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A retrospective cohort study.To investigate the unknown direct costs of failed instrumented lumbar fusion using iliac crest bone graft (ICBG) and subsequent reoperation utilizing recombinant human bone morphogenetic protein-2 (rhBMP-2) from a primary payer perspective.Recent evidence has demonstrated increased rates of instrumented lumbar fusion and utilization of rhBMP-2 to treat a range of conditions causing lower back pain. For health care providers with finite financial resources, there is an increasing demand to evaluate economic costs of available treatment modalities. The high cost of rhBMP-2 has often been cited as a leading reason for delaying its universal acceptance as a preferred substitute to ICBG. It has been hypothesized that rhBMP-2 may demonstrate cost-effectiveness if pseudarthrosis and reoperation rates are decreased, thus avoiding subsequent expenditure.This was a retrospective cohort study of patients who underwent instrumented lumbar fusions utilizing rhBMP-2. Hospital finance records were used to calculate direct total expenditure incurred by the primary payer for the procedure using rhBMP-2. For patients who received rhBMP-2 in a secondary lumbar fusion, additional total expenditure related to the patients’ failed primary instrumented fusion with ICBG was also sought.The mean total costs associated with failed instrumented lumbar fusion using ICBG and reoperation using rhBMP-2 totaled £47,734 per patient. The total direct costs of a policy of primary instrumented lumbar fusion with rhBMP-2 were less at £26,923 per patient; however, this was not significant.To date, this is the first study to report the costs of failed primary instrumented lumbar fusions using ICBG and subsequent secondary fusions using rhBMP-2 from a primary payer perspective. On the basis of this evidence, a policy of using rhBMP-2 in all patients undergoing a primary instrumented lumbar fusion cannot be recommended.