Tuesday, June 03, 2008
Down To The Wire On Part D Reforms
• Down To The Wire On Part D Reforms
• Prompt-Pay, AMP Delay Expected In Baucus Bill
• Dialysis Payment Update Also Eyed By Baucus
• Vioxx Ruling Is Mixed Bag For FDA Preemption
• FDA Drug Registration List Out Of Sync With CMS Data
• Universities, Investors Push Protection For Brand Biologics
DOWN TO THE WIRE ON PART D REFORMS
Senate Finance Democrats are days away from introducing Medicare reform legislation and the big, unanswered question is how aggressively lawmakers will reform Part D. Republicans want a skinny physician payment fix package, but Finance Chair Max Baucus (D-MT) says he wants to give beneficiary advocates long-sought Drug Benefit reforms. How many, is the question.
Beneficiary improvements, a Senate aide confirmed, is the single major difference between the package Baucus is drafting and the bill being discussed by ranking GOP member Sen. Charles Grassley (R-IA). Republican senators, led by Minority Whip Jon Kyl (R-AZ), invited some physician specialty representatives to a briefing last Friday in which they said—in no uncertain terms—that they didn’t want the physician lobby to endorse Baucus’ bill, reports Inside CMS’ Brett Coughlin.
The difference between the cost of the two packages is estimated to be about $2 billion to $3 billion, much of this over the size of the beneficiary improvements.
Baucus staffers told physician groups the bill would include a provision to align the Medicare Savings Program (MSP) and low-income subsidy (LIS) program benefits, lower co-pays for mental health parity and extend the Welcome to Medicare preventative exam from the first six months of eligibility to a full year, reports Coughlin.
On the generous end of the scale, advocates have proposed policy that would lift the eligibility and asset requirements for the Part D low income subsidy and then align the Medicare Savings Program income and asset eligibility limits to the higher LIS criteria. This would cost about $4 billion, according to the Senate staffer. On the low end of the scale is a much more limited proposal to modify just the Part D LIS program. Advocates note that MSP limits have not been modified since 1989.
“One thing we hear is we have to consider beneficiaries. These beneficiaries have had frozen asset levels for years. Just like physicians they are in pain too,” Coughlin quotes a Senate aide as saying.
According to a document worked up by a law firm shortly after the meeting adjourned Monday afternoon, the package also includes creation of a bundled payment system for drugs and supplies used to treat End Stage Renal Disease patients (see below). The bill is also expected to include restoration of coverage for cardiac and pulmonary rehab programs, and an obesity treatment demo if stakeholders get their way.
Baucus is also interested in prompt pay provisions for pharmacists. A Finance spokeswoman would not confirm if this provision is in the package, but pharmacy interests are confident it is (see below).
PROMPT-PAY, AMP DELAY LIKELY IN BAUCUS BILL
Baucus hasn’t confirmed it yet, but pharmacy sources are confident the Finance leader will brush aside strong opposition from pharmacy benefit managers and tuck into his final Medicare bill a requirement that Part D plans reimburse pharmacies for electronically submitted claims within 14 days of the filing date. They also expect Baucus to delay CMS’ controversial rule that limits the federal upper payment for generic drugs under Medicaid to 250 percent of the average manufacturer price (AMP), reports Inside CMS’ Amy Lotven.
Likely a safe prediction: Baucus is a sponsor of both prompt pay and AMP reform legislation. Recently, the powerful lawmaker told reporters he wants to include his “prompt pay” legislation in the soon-to-be-released Medicare package. Baucus’ Pharmacy Access Improvement Act (S. 1954), introduced last August, has 34 co-sponsors. Besides requiring electronic submissions to be repaid within 14 days, the bill also requires other claims to be reimbursed within 30 days.
While “prompt pay” may be a done deal, Baucus’ AMP fix bill is considered a long-shot. Washington insiders instead expect an interim move to delay CMS’ AMP rule will make it into the bill.
Baucus introduced legislation last year that would bump the federal upper payment limit to no less than 300 percent of AMP, but Finance ranking Republican Charles Grassley (IA) and health subcommittee ranking Republican Orrin Hatch (UT) are not cosponsors. However, the fact that bill has 48 bipartisan cosponsors, including several Finance members, means there would be strong support for, at the very least, delaying the rule.
“They can’t do an AMP fix in this Congress, but we want to see them formalize a delay,” a source with the National Community Pharmacist Association (NCPA) told Lotven. Pharmacists complain that the rule, which has been delayed for now due to a court injunction, would force pharmacists to be reimbursed at levels at least 36 percent below costs, as suggested by a Government Accountability Office report.
House members, including several freshman Democrats, have also joined NCPA’s effort to get pharmacy-friendly provisions into the Medicare bill, recently scoring a meeting with House Majority leader Steny Hoyer (MD).
At the same time, PBMs, represented by the Pharmaceutical Care Management Association (PCMA), are trying to counteract the pharmacists’ lobby. They plan to spend the next few weeks lobbying congressional leadership to keep “prompt pay” out of the Medicare package. “We oppose legislation making plans pay drugstores twice as fast as other Medicare providers,” a PCMA source told Lotven Monday (June 2). The source charged that rapid payments would make fighting fraud and abuse more difficult, and would increases costs to the seniors.
DIALYSIS PAYMENT UPDATE ALSO EYED BY BAUCUS
Once again, Baucus’ hotly awaited Medicare bill will not only affect doctors. Makers of end-stage renal disease drugs will see major policy changes, sources familiar with the draft bill tell Inside CMS’ Theresa T. Morgan. They say the bill will create a permanent market basket update starting in 2012 for ESRD therapy and bundle anti-anemia drugs like Epogen into the composite rate. The ESRD lobby has long pushed for the annual update as a trade off for bundling.
A Senate meeting with kidney patient and ESRD stakeholders is scheduled for later this week, a source who attended the Finance briefing told Inside CMS.
When it comes to bundling Part D drugs into the composite rate, Baucus will include oral equivalents but not phosphate binders, a source says. But a variety of drugs could be included in the bundle in the future.
The bill is expected to include a 1 percent update in 2009 and another 1 percent in 2010, the sources say. In 2011, CMS would begin a four-year phase-in of bundled payments at 25 percent a year. The composite rate would be sliced by 2 percent, but that is viewed as something of a victory for industry as the White House’s fiscal 2009 budget and the CHAMP bill passed by the House last year called for a 4 percent cut.
Also, in 2011 CMS would be required to launch a quality program to combat the risk of under-service and decreased quality that could occur as a result of bundled payments, a source told Inside CMS. The quality program could include incentive payments to achieve quality measures – such incentive payments were discussed last year as part of the CHAMP Act.
And, speaking of CHAMP, the House has been quiet recently on its Medicare strategy. While House Democrats said earlier their starting point was CHAMP, the next few weeks will reveal their bottom line.
VIOXX RULING IS MIXED BAG FOR FDA PREEMPTION
FDA’s battle to assert preemption over state tort suits was dealt both a loss and a victory last week by a New Jersey appeals court. In a lawsuit involving Vioxx, the court shot down FDA’s controversial attempt to use a preamble to a 2006 drug labeling rule to lay down preemption policy. Drug lawyers have been divided on the legality of FDA’s move, as have the courts.
Last week the New Jersey court made its stance clear. Vioxx maker Merck could not rely on the preamble language to assert FDA preemption of state tort suits. While federal agencies are generally entitled to some degree of deference in the courts, the New Jersey court offered no such leeway, reports FDA Week’s Sam Baker.
“(The) Preamble does not constitute a regulation, duly adopted after notice and comment, but is merely an expression of opinion, reflective of current Administration views, on the part of the FDA,” the court’s opinion states.
But the court agreed with Merck on a separate preemption claim. Merck’s win came in an area of preemption law that the U.S. Supreme Court recently considered—state-court suits involving fraud against FDA. The plaintiffs in the New Jersey case charged, in part, that their troubles would have been avoided if Merck had submitted better information to FDA. The New Jersey court applied a Supreme Court ruling that blocked state courts from hearing “fraud-on-FDA” cases.
Earlier this year, the Supreme Court heard a narrow challenge to part of that prohibition. The justices ended up with a 4-4 split, which does not set precedent for lower courts. The high court is now hearing a drug preemption case.
Will other courts side with the New Jersey ruling on FDA’s preamble? Time will tell.
FDA DRUG REGISTRATION LIST OUT OF SYNC WITH CMS DATA
Just as FDA and CMS made a big hoopla last month about plans to share Medicare drug claims and other post-market data, Senate drug safety maverick Sen. Charles Grassley (R-IA) charged inaccurate data collection has thwarted efforts by the agencies to cross check drug data.
FDA’s Drug Registration and Listing System is so incomplete and inaccurate that FDA does not routinely compare it to CMS reimbursement data to help CMS determine which drugs to drop from its Medicare Part D Formulary Reference file, FDA admitted in a May 14 response to Grassley. Instead, FDA informs CMS of approval status in part by reviewing quarterly reports on CMS reimbursement, reports FDA Week’s John Wilkerson.
Grassley (R-IA) is considering drafting legislation that would require FDA and CMS maintain a master list, an aide told Inside CMS. The Senate Finance ranking GOP member has been investigating whether CMS is reimbursing for ineligible drugs, and if there is a way to get that money back. The health research firm Avalere Health recently issued a report showing that CMS dropped more than 1,600 drugs from its Medicare Part D Formulary Reference file from 2007 to 2008.
Bit CMS has not been open about how it determines which unapproved drugs it will drop from the formulary—and FDA does not keep a list of marketed unapproved drugs—which means patients lose coverage for drugs without warning, and pharmacists are left with little explanation for their angry, confused customers.
Complicating matters is the fact that FDA and CMS laws are out of sync. FDA tries to keep unapproved drugs off the market, but CMS may provide reimbursement for certain off-label treatments. Another twist is that CMS’ off-label policies under Part B and Part D are different, as Lotven recently reported.
The Senate Cancer Coalition wants Baucus to expand Part D off-label coverage, as do beneficiary advocates, while Grassley is concerned about the safety of cancer drugs approved through the fast-track process.
UNIVERSITIES, INVESTORS PUSH MARKET PROTECTION FOR BRAND BIOLOGICS
The generic biologics debate for years has pit brand drug makers against generic makers. Now new stakeholders are weighing in thanks to a recent survey by House lawmakers.
Universities and venture capitalists have responded that brand-name biological drug makers need strong legal shields against competition from generics—which also would benefit universities and venture capitalists. The two groups are urging lawmakers to create a biogenerics approval path with a long period of exclusivity and strong patent protections, reports Baker.
The Association of American Universities and the National Venture Capital Association are among more than 30 stakeholders who received the survey from House Energy & Commerce lawmakers. Several of the responses have been obtained by FDA Week and are posted at InsideHealthPolicy.com. Lawmakers hope the survey will help health subcommittee leaders conduct a thorough analysis of the scientific and regulatory issues at stake.
AAU and NVCA largely stayed away from scientific questions, focusing instead on how best to structure an approval pathway so innovator companies have an incentive to develop new treatments. Academic researchers are often part of that process. The two organizations urged lawmakers to give band-name companies significant data exclusivity, not just market exclusivity. The distinction is important because generic biologics will likely not be deemed identical to the products they copy, but rather “similar.”
NVCA said innovators should receive at least 14 years of data exclusivity. AAU said that period sounds good, but also said the 12 years of exclusivity proposed in a Senate bill would be OK. The group commended Reps. Anna Eshoo (D-CA) and Joe Barton (R-TX) for including a long period of exclusivity in their biosimilars bill.
The university association also urged Congress to avoid replicating the flood of patent litigation that has become central to the pharmaceutical and generic-drug industries.
Stay tuned for stories on the positions of other stakeholders who up to now have been on the fringes of the debate.--Donna Haseley