Early Adoption of Cyclosporine and Recombinant Human Erythropoietin: Clinical, Economic, and Policy Issues With Emergence of High-Cost Drugs

Neil R. Powe, Paul W. Eggers, Calvin B. Johnson

Research output: Contribution to journalArticlepeer-review


The discovery of new drugs and their introduction into US markets will become an intense area of focus should health care reform result in Medicare insurance coverage for prescription drugs. Particular attention will be focused on high-cost drugs. Two high-cost drugs, cyclosporine and recombinant human erythropoietin (rHuEPO), introduced into the clinical management of patients with kidney disease during the past decade, provide some experience concerning the forces affecting the use of expensive drugs in a cost-conscious health care system. The decision to prescribe a drug will depend on provider's judgements of the drug's clinical benefits and costs compared with those of other possible therapies. It may also depend on payment policy. Both cyclosporine and rHuEPO were adopted rapidly and extensively by providers of end-stage renal disease care following US Food and Drug Administration approval, despite their high costs. Both drugs were remarkably effective, relatively safe, and able to be administered without great difficulty compared with the therapies they have replaced. There was no additional payment to hospitals for the initial use of cyclosporine, which was introduced in 1983 at the time when Medicare's prospective payment was established, since choice of immunosuppressive agent did not affect the fixed, per-admission payment determined by the diagnosis-related group for kidney transplantation. Medicare coverage for continuing outpatient use of cyclosporine was not initially provided, in contrast to rHuEPO, which was introduced in 1989 with Medicare outpatient coverage and payment of 80% of the allowed charge. Despite their high costs and different methods of insurance payment both drugs achieved a rather quick and high penetration rate into their respective populations. Observations on the attributes and dissemination of these drugs into the US end-stage renal disease population provides an understanding of the clinical, economic, and policy issues that can shape the adoption and utilization of high-cost drugs.

Original languageEnglish (US)
Pages (from-to)33-41
Number of pages9
JournalAmerican Journal of Kidney Diseases
Issue number1
StatePublished - 1994
Externally publishedYes


  • Medicare
  • Prescription drugs
  • cyclosporine
  • end-stage renal disease
  • insurance coverage
  • recombinant human erythropoietin

ASJC Scopus subject areas

  • Nephrology


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