'Conception Kit' for pregnancies could help health insurers control costs

It's a boy! Or, it's a girl! Either way, one company's baby-making device could soon be making profits bounce.

The Conception Kit, which went on sale for the first time early this year, offers couples who are struggling to have a child an updated and more convenient "at-home" version of a relatively old-school technique for helping to get pregnant. 

It may also offer its privately held manufacturer, Conceivex, an opportunity to quickly grow its business by exploiting the desire of health insurance plans to control medical costs, while keeping their insured enrollees happy at the same time.

Conceivex, whose device involves semen being deposited into a conception cap that is then placed against a woman's cervix, told CNBC that on Monday it will formally announce plans to seek up to $10 million in private equity investment in the Michigan-based company for domestic efforts.

The company, which currently sells only about 500 kits or less per month, estimates that the United States represents at most about one-third of the potential worldwide market for The Conception Kit, which is available in America only by prescription.

Latin America is another potentially big market for the kit, since in vitro fertilization is largely banned there. 

Conceivex's strategy focuses on the big price gap between The Conception Kit and popular existing fertility treatments, and on state insurance regulations — affecting about half of all Americans — that compel health plans to cover some form of infertility treatments for their enrollees. About 1 in 6 couples have difficulty conceiving. 

A three-month supply of The Conception Kit, with a noninsured retail price of $360, is much less expensive than some popular forms of fertility treatments.

"You don't have to mortgage your house," said Conceivex's founder and president, Michael La Vean, referring to one way couples have financed fertility treatments, along with borrowing against 401(k) accounts and putting the costs on credit cards.  

Other infertility treatments include intrauterine insemination, which can cost $1,110 per cycle, on top of medications that can cost hundreds of dollars or more per month. And in vitro fertilization, or IVF, is even pricier: $12,000 to $15,000 per cycle, with many couples requiring multiple cycles before they get pregnant.

Fifteen states, which together account about 50 percent of the U.S. population, require health plans to cover some form of infertility treatment for their enrollees if the patients fail after 12 months and receive an infertility diagnosis.

Conceivex has gone to health plans in those states, as well as elsewhere, and offered The Conception Kit as a less expensive means to comply with that insurance mandate, one that is approved for infertility treatment by the U.S. Food and Drug Administration.

"It's unusual for a small entrepreneurial company to make its deal with the payors directly," La Vean said. 

Agreements by pharmacy benefits managers Express Scripts, Caremark, ProCare and a growing number of other plans to cover the kit, with copays typically around $30 for customers, have set the stage for Conceivex to boost its sales. Health plans that cover about 60 percent of the insured people in the U.S. have placed The Conception Kit on their lists of covered treatments, La Vean said.

But the company's sales could explode if plans tell their enrollees that they must first try The Conception Kit before the plan covers more-expensive fertility drugs, intrauterine insemination or IVF.

"Mandating is going to be the next big milestone for us," La Vean said. "When it starts getting mandated, I think it's going to be rapidly picked up."

In discussions with employer-based health plans, La Vean said, companies have been "fairly supportive" of such an idea.

The big questions employers have, La Vean said, are "Can we mandate this, how do we discuss this with employees and how does this work in HIPAA?" a reference to the federal law that protects the privacy of personal health information.

And a selling point for doctors, La Vean noted, is that The Conception Kit has to be prescribed by a physician, who is reimbursed separately by insurers for providing "procreative counseling."  

Asked how big U.S. sales could get, La Vean noted that one entry-level fertility drug is prescribed 850,000 times annually: "We believe that there is absolutely no reason that we can't get into that ballpark, and that we can't exceed that."

La Vean argued that his company's product is much less uncomfortable of an experience than existing options for women who use it. "A woman can actually go out and play basketball with the cap in," he said.

It's taken years for Conceivex to get to the point where The Conception Kit could be delivering serious sales to the company. La Vean said Conceivex had to deal with "a lot of things that are ... above and beyond" developing a product and getting FDA approval.

One big hurdle was overcoming potential objections by religious groups to The Conception Kit, in some cases because of its use of a condom-like "semen collector" to obtain sperm for deposit into the conception cap. 

Health plans and pharmacy benefit managers were concerned about covering The Conception Kit if religious-based concerns were going to be raised, La Vean said.

"Nobody wants picketers outside their business," La Vean noted.