Policy interest in Medicare’s payment policies regarding recombinant erythropoietin has arisen chiefly because of the biologic’s expense. Because of concern about the implications of recombinant erythropoietin use for Medicare expenditures, the House Ways and Means Committee, Subcommittee on Health, requested OTA to examine alternative payment policies that Medicare might adopt to pay for the biologic. In responding to that request, this Special Report reviews clinical and economic issues regarding the use of recombinant erythropoietin and develops a series of options for Congressional consideration.