Health Care Fiasco

Medicare, Medicaid Still Paying for Blood Drugs Despite FDA Warnings

The FDA has warned that three blood drugs are dangerous, but Medicare and Medicaid still pay for them. By Eve Conant.

Sylvia Tsoutsanis, a septuagenarian from a large Greek family in Massachusetts, had been diagnosed with cancer in the plasma cells of her bone marrow but had long since been in remission.

Nonetheless, in 2003 her doctor put her on a steady dose of the increasingly popular anti-anemia drugs, Procrit and Aranesp, paid for by her Medicaid. In 2007, the FDA issued a black box caution for the drugs, warning of serious and life-threatening side effects that could hasten death among cancer and dialysis patients; but the warning did not come in time for Tsoutsanis. In 2008, she died with a brain full of tumors that her family now believes was related to the anemia drug regimen.

“They came out of nowhere and grew wildly,” says her nephew, Orestes Brown, who took her to every doctor’s appointment. But without proof, Brown—a lawyer, and an upset one at that—did not pursue a case.

For years, Medicare and Medicaid paid billions to buy cancer and kidney patients the anti-anemia drugs Procrit, Epogen, and Aranesp to help them avoid blood transfusions or boost energy during grueling chemotherapy.

Now, lawsuits and a new book Blood Feud: the Man Who Blew the Whistle on One of the Deadliest Prescription Drugs Ever, allege that doctors were persuaded to overprescribe the drugs and often got substantial incentive payments, putting the health of patients at risk as evidence mounted that the drugs help cancers grow. Critics have said for years that the drugs were never meant for quality-of-life purposes, and there was no evidence such off-label use really provided benefit, even as the drugs, also known as ESAs, became some of the top reimbursed drugs in Medicare.

By 2007, the FDA issued its first warning that the three drugs actually may make cancer worse. The new labeling, according to the FDA, also emphasized “that there are no data from controlled trials demonstrating that ESAs improve symptoms of anemia, quality of life, fatigue, or patient well-being for patients with cancer or for patients with HIV undergoing AZT therapy.” By this summer, the FDA determined that the drugs were so dangerous to the heart that there were no risk-free doses, and advised doctors to drastically scale back prescriptions to only patients suffering severe anemia.

The three drugs are manufactured by Amgen, but Procrit is sold and marketed by a subsidiary of Johnson & Johnson. J&J also manufactures a European version, Eprex.

Coverage was restricted for certain non-renal uses in 2007, and last week, Medicare confirmed it would remove certain requirements for kidney dialysis providers that will likely further reduce use of the drugs. Amgen says it was “disappointed” by aspects of the decision but encouraged that the government “will continue to develop and evaluate additional measures for future years.”

The government has not stopped paying for the drugs, adding to concerns over how officials manage Medicare and Medicaid, as both programs likely face budget cuts. “We share the FDA’s concern about assuring that ESAs are used in a safe and effective manner,” says Ellen Griffith with the Centers for Medicare & Medicaid Services, which run the government’s two biggest health entitlement programs.

Others argue that patience is running out. “Given the current debt crisis, overpayments for services and pharmaceuticals, including for anti-anemia drugs, by the Medicare and Medicaid programs are very serious,” says Rep. Cliff Stearns, R-Fla., chairman of the House Energy and Commerce Committee’s investigative subcommittee with responsibility for pharmaceuticals. “Although I held a hearing on waste and fraud in the Medicare and Medicaid programs, the administration officials were unable to even guess on the amount of fraud in either program.”

For families of people like Sylvia Tsoutsanis, the slow creep of news about the drugs’ dangers has been devastating. “I didn’t learn until after my aunt died that doctors had questioned whether the drugs might be a ‘Miracle Gro’ for cancer,” says her nephew, Brown. “People in dire circumstances just need to be able to make informed decisions of their risks.”

The history of the drugs and their rise “tell the story of the dysfunctional health care system we have,” says Kathleen Sharp, author of the Blood Feud book that explores how drug makers marketed the anemia medications for off-label use with rebates, and provided payments to doctors as incentive to prescribe the drugs.

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Amgen and Johnson & Johnson have made billions in sales of the drugs. When the FDA issued its warning this summer, both companies issued detailed statements, including comments from their respective medical experts, on how the new information would help inform physicians. But sales are down, and Amgen last month announced a tentative $780 million settlement with the federal government over its sales and marketing practices for the anemia drugs, including doctor payments. The company said at the time that “if the ongoing settlement discussions are successfully concluded, Amgen expects that the proposed settlement will resolve the federal investigations, the related state Medicaid claims and the claims” in a major court case.

Amgen and Johnson & Johnson challenge some of the allegations in Sharp’s book, suggesting it misrepresented and mischaracterized years of data about the drugs. “Our most immediate concern is that patients facing serious illnesses could be unnecessarily alarmed by Ms. Sharp’s allegations, distortions and inaccuracies,” Johnson & Johnson said. Amgen said it has “always been committed to the safe use and responsible marketing of our products” and employees are “held to the highest ethical standards for doing the right thing for patients.”

Sharp responds that, “This is a thoroughly researched book with volumes of documents cited from public sources.” She says both companies declined several offers to participate in the book. “It’s really important for readers to judge for themselves how Amgen and Johnson & Johnson conducted themselves during the sales and marketing of these very risky and expensive drugs,” she says.

Sharp has many allies, who fear the drug industry may have used its marketing prowess to put profit over safety. Patrick Burns of Taxpayers Against Fraud says the drugs “are the edge of a very big wedge of fraud” and that “what was going on was not an accident, it was planned.”

The Institute of Medicine has estimated that Americans waste some $800 billion in unnecessary health care costs every year. With fraudulent Medicare claims and other forms of fraud accounting for $75 billion every year, a growing number of advocates are pressing for a tighter approach to fraud as part of the administration’s efforts to slash $320 billion from Medicare and Medicaid over the next 10 years. The three anti-anemia drugs have cost the government a reported $60 billion since 1989.

“Before we start cutting programs let’s see how the companies game the system,” Sharp urges.

Dennis Cotter, a former FDA bioengineer and president of the health research Medical Technology and Practice Patterns Institute, says the drug makers’ claims were never fully tested. He has co-authored a report that includes what he describes as a “conservative” estimate that over the past two decades Medicare alone has paid $39 billion for the “ESA” anemia drugs, just for kidney patients alone. Medicare and Medicaid are overseen by the federal agency CMS.

“As early as 1998, CMS had full knowledge of significant ESA risks, but it continued through 2010 to make reimbursement policy decisions that created perverse financial incentives to overuse ESAs, thereby exposing patients to adverse effects of high doses,” according to the institute.

Dean McClellan knows all about those incentives. After all, he was one of the salesmen offering them. He only started to think something was fishy when he was asked to double his incentive payments to doctors who bought his product—Procrit—around the time the drug was suddenly being offered as a quality-of-life enhancer. That claim helped the drug’s sales skyrocket, he says.

A key figure in Sharp’s expose, McClellan was a legendary pitchman, selling $170 million worth of the drug over the 13 years he worked for Johnson & Johnson. “I didn’t have an oncologist who didn’t become a millionaire because of it,” he tells The Daily Beast. He recalls writing unreported $30,000 rebate checks to doctors to push the drugs for fatigue, “Even when the FDA said we shouldn’t be doing that. I can’t believe this fraud was pulled off for so long.”