Avastin, an anti-angiogenic drug developed by Genetech, is currently in clinical trials for the treatment of metastatic breast cancer. First approved by the FDA in 2004 for use in metastatic colorectal cancer (MCRC) and approval in 2006 for the treatment of metastatic non-small cell lung cancer, the breast cancer trials are showing positive results, at double the dosage of the original indications. FDA approval is expected about mid 2007.

Approving the off-label use of what would otherwise be denied as an "experimental" drug, health plans are already feeling the impact of this high cost pharmaceutical.  The current cost for this treatment for an average case, in conjunction with chemotherapy, could easily exceed $200,000. For an outlier case, the cost could surpass $600,000.

Once the new indication becomes FDA approved, with the national push for increased breast cancer awareness and the success noted in the trials, the expectation is that patients will demand this treatment option from their health care provider. 

A recent claim experience summary of a member on this treatment showed total billed services of $734,607.31 and health plan expenses of $458,522.41. Avastin contributed $256,007.70 to the total expenses.

Reinsurance Impact

Health plans with inpatient services coverage only, would have no reinsurance coverage for this claim. Likewise, for plans with per diem or annual limits on claims incurred in a non-inpatient setting, there would have been very little reinsurance protection.

A well designed reinsurance plan is one way to protect the health plan’s balance sheet by transferring the financial risk of unpredictable, serious cases that threaten medical loss ratio and capital reserves.

The increasing severity and frequency of catastrophic claims has prompted many health plans to reconsider their reinsurance strategies. Advances in medical devices, pharmacy and biotechnology are rapidly driving trend on the cost-per-day of the most severe hospital admissions. And the same advances in the pharmacy and overall specialty categories are resulting in claims of more then $1 million without inclusion of any hospital-related expenses.

For additional information, visit Clinicaltrials.gov; Genetech.com, Avastin.com