1. Summary of the Advisory Committee on Blood and Tissue Safety and Availability 47 th Meeting Jim Berger, ACBTSA Designated Federal Officer November 9 - 10, 2015

2. Meeting Overview November 9-10, 2015 National Veterans Health Administration Conference Center, Crystal City, VA Focused on short-term funding strategies for securing funding for blood safety innovations Background on issue Hospital and User Perspective Budget Impact Perspective Purchasers and Payers Perspective Updates for Committee Tissue Products for Emergency Preparedness Symposium Blood Product Advisory Committee Blood System Sustainability Subcommittee April 2015 Tissue Tracking and Traceability Recommendations

3. Committee Findings Maintaining an adequate supply of safe blood for transfusion is integral to public health and a national priority. Blood utilization data understate the need to have reserve “blood on the shelf” prior to commencing many medical and surgical procedures Dramatic reductions in blood use (~25% currently, with projections of up to 40% by 2020) ongoing since 2008 have created a current crisis of economic instability in blood banking, which has worsened since the committee examined this issue in 2013 Instability in the blood centers threatens to exacerbate existing spot blood shortages, reduce resilience in the face of public health emergencies through elimination of surge capacity, and reduce ability to provide the most appropriate routine and specialty products and services

4. Committee Findings (con’t) The following manifestations of a blood crisis have already been observed: Reduction in resources for implementation of available new safety measures Increased unit cost of blood due to ~25% reduction in revenues (ca $1.3B) with inability to implement corresponding reductions in fixed costs related to infrastructures necessitated by regulatory and safety requirements Reduced viability of blood collection centers with many operating in deficit Mergers and closures in the face of competition among blood providers Reduced resources for product safety related research and development, including epidemiologic surveillance and blood safety technologies Difficulty in providing products to meet specialized patient needs

5. Committee Findings (continued) The large gap in inpatient hospital reimbursement (accounting for 80% of blood utilization) relative to the production costs of blood components contributes significantly to the economic stress experienced by blood centers Anti-trust laws constrain the ability of the blood centers to engage in collective discussions of system-wide cost and supply management A study contracted with the RAND Corporation to investigate causes of instability and recommend remedies for stabilization of the US blood system will take 12 to 18 months These findings indicate a clear and present need to address the immediate crisis and to manage a longer term paradigm shift to stabilize blood centers in the U.S. and ensure it continues to meet public health needs

6. Committee Recommendations Request an interim report from the RAND Corporation at the next meeting of the ACBTSA Facilitate a process for blood centers to collaborate and dialogue on innovative strategies to address their new economic realities (e.g., an anti-trust safe harbor) Provide advocacy to CMS and Congress on measures that could be taken to address the gap in reimbursement of blood components as a special need in the public health system potentially including: a “carve-out” enabling direct “pass-through” CMS reimbursement of blood centers for the actual cost of the blood components including implementation of newer safety innovations based on the special role of transfusion as a public good in supporting modern health care immediate line item additive congressional funding for hospital purchase of blood components

7. Committee Recommendations (con’t) Assure that studies of the crisis in the blood system address the following issues: Whether open competition among blood centers is the optimal model for the U.S. blood supply in the present environment Adverse effects of an unconstrained competitive environment in blood collection with avoidance of potentially adverse outcomes for public health Need for preservation of surge capacity to address public health emergencies Need to maintain resources for research, product innovation and implementation of newer measures to assure and advance blood safety, efficacy and availability Structural causes of the gaps and misalignments between costs of blood production [including the cost of maintaining a reserve inventory in excess of predicted need and charges to hospitals

8. Committee Recommendations Continued Questions?