a 3-year period under the 
 
       passthrough category to allow for collection of

       data.  I'll tell you in a few minutes that didn't 
 
       really help us. 
 
                 The proposed rule last year would have 
 
       leveled reimbursement to 52 cents a unit for 
 
       virtually all of the products, regardless of

       whether they were plasma derived or recombinant, 
 
       which just would have had a devastating effect. 
 
                 We did respond, providing data that we 

                                                                172 
 
       collected on hospital cost through our Hemophilia 
 
       Treatment Center networks.  And the final rule did 
 
       recognize the poor quality of the hospital billing 
 
       data and implemented a dampening effect to limit

       reductions.  So, for 2003, we were limited to 
 
       reductions of no more than 15 percent. 
 
                 The current Year 2004 Rule, proposed 
 
       earlier this month, it provides more favorable 
 
       treatment for blood and blood products than other

       nonpassthrough drugs.  Other drugs that are in this 
 
       category can be reduced based on the reported cost 
 
       data by as much as 15 percent, plus a quarter of 
 
       the difference between what the 2003 payment was 
 
       and what the 2004 payment would have been if they

       used the reported data.  So we will have some drugs 
 
       in that category, the broad category of 
 
       nonpassthrough drugs, that could be reduced by as 
 
       much as 20/30 percent. 
 
                 Blood and blood products, collectively,

       were given special recognition, with a 10-percent 
 
       dampening effect.  So we should all be very 
 
       excited.  We were only cut by 10 percent.  It could 

                                                                173 
 
       have been much worse.  And as I say, still net 
 
       decreases. 
 
                 We're going to see how this chart looks. 
 
       So these are the rates, 2003 versus 2004.  As you

       can see, pretty much a uniform about 10-percent 
 
       reduction for all but our you'll see J-7193. 
 
       That's the Factor IX monoclonal products, which are 
 
       like the mid-grade product, if you will, for those, 
 
       and those actually receive a 5-percent increase.

                 Our concerns.  I gave you actually two 
 
       pieces of paper, and on this one, which was our 
 
       summary that we provided to the community of the 
 
       rule, the last page shows actually the data that 
 
       CMS reports using in aggregate form, and you'll see

       that the coefficients of variation for our products 
 
       range from, based on their own analysis, between 
 
       almost 6,000 and almost 120,000 for your 
 
       coefficient variations, which means this is really 
 
       reliable stuff they're using here.

                 Our volume is low in HOPPS.  About six 
 
       million units were reimbursed between April and 
 
       December of 2002, which is the time period they're 

                                                                174 
 
       using, the hospital cost data, and I'll explain 
 
       that. 
 
                 Overall, Medicare, according to GAO, in 
 
       2001, paid about $105 million for clotting factor

       used in the home.  Similarly, the inpatient volume 
 
       were much higher than this.  People with hemophilia 
 
       typically don't go to the outpatient services for 
 
       their care.  They're infusing at home before they 
 
       go in for a procedure, if they've got an outpatient

       scheduled surgery.  They're making arrangements, 
 
       even though you're not always supposed to do this, 
 
       to bring factor with them.  But, by and large, 
 
       we're not seeing a lot of people get reimbursed 
 
       here.  Nevertheless, it's concerning, the rates

       that they want to put in place and the way that 
 
       they continue to intend to do it. 
 
                 We have to go back to remembering that 
 
       HOPPS is intended only to reimburse hospitals for 
 
       only about 80 percent of their cost in the

       Outpatient Department.  The rule, in compiling the 
 
       relative values by which they determine the rates, 
 
       applies an average pharmacy markup.  It doesn't 

                                                                175 
 
       apply, I would say, to blood and to blood products. 
 
       They've got everything from aspirin with 1,000-percent 
 
       markup to our products, which we assume 
 
       hospitals have a relatively low markup for.

                 Overall, with the rates that I showed you 
 
       earlier in the presentation, we don't have serious 
 
       access problems at this point, but certainly if we 
 
       continued to have 10-percent or 15-percent 
 
       reductions every year, I would say the rates that

       are proposed for 2004 are getting pretty close. 
 
                 We intend to respond to this rule, given 
 
       that we're now about six weeks out from when that 
 
       is due.  Again, by collecting hospital-cost data 
 
       through our Hemophilia Treatment Center network,

       we've asked for data by brand, we've asked for 
 
       volume by brand or by HCPC Code. 
 
                 We had, I know a couple of times the 
 
       question has come up about CMS's refusal or 
 
       reluctance to take industry data.  We participated

       in the call that they held last week on HOPPS, and 
 
       they do provide specific instructions about the 
 
       data they'd like to see from industry-owned 

                                                                176 
 
       devices, but they only, for us, say they'd like to 
 
       see more data. 
 
                 So I asked the question should we presume 
 
       that for the data they'd like to see for blood and

       blood products that it look a lot like geographical 
 
       variation, et cetera; the characteristics of the 
 
       data they asked for, for devices, and the answer 
 
       was, yes.  So we are going by that in preparing our 
 
       comments and seeking this data.

                 We will provide comments.  We're going to 
 
       make those available to our communities, so they 
 
       can also respond.  And we also were seeking 
 
       collaboration with other organizations.  To the 
 
       extent that clotting factor is included in the

       category of blood and blood products, we all need 
 
       to be cognizant of the recommendations that we're 
 
       making and the impact they could have on the other 
 
       products, as long as CMS is continuing to treat us 
 
       all the same.

                 Finally, future steps.  Looking ahead, 
 
       this is an annual process you're going to have to 
 
       go through.  And we are seeking to partner with 

                                                                177 
 
       others to improve the accuracy of hospital cost 
 
       reporting and billing.  We feel that that's 
 
       absolutely crucial, not only in getting the right 
 
       data for CMS to be able to make decisionmaking, but

       I think, more importantly, for hospitals to fully 
 
       recover the costs that they should be recovering 
 
       for these products, which doesn't always occur and 
 
       results in the spiraling effect that some of the 
 
       other Committee members spoke about earlier.

                 Our proposals in the last few days about 
 
       trying to collectively come together to better 
 
       survey hospital-cost data, I was fascinated with 
 
       the data that ABC has. 
 
                 And we've actually been reluctant for

       clotting factor to, at this point, request 
 
       exemption from the Prospective Payment System, to 
 
       be reimbursed on a reasonable cost basis because 
 
       the data is so bad. 
 
                 I'd be glad to answer any questions that

       you have. 
 
                 DR. BRECHER:  Karen? 
 
                 MS. LIPTON:  Not really a question, but I 

                                                                178 
 
       just wanted to let people know that in terms of 
 
       trying to help hospitals better bill for this, 
 
       we've been talking with the National Hemophilia 
 
       Foundation about revising our billing guide out so

       that it can include some sort of modular 
 
       information on the plasma products, also. 
 
                 MS. PENBERTHY:  AABB has done a wonderful 
 
       guide, and so we are looking forward to that 
 
       partnership.  We think it would be very helpful.

                 DR. BRECHER:  Chris? 
 
                 MR. HEALEY:  Shannon, I just wanted to 
 
       temper maybe your enthusiasm a little bit about 
 
       your slide, I think it's number six, where you say 
 
       "provides more favorable treatment for blood and

       blood products."  We heard earlier that IVIG still 
 
       isn't included in CMS's definition of a blood and 
 
       blood product-- 
 
                 MS. PENBERTHY:  Right. 
 
                 MR. HEALEY:  So we consider that a major

       oversight, just to remind the Committee of that 
 
       point. 
 
                 DR. BRECHER:  John? 

                                                                179 
 
                 DR. PENNER:  What was the Factor VIIa, at 
 
       least prescribed on what unit basis, in your table 
 
       there?  The recombinant VIIa. 
 
                 MS. PENBERTHY:  In the table that CMS

       provided? 
 
                 DR. PENNER:  Yes, just I notice that 
 
       1,000--the 83 or something like that, that's per 
 
       what? 
 
                 MS. PENBERTHY:  Oh, that is per, I'm

       sorry, that product is packaged in 1.2 micrograms. 
 
       So that would be per 1.2 micrograms.  You're right. 
 
       The other products are in international units. 
 
       That product is treated differently. 
 
                 DR. PENNER:  So it's unrelated, but it is

       allowed to be at least identified separately, based 
 
       on that. 
 
                 MS. PENBERTHY:  Yes. 
 
                 DR. PENNER:  And then the other issue, I 
 
       thought there was something about pharmacies, on

       the  blood products that we have, being allowed for 
 
       Medicare and Medicaid at 3-percent addition to the 
 
       cost of the product.  How does that-- 

                                                                180 
 
                 MS. PENBERTHY:  For Medicaid, particularly 
 
       if you're participating in one of the 340(b) 
 
       programs, if you're a treatment center that is 
 
       participating in that program, you're allowed only

       to bill at acquisition, and then whatever the usual 
 
       customary state-dispensing fee is, which normally 
 
       is quite nominal because they're thinking of a 
 
       prescription of pills or aspirin or antibiotics, 
 
       rather than a very expensive product that requires

       extensive inventory management costs, special 
 
       shipping and storage cost.  So, for Medicaid, for 
 
       those products, that dispensing fee, it barely 
 
       scratches the surface. 
 
                 We've had some states that have recognized

       that and put in place different reimbursement 
 
       mechanisms for the dispensing fee part, if you 
 
       will.  I think Dr. Hoots wants to say something 
 
       because he's one of those states. 
 
                 DR. HOOTS:  I can tell you that, in Texas,

       it doesn't matter.  We can ship a month's supply of 
 
       factor, which might be 15,000 units, net cost 
 
       $12,000 or so, and we'll get reimbursed $200 above 

                                                                181 
 
       that. 
 
                 DR. PENNER:  I think this holds true, and 
 
       I didn't know if this was being addressed as a 
 
       major problem, inasmuch as it really curtails any

       of the Medicaid programs that we have for the 
 
       patients who have hemophilia or are requiring some 
 
       of these blood products in large quantities because 
 
       it's, from the pharmacy standpoint, they'd just as 
 
       soon not bother with it.

                 MS. PENBERTHY:  Absolutely.  There are, 
 
       right now, and CMS has another rule that wasn't 
 
       discussed here that would make revisions to average 
 
       wholesale price reimbursement, and one of the 
 
       proposals is that a 5-cent per unit administration

       fee would be added to the reimbursement rate for 
 
       clotting factor. 
 
                 As part of the Medicare prescription drug 
 
       bill being debated in Congress, both the House and 
 
       Senate proposals have provisions that would ask for

       a study of what that administration fee for 
 
       clotting factor should be.  Again, that's only for 
 
       Medicare, but we could hope that if something was 

                                                                182 
 
       implemented, it would help us making our case 
 
       better to the states.  There's a lot of work to be 
 
       done in state Medicaids in this area. 
 
                 DR. BRECHER:  Jeanne?

                 DR. LINDEN:  Could you please explain a 
 
       little bit more, so I can understand, this table on 
 
       the third page of your white handout, not the 
 
       slides, the columns that are headed "minimum cost, 
 
       maximum cost, mean cost, median cost," could you

       please explain what those mean.  I'm having trouble 
 
       making sense of them. 
 
                 MS. PENBERTHY:  Sure.  This came from the 
 
       Medicare rule that was issued on HOPPS earlier this 
 
       month.  And it's their reported minimum cost that

       was reported to them for, that was billed, if you 
 
       will, by a hospital versus maximum cost, looking at 
 
       all of the claims. 
 
                 DR. LINDEN:  For a patients' entire stay, 
 
       everything they used?

                 MS. PENBERTHY:  Well, this is hospital 
 
       outpatient, so we presume that they came in and had 
 
       a service and then left.  So this would be, yes, 

                                                                183 
 
       during that stay.  And so when they look at the 
 
       billing, the cost reporting they receive from the 
 
       hospitals; for example, J7190, the Factor VIII 
 
       plasma-derived product, the lowest cost that they

       received a bill for was remarkably 17 cents, and 
 
       the maximum cost was $2,600, which would have been--probably 
 
       more reflect a full infusion. 
 
                 DR. HOOTS:  Can I comment?  Go ahead. 
 
                 DR. LINDEN:  I mean, I'm still not clear.

       Somebody used .3 of a unit, and the mean, I mean, 
 
       this is not per unit?  This is total cost?  This is 
 
       still not making sense. 
 
                 DR. HOOTS:  No, it doesn't. 
 
                 MS. PENBERTHY:  This is why I don't want

       to use the data. 
 
                 DR. HOOTS:  And that's precisely what I 
 
       think Shannon is trying to say.  Clearly, the 
 
       $2,000 per unit is not true.  I mean, no one could 
 
       get that past anything.  That clearly is $2,000 for

       an infusion.  So the coders don't have a clue about 
 
       this.  This is why it's so problematic.  The 
 
       hospital coders, that's what I was trying to say 

                                                                184 
 
       earlier, to them, a unit may be a box because they 
 
       don't, again, these are people who are trained to 
 
       just like at ICD9s and put down a number, and this 
 
       is not anything like within their spectrum of

       expertise, and so that's why they get these weird 
 
       numbers. 
 
                 MS. PENBERTHY:  Medicare guidelines 
 
       dictate that you bill to the nearest 100 units, but 
 
       that you bill per unit, and if you infuse 957

       units, you bill 957 of that code at this per-unit 
 
       price. 
 
                 DR. BRECHER:  Shannon, on that same table, 
 
       look at Factor VIII, this is for 512 days of 
 
       billing or infusion?  What are the days and what

       are the units column supposed to represent? 
 
                 MS. PENBERTHY:  The days would, because 
 
       it's an outpatient service, in my mind, that's 
 
       representing what was reported as the number of 
 
       claims.  We almost could equate that into the

       number of claims they had.  Again, it depends on 
 
       how they billed, but they're trying to tell us that 
 
       there were 512 patient days in which a hospital 

                                                                185 
 
       billed for that code. 
 
                 DR. BRECHER:  That doesn't seem like very 
 
       many days. 
 
                 MS. PENBERTHY:  There's low volume of this

       product in the hospital outpatient department.  In 
 
       terms of the units, that was the number of units 
 
       that, in the aggregate, was billed between April 
 
       and December 2002 for that code--assuming that 
 
       someone didn't bill one unit for the $2,600.

                 DR. HOOTS:  Yes, it's really convoluted, 
 
       and most of this outpatient/inpatient, that's why, 
 
       I mean, really, hospital outpatient is going to be 
 
       emergency center, and a lot of that, I mean, the 
 
       billing there, as you well know, is very

       problematic to begin with.  Some of it may also be 
 
       outpatient use in day surgeries, although that's 
 
       not very common, except for the mildest form of 
 
       hemophilia surgeries, and essentially that's it. 
 
                 So this doesn't really represent much of

       anything, in terms of the outpatient use of this 
 
       product, which is, clearly, as Shannon said, at 
 
       home. 

                                                                186 
 
                 MS. PENBERTHY:  Other questions? 
 
                 DR. BRECHER:  Okay.  Thank you, Shannon. 
 
                 MS. PENBERTHY:  Thank you very much for 
 
       your time.

                 DR. BRECHER:  Members of the Committee, 
 
       what are we going to do about this?  What is the 
 
       Committee's feeling?  In the past, we have made 
 
       resolutions that have encouraged CMS to use actual 
 
       costs.

                 Karen? 
 
                 MS. LIPTON:  I think it's appropriate 
 
       because it is a comment period, and if we don't 
 
       weigh in during a comment period, then we might not 
 
       as well weigh in at all.  I don't know that we know

       exactly how to solve the problem, and we've had two 
 
       suggestions, and I'm not even sure how different 
 
       they are, you know, to use the Red Cross and the 
 
       ABC data or to just base it on reasonable cost, but 
 
       I think it's something along those lines, and I

       think it's fairly urgent.  I mean, if it weren't so 
 
       sad, it would be laughable, but it's, you know, 
 
       it's really, it's really disturbing. 

                                                                187 
 
                 DR. BRECHER:  Jerry? 
 
                 DR. SANDLER:  This is my first time as a 
 
       member of this Committee, and I'm affronted by the 
 
       way the government is treating this issue.

       Hospitals are in desperate financial straits. 
 
       Reasonable proposals are being made by reasonable 
 
       people, supposedly, that say it's costing us $200. 
 
       Look, here's the bill for what the transfusions are 
 
       costing for people that you are supposed to be

       paying for, and you are not going up, you're going 
 
       down? 
 
                 I mean, this is absolutely outrageous, and 
 
       I think that we should, in very plain language, 
 
       write to the Secretary and explain to him, in very

       plain language what a terrible job his department 
 
       is doing. 
 
                 DR. BRECHER:  Mark? 
 
                 MR. SKINNER:  I hadn't read these before, 
 
       but I was re-reading the comments that Shannon

       submitted in her written comments, and in there it 
 
       states, CMS acknowledges the poor quality of the 
 
       hospital data for blood and blood products. 

                                                                188 
 
                 And I'm wondering if we could just pick up 
 
       on the theme and say we agree with them and that, 
 
       therefore, if they think their data is flawed, we 
 
       certainly have said that, and if it continues to be

       flawed, as they acknowledge, then it shouldn't be 
 
       used.  I mean, if that's actually in their written 
 
       comments that they acknowledge that their data is 
 
       inadequate, then I don't know how they could 
 
       justify using it.

                 DR. BRECHER:  Jay? 
 
                 DR. EPSTEIN:  I'm somewhat out of my depth 
 
       in this subject area and also not a voting member 
 
       of the Committee, but I'd like to read a candidate 
 
       statement that I think the Committee could provide,

       and I think it falls to the Committee management 
 
       whether it's appropriate or not appropriate for the 
 
       Committee directly to respond to CMS in the comment 
 
       period. 
 
                 So, putting that aside for the moment, the

       language I would propose is that: Whereas, 
 
       declining Medicare and Medicaid reimbursement for 
 
       blood products and plasma derivatives threatens 

                                                                189 
 
       both the stability of the nation's blood system and 
 
       individual patient access to medically necessary 
 
       therapies, the Committee recommends that the 
 
       Secretary direct CMS to reexamine its framework for

       cost reimbursement in this product area and provide 
 
       for passthrough reimbursement as an interim measure 
 
       based on actual costs. 
 
                 DR. BIANCO:  That's it.  We can go home. 
 
                 [Laughter.]

                 DR. BRECHER:  We have a motion.  Do we 
 
       have a second? 
 
                 MR. SKINNER:  I make the motion. 
 
                 DR. HOOTS:  Second. 
 
                 DR. BRECHER:  Actually, I think the

       wording is actually quite good, Jay.  And I don't 
 
       think putting it on the screen right now is going 
 
       to add very much. 
 
                 DR. PENNER:  I think we'd all have to 
 
       support, from what we've heard today, that there's

       a need for this sort of proposal to urge a 
 
       reevaluation. 
 
                 I think we've dealt with this, though, in 

                                                                190 
 
       the past on a couple of occasions, and I don't know 
 
       if it is superimposed onto previous 
 
       recommendations.  We might want to explore that, 
 
       but at any rate, I think it needs to be addressed

       again now because we're at a level of urgency that 
 
       needs the attention. 
 
                 DR. BRECHER:  Keith? 
 
                 DR. HOOTS:  Perhaps we could handle that 
 
       ex post facto by saying, having a preamble

       "whereas" statement that says: Whereas, our 
 
       recommendation such and such, and such and such, on 
 
       such and such a date, have addressed this issue 
 
       previously, we wish to reaffirm. 
 
                 DR. BRECHER:  You know, I think that could

       be covered in the cover letter that I, as Chair, 
 
       write. 
 
                 DR. HOOTS:  That's good, yes. 
 
                 DR. BRECHER:  Yes, Karen? 
 
                 MS. LIPTON:  I am not the expert in this,

       and Theresa just said to me, the one thing is that 
 
       the word "passthrough" has a technical meaning--it 
 
       doesn't mean anything to me--and so she said base 

                                                                191 
 
       it on actual cost instead, rather than using a 
 
       technical term.  And I don't, once again, we're 
 
       getting into this area where-- 
 
                 DR. BRECHER:  Can we use the word

       "passthrough," Dr. Bowman? 
 
                 DR. BOWMAN:  The problem for you, if you 
 
       use the word "passthrough," as some of you can 
 
       probably allude to, that passthrough doesn't 
 
       necessarily guarantee at all that you're going to

       get reimbursed at the acquisition cost that you're 
 
       trying to achieve for the providers and the 
 
       facilities that you're concerned about. 
 
                 MS. LIPTON:  Would you have a 
 
       recommendation for words, even though you can't

       vote, and you probably don't even want to 
 
       participate? 
 
                 [Laughter.] 
 
                 DR. BRECHER:  But that's off the record, 
 
       right?

                 [Laughter.] 
 
                 DR. BOWMAN:  No.  We do appreciate the 
 
       opportunity to participate with your Committee, 

                                                                192 
 
       actually, and we appreciate that you've extended 
 
       for us to be here.  I can't recommend anything, 
 
       certainly at this time, because of the comment 
 
       period with the current outpatient rule, but I

       would just phrase it in more plain language to just 
 
       reflect what you really want and not try to use 
 
       terms like passthrough because there are probably 
 
       any number of instances where passthrough has not 
 
       resulted in total reimbursement for the total cost.

                 DR. BRECHER:  I think we have to be 
 
       crystal clear.  I think we have stumbled in the 
 
       past with our very complicated wording.  So 
 
       whatever we say, let's keep it simple and clear. 
 
                 MS. LIPTON:  Well, then is it the actual

       acquisition cost of the hospital for these?  I 
 
       mean, I don't-- 
 
                 DR. PENNER:  You might want to, the actual 
 
       costs, and then there has to be at least some 
 
       handling or management or cost that's added on,

       which ordinarily is added on in any of the hospital 
 
       activities.  So that has to be at least accounted 
 
       for in some way. 

                                                                193 
 
                 MS. LIPTON:  So it could be an actual cost 
 
       of acquiring and providing these. 
 
                 DR. PENNER:  Yes.  I think that would 
 
       provide enough so it would be reasonable.

                 DR. LINDEN:  So would you accept that 
 
       friendly amendment to your nonmotion? 
 
                 DR. EPSTEIN:  Yes, indeed.  I actually put 
 
       passthrough in quotes because I was very 
 
       uncomfortable.

                 MR. SKINNER:  Mr. Chairman, the one thing 
 
       that, and maybe I'll see it when I actually read--it's a 
 
       little small--is I don't recall Jay reading 
 
       anything that related to the need for enhanced data 
 
       collection.  I mean, the whole aspect of training

       and the importance of hospitals being helped to 
 
       understand how to do it, and CMS recognizing the 
 
       importance of that from their side, I don't know 
 
       where that role, whether we want to be placing 
 
       blame or responsibility for that.

                 DR. BRECHER:  Or the use of industry data. 
 
                 MR. SKINNER:  Right.  The data piece that 
 
       I don't think, whether that's mixing two messages 

                                                                194 
 
       or whether that it's missing from there.  I don't 
 
       recall. 
 
                 DR. BRECHER:  We could recommend, as a 
 
       second clause, that CMS investigate or consider the

       use of verifiable industry data in setting their 
 
       rates.  I think that's going to be more reliable 
 
       than the hospital data for the time being. 
 
                 MR. SKINNER:  Could we add "or support 
 
       training" or "encourage"; is that a piece that I've

       heard people say is the importance of people 
 
       understanding how to bill? 
 
                 DR. BRECHER:  I think that the national 
 
       organizations are taking care of that.  I don't 
 
       think that we need to take that to the Secretary.

                 MS. LIPTON:  Well, but there is.  We have 
 
       asked for some clarification from CMS, and until we 
 
       get that guidance, I think we're all still going to 
 
       be in the dark here. 
 
                 MS. WIEGMANN:  I think that have been in

       one of your resolutions from last time.  If you 
 
       have the list of resolutions from last time, I 
 
       think that you included some provision about the 

                                                                195 
 
       need for guidance at that point in time. 
 
                 MS. LIPTON:  Mark, do you have what we 
 
       read on that the last time? 
 
                 I hate to get technical, but when you

       finally get this, could you put it in like 14-point 
 
       bold? 
 
                 [Laughter.] 
 
                 DR. HOOTS:  Can we add didn't you say 
 
       actual cost for acquisition and dispersal or

       something like that, provision? 
 
                 MS. LIPTON:  And I said cost of providing 
 
       to the patient.  I don't know what--cost of 
 
       acquiring and-- 
 
                 DR. HOOTS:  Acquiring and providing the

       product, yes. 
 
                 [Pause.] 
 
                 DR. HOOTS:  Acquiring and providing the 
 
       product. 
 
                 [Pause.]

                 DR. HOOTS:  Acquiring and providing. 
 
                 DR. BRECHER:  I'm sorry, Jerry.  Go ahead. 
 
                 DR. SANDLER:  Rather than wordsmithing 

                                                                196 
 
       this, I'd like to make two suggestions that go into 
 
       your cover letter.  I think this doesn't really 
 
       show the disparity in this, and I don't want to 
 
       touch this resolution because I think it's been

       very well written, but I think something that 
 
       points out that they're paying hospitals half of 
 
       what it's costing hospitals should be communicated. 
 
       As I read this, I don't get the sense of the 
 
       injustice that is being done, and I think the cover

       letter should communicate that. 
 
                 There's no time line.  They could blow us 
 
       off, like they have been for years, and I really 
 
       think that there should be some time line in the 
 
       cover letter that communicates that we would really

       like to be in touch because hospitals are losing an 
 
       awful lot of money on the people that they're 
 
       supposed to be paying for every single day. 
 
                 DR. BRECHER:  Mark? 
 
                 MR. HAAS:  Might it make some sense, to

       follow Jerry's point, to use as an example that 
 
       third page of Shannon's memo which is the CMS data 
 
       itself and which shows the disparity? 

                                                                197 
 
                 DR. BRECHER:  Well, we can include that in 
 
       the cover letter.  I think I would do that, as well 
 
       as probably, if we could get a similar letter on 
 
       blood products, maybe AABB could provide that to

       us. 
 
                 MS. LIPTON:  We can put together something 
 
       from our testimony.  I know you just had slides, 
 
       Jim and Elaine, that we didn't see, but I'm sure we 
 
       could come up with some language that we'd like in

       there.  Does that sound good? 
 
                 DR. BRECHER:  Or a similar table. 
 
                 MS. LIPTON:  I'm sure we could come up 
 
       with a table. 
 
                 DR. BRECHER:  With the percentage drop and

       the old price, new price, et cetera. 
 
                 MR. HEALEY:  Mark, if it's appropriate, 
 
       I'd like to also offer data on IVIG as well and the 
 
       Alpha One. 
 
                 DR. BRECHER:  Yes.

                 MR. HEALEY:  Just roll in all of those 
 
       plasma therapies together. 
 
                 DR. BRECHER:  And if everyone could get me 

                                                                198 
 
       that data in the next couple of days, that would be 
 
       helpful. 
 
                 MR. HEALEY:  Also, the question I had is 
 
       either in the cover letter or the language itself

       will we make reference to the 2004 HOPPS proposed 
 
       rule?  I mean, that's what's really driving this. 
 
       We might want to make them aware that we're-- 
 
                 DR. BRECHER:  Yes, I'll make that clear in 
 
       the cover letter that that's what we're referring

       to. 
 
                 Ron? 
 
                 DR. GILCHER:  As a point of clarification, 
 
       I discussed this with Jay, changing the word 
 
       "declining" to, "Whereas, inadequate and further

       reducing Medicare and Medicaid reimbursement" would 
 
       clarify declining. 
 
                 DR. BRECHER:  Yes.  So we're going to 
 
       change the word "declining" to "inadequate." 
 
                 DR. GILCHER:  Whereas, further inadequate

       and further reducing. 
 
                 DR. BRECHER:  Yes, inadequate and further 
 
       reducing. 

                                                                199 
 
                 [Pause.] 
 
                 DR. LINDEN:  That's not really 
 
       grammatically correct. 
 
                 DR. GILCHER:  Yes.  And further reduction

       in-- 
 
                 DR. PENNER:  I think you better put 
 
       "inadequate" up front.  I think that hits it 
 
       better.  Don't let them dodge that. 
 
                 DR. LOPES:  I suggest "inadequate and

       still falling reimbursement rates." 
 
                 DR. BRECHER:  We're continually defining 
 
       it.  How about plummeting? 
 
                 [Laughter.] 
 
                 DR. BRECHER:  It sounds like people will

       be happy with "further reduction." 
 
                 Is everybody happy?  No?  What do you want 
 
       to-- 
 
                 "Whereas, inadequate and continually 
 
       decreasing."

                 [Pause.] 
 
                 DR. HEATON:  Why don't you move it to, 
 
       "Whereas, further reduction in already inadequate 

                                                                200 
 
       Medicare/Medicaid--" 
 
                 DR. BRECHER:  Yes, that'll do it. 
 
                 DR. HEATON:  Because that's the key issue. 
 
       It's going down, and it was never adequate in the

       first place.  "--in already inadequate--"  That's 
 
       perfect.  Thank you. 
 
                 DR. SANDLER:  Would we want to get right 
 
       to the point and say that he directs the 
 
       Administrator of CMS, so that there's a little more

       focused accountability?  We've got him by his name. 
 
       He's the Secretary.  Now, we're going to CMS in a 
 
       bit of a blur, and it kind of slips away.  We could 
 
       just say, "Directs the Administrator of CMS."  We 
 
       know who we're talking about, who's got a job to

       do. 
 
                 DR. BIANCO:  I think it's unnecessary, 
 
       Jerry.  He's the boss.  I think the most important 
 
       part is I think, instead of refining this, is for 
 
       us to collect the data, as you suggested, so that

       the inadequacy becomes apparent. 
 
                 MR. SKINNER:  Mark, were we going to add a 
 
       reference to the data?  Because this says what we 

                                                                201 
 
       want to happen, but it doesn't say at all why. 
 
                 DR. BRECHER:  I think I can cover that in 
 
       the cover letter that examples of the changing in 
 
       the reimbursement are illustrated in the

       accompanying tables.  The tables are self-evident. 
 
                 MR. SKINNER:  I guess what I'm saying is 
 
       this doesn't offer a solution.  To the extent that 
 
       there is a solution, better data, the solution is 
 
       here, pay the cost, but we don't say why.

                 DR. BRECHER:  Oh, I see. 
 
                 MR. SKINNER:  Maybe it's self-evident. 
 
                 DR. BIANCO:  I would support what Mark jus 
 
       said, in the sense that there are alternative 
 
       sources of data at the end.

                 DR. LOPES:  How about you say, "in this 
 
       product area, and, until better data are available, 
 
       provide reimbursement based on actual costs"? 
 
                 MR. HEALEY:  I think one thing to think 
 
       about, though, is, at the end of the day, the

       claims data, even if they are accurate and correct, 
 
       may not be the payment mechanism that you want to 
 
       follow for reimbursement.  I mean, there are a host 

                                                                202 
 
       of different payment mechanisms out there.  There's 
 
       Medicare reform up on the Hill, so there are a lot 
 
       of different directions this could take by, you 
 
       know, locking ourselves in or at least proposing

       that it may lock us in, and I'm just not sure 
 
       that's where we want to be. 
 
                 DR. BRECHER:  Mark? 
 
                 MR. SKINNER:  I guess what I would say is, 
 
       and while I think we've identified the data issue,

       and I think it's the right thing to mention it, if 
 
       it goes in the cover letter, and if that really is 
 
       a part of what we want them to address, that cover 
 
       letter really doesn't become a part of the 
 
       permanent record.  I mean, what we continually

       publish is just the resolution part. 
 
                 So, if it's important for posterity that 
 
       the data issue stay with this recommendation, then 
 
       I think that it needs to be in here.  If we're open 
 
       to whatever solution they might come back with,

       then it's fine to leave it out.  But if data really 
 
       is the driver for this, it needs to be there for 
 
       posterity. 

                                                                203 
 
                 MR. HEALEY:  The data is the problem, 
 
       right?  I mean, that's the problem we're facing 
 
       today. 
 
                 DR. BRECHER:  I think we need to keep our

       resolutions simple, clean.  If we start putting in 
 
       tables, I think we're going to trip over ourselves. 
 
                 Jay? 
 
                 DR. EPSTEIN:  I liked an earlier statement 
 
       along the lines that CMS be directed to consider

       using validated industry data in making these 
 
       determinations.  I'm not averse also to adding a 
 
       sentence higher up, recognizing the problem that 
 
       the current data set available to CMS is 
 
       recognizably flawed, but I do think that the

       recommendation per se should focus on the utility 
 
       of validated industry data. 
 
                 So I'd like to suggest we add a part. 
 
                 DR. BRECHER:  In that new paragraph 
 
       underneath that one, "Further, the Committee

       recommends that CMS utilize validated industrial 
 
       data regarding costs." 
 
                 MR. HEALEY:  It's really claims data, 

                                                                204 
 
       right?  I mean, that's what you're getting at. 
 
                 [Chorus of noes.] 
 
                 MR. HEALEY:  Sorry.  Sorry.  I understand. 
 
                 DR. BRECHER:  Validated industrial cost

       data. 
 
                 DR. LOPES:  Is the industry then the 
 
       producer or the producer and the dispenser? 
 
                 DR. BIANCO:  In most cases, the industry 
 
       is the producer.  On occasion, it will be both, but

       the vast majority of the times it will be the 
 
       producer. 
 
                 DR. LOPES:  If we focus, though, on the 
 
       producers, will the hospitals be left out because 
 
       they're very important in this underreimbursement

       issue? 
 
                 DR. BIANCO:  I don't think so, Lola, 
 
       because ultimately the hospital is the one that 
 
       will now have the opportunity, if this resolution 
 
       is accepted, to build using the cost data that was

       generated that let's say the blood centers provided 
 
       or the manufacturer of IVIG provided. 
 
                 DR. PENNER:  But then they may just end up 

                                                                205 
 
       with the cost of the product and the industrial 
 
       cost, and then when the bill is submitted, which 
 
       includes administration fee and other parts of it, 
 
       I don't think that's what we want to leave here.

                 DR. BIANCO:  I don't understand the 
 
       system, but I do understand infusion costs are 
 
       charged separately, aren't they? 
 
                 DR. PENNER:  No, they're sometimes 
 
       bundled.  You really can't be sure.

                 MR. HEALEY:  And that doesn't work at all 
 
       for the plasma and therapeutics industry because 
 
       the manufacturers are not selling directly to the 
 
       end user.  There are a variety of distribution 
 
       channels.  So my suggestion would be validated cost

       data.  Eliminate the word "industrial" and rely on 
 
       the appropriate sources. 
 
                 DR. BRECHER:  Jay? 
 
                 DR. EPSTEIN:  Perhaps we can bridge that, 
 
       if it's validated cost data obtainable from product

       manufacturers and distributors. 
 
                 DR. BRECHER:  Yes, that should do it. 
 
                 DR. EPSTEIN:  Now, that doesn't address 

                                                                206 
 
       the hospital's administration costs.  We may want 
 
       to--but I think the thing that covers it is 
 
       manufacturers and distributors. 
 
                 DR. BRECHER:  So validated cost data

       available from-- 
 
                 DR. EPSTEIN:  Product manufacturers and 
 
       distributors. 
 
                 DR. BRECHER:  Keith? 
 
                 DR. HOOTS:  Yes, I think that's important,

       and I agree with what Chris said.  I think we want 
 
       to keep this statement discrete from the previous 
 
       statement. 
 
                 MS. WIEGMANN:  Just as clarification, for 
 
       the most part with blood components--I can't speak

       to derivatives--but you're mainly talking, 
 
       particularly in the outpatient, about just the cost 
 
       that the hospital pays for the blood product.  If a 
 
       hospital later does some processing to the product, 
 
       those costs will be incorporated under other lab

       fees and other processing or the transfusion itself 
 
       that are separate from the APC payments.  Cross-matching, 
 
       that has separate coding. 

                                                                207 
 
                 DR. BRECHER:  Jeanne? 
 
                 DR. LINDEN:  I don't want to slow things 
 
       down by wordsmithing, but we heard that there was a 
 
       lot of problems with recombinant products, and I'm

       wondering whether plasma derivatives would be 
 
       interpreted as applying to recombinant products. 
 
       My recollection is the last time we came up with 
 
       some other term--I don't recall whether it was 
 
       plasma therapeutics or something that was more all

       inclusive that didn't imply only human plasma-derived 
 
       products. 
 
                 MR. HEALEY:  We said plasma therapies or 
 
       plasma-derived products and their recombinant 
 
       analogues in the past.

                 DR. BRECHER:  So go up.  Say that wording 
 
       again, Chris. 
 
                 MR. HEALEY:  You can say, "plasma 
 
       derivatives and their recombinant analogues." 
 
       We'll see how good your spell check is here.

                 DR. EPSTEIN:  I think we have one 
 
       superfluous "and" to delete, also.  It should say, 
 
       "blood products, plasma derivatives and recombinant 

                                                                208 
 
       analogues." 
 
                 DR. LINDEN:  Except that the recombinant 
 
       analogues only apply to plasma derivatives and not 
 
       to blood components.

                 DR. EPSTEIN:  Are there any recombinant 
 
       cellular products?  I'm not sure what you're 
 
       saying, Jeanne. 
 
                 DR. LINDEN:  No, there aren't.  That's my 
 
       point.

                 DR. EPSTEIN:  That's why I put the comma. 
 
       "Blood products, and plasma derivatives and their 
 
       recombinant analogues," without a comma. 
 
                 DR. LINDEN:  If you leave the "and," yes, 
 
       okay.  I thought you were deleting it.

                 MS. LIPTON:  You need a comma the first 
 
       paragraph, third line up, "in the interim" comma. 
 
                 DR. BRECHER:  Let's read this from the top 
 
       to the bottom, shall we? 
 
                 "Whereas, further reduction in an already

       inadequate Medicare/Medicaid reimbursement for 
 
       blood products, and plasma derivatives and their 
 
       recombinant analogues--" is that an extra "and" in 

                                                                209 
 
       there?  No.  "--threaten both the stability of the 
 
       nation's blood system and individual patient access 
 
       to medically necessary therapies, the Committee 
 
       recommends that the Secretary direct CMS to

       reexamine its framework for cost reimbursement in 
 
       this product area, and in the interim provide 
 
       reimbursement based on actual costs of acquiring 
 
       and providing the product." 
 
                 "Further, the Committee recommends that

       CMS utilize validated cost data available from 
 
       product manufacturers and distributors. 
 
                 DR. HOOTS:  A comma after "further." 
 
                 MS. LIPTON:  And do you want to say, 
 
       "Further, the Committee recommends that CMS be

       directed to utilize," since that's more consistent 
 
       with the-- 
 
                 DR. BRECHER:  Right.  So the second clause 
 
       would be, "Further, the Committee recommends that 
 
       CMS be directed to utilize validated cost data

       available from product manufacturers and 
 
       distributors. 
 
                 MR. HEALEY:  Is it redundant to, at the 

                                                                210 
 
       very end there, "And distributors in arriving at 
 
       the actual cost of acquiring and providing the 
 
       product," directing them for what they need to do 
 
       to acquire the validated data?

                 DR. BRECHER:  I think it's implicit. 
 
                 Jay? 
 
                 DR. EPSTEIN:  I think products should be 
 
       plural at the end of the first paragraph. 
 
                 DR. BRECHER:  Oh, of providing the

       products. 
 
                 DR. EPSTEIN:  "Providing the products," 
 
       plural. 
 
                 DR. BRECHER:  Yes, at the end of the first 
 
       paragraph.

                 DR. EPSTEIN:  Last word in the first 
 
       paragraph. 
 
                 DR. BRECHER:  All right.  All in favor of--well, 
 
       let's see, does someone want to make a 
 
       motion to accept it?

                 Lola? 
 
                 DR. LOPES:  Move. 
 
                 DR. BRECHER:  Second? 

                                                                211 
 
                 DR. BIANCO:  Second. 
 
                 DR. BRECHER:  Anyone want to be a third? 
 
                 [Laughter.] 
 
                 DR. BRECHER:  All in favor?

                 Thirteen in favor. 
 
                 All opposed? 
 
                 Any people not voting?  I didn't vote as 
 
       Chair, but--and the government representatives 
 
       don't vote.  That's right.

                 Okay.  So this is our motion.  I will read 
 
       it in its complete form one last time from the top 
 
       just to make sure it is in the transcript: 
 
                 "Whereas, further reduction in already 
 
       inadequate Medicare/Medicaid reimbursements for

       blood products, and plasma derivatives and their 
 
       recombinant analogues threatens both stability of 
 
       the nation's blood system, and individual patient 
 
       access to medically necessary therapies, the 
 
       Committee recommends that the Secretary direct CMS

       to reexamine its framework for cost reimbursement 
 
       in this product area and, in the interim, provide 
 
       reimbursement based on actual cost of acquiring and 

                                                                212 
 
       providing the products." 
 
                 "Further, the Committee recommends that 
 
       CMS be directed to utilize validated cost data 
 
       available from product manufacturers and

       distributors." 
 
                 In the cover letter, I will also include 
 
       the charts illustrating the price decreases.  Is 
 
       there anything else that-- 
 
                 DR. HOOTS:  Yes, our previous

       recommendations. 
 
                 DR. BRECHER:  Oh, and references to our 
 
       previous recommendations. 
 
                 DR. HOOTS:  It is kind of a run-on 
 
       sentence.  You might want to--

                 DR. BRECHER:  It is a long sentence-- 
 
                 DR. HOOTS:  Cut it into two somewhere, but 
 
       you can wordsmith that. 
 
                 MS. LIPTON:  And make sure to reference 
 
       the proposed rule.

                 DR. BRECHER:  Okay.  We can do that and, 
 
       yes, we may split it into two sentences.  We'll 
 
       have to take a look at that. 

                                                                213 
 
                 MS. LIPTON:  I didn't mean in the 
 
       resolution, I meant in the cover letter. 
 
                 DR. BRECHER:  In the cover letter, yes, 
 
       refer to the HOPPS 2004, yes.

                 Jay? 
 
                 DR. EPSTEIN:  I just want to come back to 
 
       Karen's point earlier that the comment period is 
 
       open now and that we want an action in the comment 
 
       period.  Of course, this recommendation to the

       Secretary is timely because the Secretary can act 
 
       at any point, but we do want a communication to go 
 
       to CMS during the open comment period, and I think 
 
       it would be appropriate for us to clarify with the 
 
       Committee management whether the Committee can

       directly respond to CMS. 
 
                 CAPTAIN McMURTRY:  Dr. Bowman, when does 
 
       the comment period end? 
 
                 DR. BOWMAN:  October 6. 
 
                 CAPTAIN McMURTRY:  This will go into the

       Secretary.  It will go almost straight from the 
 
       Secretary's office to CMS for CMS review.  For the 
 
       response that the Secretary will provide to Dr. 

                                                                214 
 
       Brecher, CMS will have an opportunity to comment on 
 
       that review.  So they will see the comments right 
 
       away. 
 
                 DR. BOWMAN:  I wouldn't count on a

       communication like this going from the Secretary 
 
       down to the appropriate individuals for comments on 
 
       the OPPS proposed rule.  So it would probably be 
 
       advisable to send it directly to the address that's 
 
       listed in the Federal Register for the comments.

                 DR. BRECHER:  We can clarify with 
 
       management-- 
 
                 DR. BOWMAN:  Or at least send a copy, I'm 
 
       sorry. 
 
                 DR. BRECHER:  --whether we can cc this to

       the Exec Committee. 
 
                 DR. BOWMAN:  Instead of a formal comment, 
 
       just cc the cover-- 
 
                 DR. BRECHER:  Right.  We'll clarify 
 
       whether that would be acceptable to HHS.

                 Jay? 
 
                 DR. EPSTEIN:  Also, nothing prevents 
 
       Committee members acting as individuals from 

                                                                215 
 
       commenting to the docket, and that's another 
 
       expeditious mechanism. 
 
                 CAPTAIN McMURTRY:  The fact is, in the 
 
       ethics statement I read yesterday--you all remember

       that, right? 
 
                 [Laughter.] 
 
                 CAPTAIN McMURTRY:  You can communicate 
 
       directly. 
 
                 DR. BRECHER:  Yes, we can.

                 DR. BOWMAN:  You may. 
 
                 DR. BRECHER:  Yes, you may. 
 
                 MS. LIPTON:  As the totally conflicted 
 
       person on this Committee, I'm just going to-- 
 
                 DR. BRECHER:  I want to know who's not

       conflicted on this Committee. 
 
                 [Laughter.] 
 
                 DR. BIANCO:  It would be very useful to 
 
       all of us to have a copy of the final version and 
 
       cover letter.

                 DR. BRECHER:  When the letter is ready to 
 
       go, I will e-mail you the text that I will be 
 
       sending out. 

                                                                216 
 
                 DR. PENNER:  Can the Committee just 
 
       recommend that a copy of this be forwarded, all of 
 
       those who wish to could vote to agree, and 
 
       therefore that would be the same as adding a

       comment during the open comment period?  In other 
 
       words, we're verifying that all of us are-- 
 
                 DR. BRECHER:  Yes, I mean, I think it's-- 
 
                 DR. PENNER:  You intend to send this on to 
 
       them.

                 DR. BRECHER:  That would be one way of 
 
       getting it there, and I think it's legitimate that 
 
       I cc all of the Committee members the letter that 
 
       I'm sending to Secretary Thompson.  And so what you 
 
       do with that is at your discretion, but that would

       be one way of getting it to CMS. 
 
                 DR. LOPES:  But are you saying that you 
 
       might not necessarily send this to CMS directly, in 
 
       which case, certainly someone like me, who has no 
 
       ties to this community or axes to grind, might be

       deputized to send it as a member of the Committee? 
 
                 DR. BRECHER:  Not deputized. 
 
                 CAPTAIN McMURTRY:  The way I understand 

                                                                217 
 
       the ethics rules is that you could take a copy of 
 
       this letter and as a private citizen send it. 
 
                 DR. LOPES:  Okay. 
 
                 DR. BRECHER:  Mark?

                 MR. SKINNER:  I'm wondering, and I don't 
 
       know if Jay can answer this question, but given 
 
       that so many of the recommendations in this 
 
       Committee relate to blood safety and obviously the 
 
       work of the FDA, I mean, isn't there precedent for

       that kind of communication from the committee, that 
 
       either you've carried back formally or informally 
 
       or have we ever sent anything directly to you from 
 
       the Committee at the same time it went to the 
 
       Secretary?  Certainly, individuals have carried the

       same message individually to the FDA.  So, I mean, 
 
       that's a common practice. 
 
                 DR. EPSTEIN:  Well, agencies sometimes 
 
       share their draft rulemaking with each other and 
 
       solicit prepublication comments.  Additionally,

       agencies are free to comment back to other agencies 
 
       in the open comment period.  Let me just say that 
 
       FDA is aware of this proposed rule, and we have 

                                                                218 
 
       codified some of our thinking on its implications 
 
       to blood safety. 
 
                 Now, what you're saying is have we not 
 
       also at times received communications of that

       nature directly to the FDA, and the answer is, yes, 
 
       and certainly we're interested in those comments. 
 
       To the extent that you think it's FDA business, 
 
       it's certainly appropriate we comment to FDA. 
 
                 MR. SKINNER:  I wasn't referring to a

       specific example, just precedent in terms of how 
 
       the process might work on this issue as it related 
 
       to CMS. 
 
                 DR. EPSTEIN:  Well, I would say there is 
 
       no one-to-one link between a comment or a letter

       you sent to the FDA and what we might or might not 
 
       do, commenting on another agency's rulemaking, but 
 
       we're certainly interested in public comments that 
 
       would bear on blood safety. 
 
                 DR. BRECHER:  We are going to clarify with

       the administration whether they feel it is 
 
       appropriate for us to cc this letter to CMS, and if 
 
       we are told that we can do that, we will officially 

                                                                219 
 
       do that. 
 
                 DR. BRECHER:  Chris? 
 
                 MR. HEALEY:  The question I have for Jay 
 
       is would it be appropriate for us to submit

       comments to FDA, urging you to work with CMS to 
 
       harmonize definitions of things like orphan drugs 
 
       and blood and blood products? 
 
                 DR. EPSTEIN:  Sure.  I would hope you'd 
 
       send the same letter to CMS.

                 When this is cc'd to the members of this 
 
       Committee, is it appropriate or can we, in some 
 
       way, get the appropriate address to CMS? 
 
                 DR. BRECHER:  It's in your packet. 
 
                 Okay.  If there are no further questions

       or comments, we can adjourn early.  Okay.  We're 
 
       done. 
 
                 [Whereupon, at 2:14 p.m., the proceedings 
 
       were adjourned.]