Part D Under Attack - Pharmaceutical Executive


Part D Under Attack

Pharmaceutical Executive

Broader Protection

Medicare Goody Bag
Advocates of centralized price negotiations, interestingly enough, also support expansion of certain "protected classes" of drugs that have to be included on all Part D formularies. Medicare requires PDPs to reimburse for "all or substantially all" drugs in six protected classes (antipsychotics, antidepressants, antiretrovirals, immunosuppressants, anticonvulsants, and antineoplastics). And if the Medicare legislation approved by Congress in July is a sign of things to come [see "Medicare Goody Bag"], it will be very difficult for policy makers to deny seniors access to any drug that documents efficacy for at least some patients.

The Medicare legislation codified the status of current protected classes, and established a process for extending this status to additional medications where formulary exclusion could have "major or life-threatening clinical consequences." The Bush administration protested that such a move would "effectively end meaningful price negotiations" between drug plans and manufacturers, and ultimately increase program costs and beneficiary premiums. Here, PBMs and insurers opposed the change, while Democrats and patient advocacy groups praised it as a way to ensure coverage of important medicines for seniors. Pharma companies say they sat this one out, but stand to gain from broader coverage requirements. That could be a short-sighted position if curbs on price negotiating do raise costs and erode private plan participation in Part D—just what program critics would like to see.

Comparing Effectiveness

Any health reform legislation in Congress next year is likely to establish a program to provide comparative information on which drugs and medical procedures are most effective. Senators introduced a bill in July to create an independent entity to conduct research, with an eye to balancing public oversight with the need for independence and minimal political influence on the research agenda.

The proposed Health Care Comparative Effectiveness Research Institute would be a private, nonprofit, non-governmental entity. It would contract with government agencies, such as the Agency for Healthcare Research and Quality and the National Institutes of Health, as well as private research organizations, to conduct literature reviews, observational studies, and possibly controlled clinical trials to obtain evidence on the clinical effectiveness of drugs and treatments.

An "all payer" funding system would tap the Medicare trust funds along with private insurers to support a $300 million annual budget by 2013. Oversight would rest in a large Board of Governors that includes government officials and representatives of private payers, pharmaceutical companies, patients, physicians, and public health agencies. An expert methodology committee would oversee the development of standards and methods for conducting scientifically sound comparative research.

To reduce opposition, the legislation specifies that assessments will not consider costs. But insurers and payers maintain that to be useful to the healthcare system, cost-effectiveness (CE) research should weigh prices and expenditures, and the bill leaves the door open for Congress to authorize CE analysis in the future.

The fear for medical product manufacturers is that such research will steer reimbursement to the least expensive products. Patients are different, emphasized Greenwood of BIO, insisting that it's unfair to those who respond better to drug B than to drug A if a health plan only covers drug A.

Advocates of CE analysis see a model in the UK's National Institute for Clinical Excellence (NICE), which assesses medical technology for the country's National Health Service. However, it's not clear if NICE decisions would enjoy the same kind of acceptance in the US as in the UK. Nor is it all that clear that NICE is the answer in the UK, as its decisions have been the subject of much public scrutiny (see "Open for Debate," page 32). NICE recently made headlines by denying coverage of several therapies for advanced kidney cancer, drawing loud protests from patients, physicians, and researchers. Although NICE agreed that the drugs may extend life by several months, it concluded that the money involved ($142,000 to $340,000 per quality adjusted life year per patient) could be better spent elsewhere.

Jill Wechsler is Pharmaceutical Executive's Washington correspondent. She can be reached at


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