Fixing Part B
Medicare spends about $20 billion a year on drugs administered by doctors, but that could soar with approval of more high-priced
therapies for cancer and other critical diseases. Fears of unsustainable program costs thus is focusing policy makers on use
of particularly high-cost therapies to treat cancer, autoimmune disorders, and chronic kidney disease, such as the 55 high-volume
therapies that account for most Part B spending, as documented in another GAO report.
Offsetting Drug Costs
This finding was discussed at a June hearing by the House Energy & Commerce Health subcommittee, along with proposals to fix
some of the anomalies in the Part B drug reimbursement formula, now set at 106 percent of average sales price. Physicians
complained about losses due to the practice of including prompt pay discounts in rate calculations, plus the half-year lag
for CMS to update prices, which leaves providers holding the bag for months. The current sequestration process, with its 2
percent across-the-board cut in Medicare funding, has generated ever louder protests from oncologists, who claim they're
losing so much money that they will have to send more patients to hospital clinics for treatment. And that's much more costly
for Medicare and often more difficult for patients.
Separately, CMS has proposed to slash reimbursement for kidney dialysis centers by 9.4 percent next year. That means a 12
percent cut in rates for Epogen and other drugs administered as part of kidney dialysis treatment. These reductions come on
top of the 2 percent sequester reduction, plus the prospect of additional adjustments in CMS' base payment for these drugs
to reflect lower recommended dosages.
Most damaging for pharma, though, is CMS denial of coverage for a new therapy altogether. Eli Lilly was rocked last month
by a CMS draft proposal to authorize only coverage with evidence development (CED) for Lilly's Alzheimer screening product
Amyvid. That means providing the PET imaging drug only to Medicare beneficiaries who enroll in clinical trials designed to
produce more evidence that this type of diagnostic screening is worth the money. Lilly and Alzheimer patient groups are lobbying
hard for CMS to be more generous in its final reimbursement decision this fall, warning that restricting coverage could "stifle
future innovation aimed at improving diagnosis" of this serious condition.
Jill Wechsler is Pharm Exec's Washington correspondent. She can be reached at