JNJ campaigns for coverage of obesity surgery

by Kim Dixon and Debra Sherman, Reuters, 12 Oct 2006

CLEVELAND, Ohio (Reuters) - The new head of Johnson & Johnson's surgical-device unit is campaigning to convince employers to cover an increasingly popular but pricey surgery for obesity.

Nearly one-third of the U.S. adult population is obese and patients are lining up for the surgery, but U.S. employers are having trouble swallowing the minimum $25,000 price tag. The cost can double if complications emerge after surgery.

Several months after the U.S. Medicare program expanded reimbursement for weight-loss surgeries for the severely obese, employers have not followed suit, unconvinced the procedure's steep cost is worth it.

The two most common types of surgery to treat obesity -- called bariatric surgery -- are gastric bypass, which diverts food from the stomach, and banding, which uses an adjustable band to restrict the size of the stomach. Bariatric surgery may work by limiting food intake or hindering absorption, or both, but does not include liposuction.

Kevin Lobo, president of the Cincinnati, Ohio-based Ethicon Endo-Surgery unit that makes equipment used in the surgery, said a lack of knowledge and education about the procedure is his biggest obstacle in corporate America.

"We recognize that bariatric surgery is not some magic pill or quick fix," said Lobo, who addressed doctors at a three-day meeting on obesity at the Cleveland Clinic. "We have to show insurers we have the evidence and now we have to take our show on the road."

A major target for J&J is consumer giant Procter & Gamble, he said. "I don't want to single out Procter & Gamble, but they're right in our backyard," Lobo said in an interview.

Obesity is usually gauged by a body mass index, which uses weight and height to calculate body fat. Those with a BMI above 40, or greater than 35 accompanied by disease, qualify for bariatric surgery under generally accepted guidelines. Roughly 10 million people are in this category, according to experts.

MEDICARE, BUT NOT EMPLOYERS

In February, the U.S. Medicare program -- the insurer for 43 million elderly and disabled people -- rejected a proposal to limit weight-loss surgeries to the disabled, amid concerns that the procedures are too risky for many elderly people.

Medicare also expanded reimbursement to include use of the band, sold by drugmaker Allergan Inc.

Private employers and health plans often follow Medicare's lead in coverage decisions, but not this time. And although some insurers pay for the surgery, it is usually a rider, giving employers the option to opt out.

"It's a huge problem -- employers are not paying," said Philip Schauer, a bariatric surgeon at the Cleveland Clinic and president of the American Society of Bariatric Surgeons. "We had expected many other third-party payers to follow Medicare."

But doctors say a growing body of evidence supports their view that the surgery is a good investment to prevent a host of costly illnesses suffered by severely obese patients, including heart disease and diabetes.

BIG PRICE, WITH COMPLICATIONS

Employers and insurers see a big price tag, potentially multiplied by a lot of people -- and they are uneasy about complications adding to the expense.

The number of obesity surgeries performed each year has quadrupled since 2000, reaching about 171,000 in 2005 -- still just a fraction of the millions who qualify, according to the surgery society.

As medical costs rise more than twice as fast as overall inflation, they are becoming a bigger chunk of total employer costs, especially those with big work forces.

"The elephant in the room is the numbers of people that qualify for this surgery. It presents an enormous cost challenge because of the prevalence," said LuAnn Heinen, director of an obesity institute at the National Business Group on Health, a group of Fortune 500 employers studying health cost issues.

The surgery's complications also tack on significant costs, according to a recent government report.

The July report by the U.S. Agency for Healthcare Research and Quality found that the rate of complications increased significantly six months after the surgery, with 40 percent of patients experiencing problems like intestinal leaks, ulcers, and hernias.

Brent O'Connell, medical director for a Pennsylvania Blue Cross Blue Shield health plan, said: "It's a tough sell when you have industry seeing fairly large bills for complications."

Cleveland Clinic's Schauer said several large studies have found the surgery pays for itself in 3.5 to 5 years by saving costs for prescriptions, hospital visits and the like.

Doctors said the biggest area where the costs may be cut may also be the simplest: preventing sleep apnea, which is common among the obese and results in high worker absenteeism.