The number of Americans with asthma and allergies continues to grow. Statistics from the American Academy of Allergy, Asthma and Immunology show that
by Denise H. McClinton

The number of Americans with asthma and allergies continues to
grow. Statistics from the American Academy of Allergy, Asthma and
Immunology show that more than 20 million Americans suffer from
asthma and 20 percent of the population has allergies, making this
segment of health care increasingly costly.

Yet, the home medical equipment industry continues to explore
its role in this growing market. Provisions of the Medicare
Modernization Act (MMA) have created uncertainties for providers of
aerosol therapy — an important treatment component for asthma
and allergy — leaving many to decide whether it makes sense
to pursue these opportunities. On the other hand, at press time,
Medicare had proposed a service-cost component for inhalation drug
reimbursements, and is also planning to cover metered dose inhalers
(MDIs) in 2006 as part of its “Part D” prescription
drug benefit.

The Numbers Are There

Regardless, the sheer size of the market should pique interest,
along with a reimbursement mix that includes managed care, Medicaid
and Medicare — an attractive diversification for many
providers.

“We have not seen any indication that it is slowing
down,” says Rich Kocinski, senior vice president and general
manager, Sunrise Medical/DeVilbiss Respiratory Group.
“Obviously, reimbursement is an important issue, but [asthma
and allergy] is still a very attractive market.”

Some experts say providers must concentrate on asthma and
allergy primarily so they can offer a full range of respiratory
care products and services to satisfy physician needs and managed
care contract requirements. Kocinski says when companies are
looking to expand their respiratory businesses they typically are
referring to oxygen; however, aerosol delivery most often is part
of the whole respiratory package.

“Referral sources want to deal with full-line respiratory
providers, so it is very difficult to cherry-pick oxygen and stay
away from everything else,” he explains.

Offering a complete spectrum of respiratory care services that
includes asthma and allergy gives local and regional providers an
opportunity to compete with large national companies, according to
Rich Rosenthal, director of sales and marketing for Ferraris
Respiratory.

“When providers can prove they have the expertise to
supply technology to a patient, their alliances with doctors can
improve,” he explains, referring to today's technology
solutions that can help physicians monitor patients and the
progress of their treatment. Such technology is driving innovation
in the aerosol therapy products market.

Efficient, Effective Products

“There is a lot of innovation going on in terms of
technologies and devices that deliver drugs in a way that is faster
and more efficient and more effective for the patient,”
explains Kevin Jones, product manager, aerosol therapy products,
Invacare Corp.

Several key trends are affecting product design, development and
treatment, according to Rob Lee, director of marketing for Pari
Respiratory. These include lower age indications for asthma
medications, the health care industry's desire to improve patient
compliance and the move to treating patients in the home
environment instead of the significantly more expensive in-office,
outpatient or emergency room situation.

Lee says primary factors influencing patient compliance are the
simplicity and convenience of taking aerosol treatments, the length
of time required to take treatments and their benefits, such as
patients feeling better, which reinforces treatment adherence.

Jones adds that a current trend is to give patients what they
want in terms of effective treatment, portability and mobility, and
to give providers what they want, meaning devices that will enable
them to realize some profit.

“The big caveat that goes along with that is the whole
issue of the proposed cuts in reimbursements for the medication. In
the short term, this will drive a lot of companies to determine how
much they are willing to invest on the device side. We are forging
ahead from the equipment side with the medication reimbursement
notwithstanding.”

According to Lee, the medical device industry is trying to
address both reimbursement and consumer issues by providing fast
and efficient reusable nebulizers with small compressors that
operate on various power sources such as AC, DC and rechargeable
batteries. As well, some products now are more
“kid-friendly” and don't look like medical devices.

Technology Offers Solutions

Patient monitoring and compliance technologies are also coming
up on manufacturers' radar screens.

“Product design is ‘evolving’ more so than
‘changing,’” says John Snobarger, president and
CEO, Alliance Tech Medical. “Technologies are becoming
available that offer better ways to measure, and products are
moving from a mechanical to a digital electronic format.”

Emerging technologies are being used to provide clinicians with
data that can help them monitor and adjust treatment plans, says
Ferarris' Rosenthal. “Traditionally, asthma hasn't been a big
enough disease to capture the attention of most home care
providers, but that's changing,” he explains. “Now
there are technology solutions that can collect data on the patient
that you can only get from them when they're in their
home.”

Rosenthal is referring to products that can measure the two
primary indicators — peak flow and FEV (forced expiratory
volume) — and then store the data for the home care provider
or physician to create a printed report.

“In the past, that was only available in a very vague way
with a patient trying to do peak flow monitoring at home, bringing
in the diary chart to the doctor's office and trying to get support
this way,” he says.

“With the advent of microelectronics and mass production,
we can now produce devices that measure more important parameters
that the physicians recognize as far more reliable measures than
what was available before, essentially for the same price as what
they've been paying for these mechanical things in the
past.”

These breakthroughs are allowing HME providers to become
intermediaries between patients and physicians.

“Home care providers are now able to act as a middleman to
make sure these devices get into the hands of the patients properly
and that the patient at home is shown how to use them,” says
Rosenthal. “In many cases, they're putting programs together
where they're collecting the data from the patients and delivering
it to the doctors electronically.”

Good education, however, still provides the foundation for good
patient compliance.

“There is a tremendous amount of education for patients to
correctly take the [respiratory] medication,” explains Dan
Fry, president of Revlis Medical. “Anybody can hand out an
inhaler to a patient, but [patients] can end up in the hospital
simply because they don't know what they're doing.”

Using equipment such as an inhaler “is very
technique-driven,” explains RRT Shawn McCormick of asthma
education firm Zoey LP. She points out that patients often have to
“coordinate breathing [the medication] just right,”
especially if using an inhaler without a holding chamber, which
slows down medication delivery and “gets more medication into
the lungs.”

Without proper instruction, Fry adds, a patient could be simply
sucking medication into the mouth and not through to the lungs,
setting an asthmatic up for some unpleasant side effects.

MMA Changes Raise Reimbursement Concerns

Amid ongoing product innovation and a growing population of
patients who require aerosol therapy, the MMA has created unrest
for providers and manufacturers alike. Yet the resolve to stay on
course is strong.

The fear, Fry says, is the possibility of providers exiting the
COPD business, traditionally much more profitable than other
respiratory sectors, including asthma and allergy. If a company
drops its profitable COPD business, “it's going to make it
tough to [continue the business] that wasn't as profitable in the
first place.”

Unlike COPD, the asthma and allergy market, with its young
patient base, doesn't have Medicare as a primary payer. Dealing
with young patients means dealing with managed care payers that may
handle respiratory medications through prescription drug cards and
pharmacies. “A lot of DME [companies] don't benefit from the
meds on the pediatric side. [Patient] education is really the
lynchpin for home care companies. [It's] what they offer that is
really hard to get from a chain pharmacy.”

“If you know how to work within the system, this business
should grow,” says Snobarger of Alliance Tech. “The
market is still growing at 15 to 18 percent, and when a market is
growing, there is business to be had. You just have to be more
competitive and cost-effective in the way you operate.”

According to Kocinski, the issue of reimbursement “is
probably going to affect product development in the long term, but
I don't really know that we're going to see any … product
that is going to overcome the issue in the very near term.

“The difficult part for manufacturers is that [product
development] almost has to be tied to new drugs. Some of the more
recent drugs on the market, particularly the higher-end ones that
have come about in the past 10 years, are what we call
device-specific.”

Invacare's Jones raises another point that speaks to consumers'
role in shaping the asthma and allergy market. “Despite any
resistance from providers because of any proposed cuts, the
consumer doesn't care. We need to be aware that we're connecting
ultimately to that end user or patient, and we deliver those
products and make them available to providers.”

He cites portable nebulizers — which are for the most part
cash sales and the fastest-growing segment of the asthma market
— to demonstrate that consumers are driving parts of the
market.

While providers of aerosol therapy products must consider
physician needs and consumer desires to be successful in the asthma
and allergy arena, they must also reexamine business processes.

“Medicare reimbursement directly impacts the profitability
of supplying and servicing respiratory patients,” says Pari's
Lee. “It will affect the number of HME companies willing to
remain and participate in the marketplace.”

He feels HME providers will be forced to work smarter to reduce
costs. One example might be providing patients with reusable rather
than disposable nebulizers, which saves shipping, billing and
packaging expenses. Another is considering the total cost of
compressors and nebulizers instead of only the initial cost. More
after-hours and weekend service can be avoided by purchasing a
durable unit with a proven record instead of the most inexpensive
product.

Jones agrees that “smart products” are one of the
solutions to the current, confusing situation. “We feel that
the key to all of this is to make products that are profitable for
the provider and effective for the patient,” he says.
“The cuts coming into play only put the onus on
[manufacturers] to help providers figure out how they can still
meet the needs of their patients in a way that helps them offset
some of [their costs] — or loss of revenue — that will
result from the [reimbursement] cuts.”

The conclusion for asthma and allergy product providers is not a
new one: It comes down to service. HME providers can teach, support
and provide a link between physicians and patients, but this bridge
must be recognized by payer sources.

“You can always go into some store and buy [a product],
but … a lot of good it does to have it at a cheap price if
nobody is there to show you how to use it,” sums up
Snobarger.

Experts Interviewed:

Michael Brown, product manager for asthma products, and Rich
Rosenthal, director of sales and marketing, Ferraris Respiratory,
Louisville, Colo.; Dan Fry, president, Revlis Medical, Windermere,
Fla.; Kevin Jones, product manager, aerosol therapy products,
Invacare Corp., Elyria, Ohio; Rich Kocinski, senior vice president
and general manager, Sunrise Medical/DeVilbiss Respiratory Group,
Longmont, Colo.; Rob Lee, director of marketing, Pari Respiratory,
Monterrey, Calif.; Shawn McCormick, CEO and chairman, Zoey LP, San
Antonio, Texas; and John Snobarger, president and CEO, Alliance
Tech Medical, Granbury, Texas.

Disease Management Can Pay Off for Asthma Patients

For providers that want to obtain managed care contracts for
their respiratory patients, some products available today offer the
tools they need to monitor patients and show outcomes. That means
asthma disease management programs are not only for the national
companies; smaller, local providers now also have a shot.

“Asthma has been a difficult disease for providers to put
their arms around because of the lack of tools available to monitor
patients,” explains Michael Brown, product manager for asthma
products, Ferraris Respiratory. “Typically, the managed care
product will try to encompass the COPD patients and the emphysema
patients, but the asthma patient is becoming more sought after for
HME providers in a disease management role.”

To be successful in the arena, Brown advises building a program
that offers care for all respiratory patients. “Managed care
organizations want to call one number to take care of all of their
patients,” he says. “That way, they get the contracts
and they get more patients. It's a variety of patients that
encompass a respiratory contract.”

When looking at a disease management program for asthma
patients, the following outcomes are what managed care
organizations look for:

Reducing medication use and using it more effectively

  • Monitoring patients' peak flow and FEV (forced expiratory
    volume)

  • Keeping patients out of the emergency department
  • Reducing emergency department and physician visits

  • Keeping patients in school

  • Reducing costs, including direct and indirect costs

    In the News

    Despite medical advances and a better understanding of asthma, a
    team of researchers at Johns Hopkins Children's Center in Baltimore
    was troubled to find that 20 precent of children with asthma do not
    get enough exercise, even though some physical activities such as
    running and swimming have been shown to decrease the severity of
    asthma symptoms.

    According to the study, almost one-fifth of all parents agreed
    with a statement that exercise is dangerous for children with
    asthma.

    One-quarter of parents of asthmatic children also said they were
    afraid their child would get sick with exercise, and that their
    child gets upset with strenuous activity. Children whose parents
    held such beliefs were more likely to be inactive.

    The study's findings also indicate that children with moderate
    or severe asthma — including those who take
    asthma-controlling medications — were less likely to engage
    in high levels of physical activity.

    Urban children with asthma who attend schools that provide
    inhaled corticosteroids had improved symptoms and fewer days absent
    from school than children who did not receive them through the
    school.

    Although national guidelines recommend that children with mild
    to severe persistent asthma take daily maintenance medications,
    undertreatment with these medications and poor adherence is common,
    especially for young urban children.

    In an article published in The Archives of Pediatrics &
    Adolescent Medicine
    (May 2004), the authors maintain that
    school-based systems of preventive care could become standard for
    the management of childhood asthma in underserved communities.

    People with asthma were 12 times more likely to develop chronic
    obstructive pulmonary disease (COPD) than people who did not have
    asthma, according to a 20-year study from the University of Arizona
    in Tucson.

    Asthma and Allergy Facts and Figures

    20.3 million Americans report having asthma

  • 6.3 million children under 18 report having asthma

  • More than 70 percent of people with asthma also suffer from
    allergies

  • 10 million Americans suffer specifically from allergic
    asthma

  • There were 1.8 million asthma-related visits to emergency
    departments in 2000; more than 728,000 of these involved children
    under 18

  • There were 465,000 asthma-related hospitalizations in 2000;
    214,000 of these involved children under 18

  • There are approximately 5,000 deaths annually from asthma

  • Direct health care costs for asthma in the United States total
    more than $9.4 billion annually; indirect costs (lost productivity)
    add another $4.6 billion for a total of $14 billion. Inpatient
    hospital services represented the largest single direct medical
    expenditure at more than $4 billion

  • Estimates from a skin test survey suggest that allergies affect
    as many as 40 to 50 million people in the United States

  • Allergic diseases affect more than 20 precent of the U.S.
    population

  • Allergic diseases are the sixth leading cause of chronic disease
    in the United States

  • At least 35.9 million people in the United States have seasonal
    allergic rhinitis (hay fever)

  • Approximately 16.7 million office visits to health care
    providers each year are attributed to allergic rhinitis

    Source: American Academy of Allergy, Asthma and
    Immunology