Friday, July 11, 2008
Medicare Bill’s Passage Ushers In Part D Reforms
•Medicare Bill’s Passage Ushers In Part D Reforms
•CMS Gets Creative On ESRD Drug Add-On Update
•FDA Plans Trilateral Drug Inspections Nearly A Decade After MRA Fails
•Part D Data Sharing Gets Boost From CMS, Democrats
•Waxman Hopes To Dig Up Data On FDA Preemption Switch
•Facing Criticism, PhRMA Unveils New Drug Marketing Code
MEDICARE BILL’S PASSAGE USHERS IN PART D REFORMS
Beneficiary advocates’ long-sought Part D reforms are close to reality, thanks to the Senate’s veto-proof vote in favor of the House-passed Medicare bill this week. Brushing aside White House opposition, lawmakers passed a bill that raises the threshold for the low-income subsidy and delays implementation of a CMS rule limiting federal upper payments for reimbursement of generic drugs at 250 percent of the average manufacturers price.
The bill, which the president has vowed to veto over its cuts to Medicare Advantage plans, also removes bureaucratic obstacles to enrollment in the Part D low-income subsidy program, boosts Part B assistance, waives co-pays for the Welcome to Medicare exam and equalize co-payments for mental health parity. It also includes several other little-noticed Part D reforms.
Pharmacists scored a major victory with the bill’s inclusion of provisions requiring prompt payment to pharmacies – a provision hotly opposed by pharmaceutical benefit managers. The bill also bundles payments for anti-anemia drugs, testing supplies and “other elements” into the end-stage renal disease composite rate.
CMS GETS CREATIVE ON ESRD DRUG ADD-ON UPDATE
Speaking of end-stage renal disease drugs, CMS also made news with its new physician fee rule. CMS lawyers have been known to switch positions on what the agency can legally do – and now we have another example. For ESRD drug add-on payments, agency lawyers have creatively interpreted the law to get around having to increase reimbursement levels, reports Inside CMS’ Seth Freedland.
Based on what the agency itself admits is “an alternative reading” of the law, the proposed physician fee rule announces there will be no increase to drug add-on payments for certain ESRD drugs. It’ll be interesting to see how drug companies comment on the rule, as Medicare law requires an annual increase to drug add-on payments, based on the estimated growth in expenditures for drugs and biologicals that are separately billed.
“We believe that the Congress may not have intended to provide an increase in the drug add-on adjustment in a year where the projected growth in expenditures for separately billable ESRD drugs is declining,” the proposed rule reads. “There is potentially a gap in the statute, which specifies an increase to the drug add-on adjustment based upon the estimated growth in expenditures for drugs and biologicals that are separately billed ESRD drugs. However, an increase cannot be implemented when estimated growth is negative.”
This is bad news for the drugs’ makers. Since 1983, Medicare payments for ESRD facilities have been based on a composite rate payment system, which covers routine drugs, equipment and services needed for dialysis treatment and separately bills other injectable drugs and lab tests.
But CMS also admits it could have read the law differently. Had it selected the option of continuing to use the PPI for prescription drugs as a proxy for ESRD drug prices, CMS says, the resulting update factor would have been a 2.6 percent increase to the $20.33 amount. This would have resulted in an increase to the composite rate of 57 cents, or a 0.4 percent increase in the 2008 drug add-on percentage of 15.5 percent.
CMS is seeking public comment on the proposal of a zero update as well as the other approach, which drug makers are likely to cling to.
FDA PLANS TRILATERAL DRUG INSPECTIONS NEARLY A DECADE AFTER MRA FAILS
Nearly a decade ago FDA and European regulators “mutually agreed” to recognize each others’ drug inspections, but the plan failed due largely to FDA’s snail pace in finding EU countries’ drug inspection programs equivalent to its own. The drug piece of the broader U.S./EU Mutual Recognition Agreement was the subject of much high-level diplomatic bickering at the time, and FDA vowed it would never again be pushed by U.S. trade officials to enter into similar pacts.
On July 9 FDA, the EU and Australia announced plans for a joint inspection program, initially focusing on facilities that manufacture active pharmaceutical ingredients, reports FDA Week’s Sam Baker. The next step: Once the three governments can agree to trust one another’s findings, HHS chief Micheal Leavitt said, there will be no need for more than one of them to inspect a single facility.
If history is any indication, FDA may have a hard time getting to that point, even though Leavitt said July 9: “This just makes good sense.” When U.S. trade officials made a similar proclamation years ago with regards to the U.S./EU MRA, FDA inspectors argued that U.S. law prevents them from totally relying on another countries’ inspection findings.
Under the latest agreement, the three countries will “jointly plan, jointly allocate and jointly conduct” international inspections, Leavitt said, beginning with API makers. FDA came under fire earlier this year after the active ingredient in imported heparin was linked to several deaths. Due to a clerical error, FDA never inspected the API manufacturer.
FDA, however, is resisting pressure from the drug industry to harmonize risk management plans with Europe. Sandra Kweder, deputy director of FDA’s Office of New Drugs, said at a Drug Information Association conference in Boston June 24 that differences between the U.S. and European health care systems pose challenges to harmonization, reports FDA Week’s Jennifer C. Smith. Again, the decade-old MRA comes to mind.
PART D DATA SHARING GETS BOOST FROM CMS, DEMOCRATS
A grandiose plan by CMS to start sharing its Part D claims data with other agencies and certain congressional support agencies got a boost last week—both from CMS and House Democrats. The Medicare agency unveiled a guide for how outside parties could request Part D data, and also vowed to safeguard sensitive information through encryption and other measures.
CMS says congressional support agencies will have limited access to unencrypted Part D plan, pharmacy, prescriber and beneficiary identifier data, reports Inside CMS’ Theresa T. Morgan. The guide follows up on a final Part D claims data sharing rule issued by CMS May 22.
But if a new bill pushed by key House Democrats moves forward, GAO might have an even easier time getting its hands on Medicare data. GAO has been in a tug-of-war with CMS over accessing Part D rebate and utilization data, but CMS’ rule falls short of covering rebate information. Offering GAO a helping hand, a number of House committee leaders have co-sponsored legislation that would grant GAO access to all Part C and D information.
And GAO wouldn’t have to arm-twist CMS into handing the data over. The bill clarifies that GAO could sue CMS and other federal agencies that inappropriately withhold data.
The bill has the drug industry nervous. “We are studying the proposal closely because any effort that distorts the prescription drug marketplace—even unintentionally—could raise costs for patients,” PhRMA says in response to the bill. “We support providing [GAO] with access to Medicare Part D data to conduct analyses of the program and to report to Congress on its results.”
WAXMAN HOPES TO DIG UP DATA ON FDA PREEMPTION SWITCH
A powerful House investigator hopes to get FDA to come clean on why it did an about-turn and suddenly supported federal preemption of state product liability suits when the Bush administration took office. Government Reform and Oversight Committee Chair Henry Waxman (D-CA), who opposes federal preemption, is on a document-hunting mission, likely looking for evidence that the shift was politically motivated. The House Democrat has a history of ferreting out politically charged memos driving Bush administration policy decisions.
Waxman has asked FDA to hand over every preemption-related document it has generated since President Bush took office, reports Baker. The far-reaching request could shed new light on the agency’s change of heart on preemption, a doctrine it had opposed under previous administrations.
Waxman’s letter casts a wide net over FDA’s preemption decisions, including a 2006 FDA labeling rule that raised the controversy to new heights. FDA stated in the preamble to that rule that FDA approval and labeling decisions preempt state tort suits. Many courts have deferred to the preemption language as a statement of FDA’s official position on preemption. Waxman’s letter wants to see all drafts of that rule written after Jan. 20, 2001—the day Bush took office.
The powerful Democrat also wants to see all preemption-related communication among FDA officials, between FDA and other parts of the executive branch, and between FDA and “private persons” (including drug and medical device company officials).
Before Bush took office, FDA lawyers and policy officials said tort suits complemented FDA’s basic mission. They now say those suits are a hindrance to effective federal regulation.
FACING CRITICISM, PHRMA UNVEILS NEW DRUG MARKETING CODE
The pharmaceutical industry surprised Washington insiders by the stringency of its new drug marketing code. In a bid to clean up the image of drug marketing, the industry voluntarily agreed to ban even small gifts, such as pens, to doctors’ offices and to let physicians keep their prescribing data private. The new pharma code came as drug companies and physicians were both facing bipartisan heat for what lawmakers viewed as their cozy relationship.
The Pharmaceutical Research and Manufacturers of America announced the changes Thursday (July 10), a day after the Senate passed Medicare legislation that failed to include drug marketing restrictions pushed by Sens. Charles Grassley (IA) and Herbert Kohl (D-WI). Kohl said he was “encouraged by industry’s attempt to clean up its act” and noted that PhRMA’s code picked up many of the provisions in his bill.
Did PhRMA avert legislation by convincing companies to adopt strict measures? PhRMA head Billy Tauzin said the revised marketing code wasn’t necessarily a bow to political pressure, but rather a change that reflects industry’s willingness to hear out its critics. “Nothing is done in a vacuum, but there’s nobody telling us we have to do this right now,” Tauzin said. But he admitted that he and other industry leaders briefed many lawmakers, including Grassley and other critics, on the new code before making it public.
In addition to the ban on gifts and the opt-out option for prescribing data, the revised PhRMA code tightens restrictions on meals, seminars and speaking engagements, reports Baker. The revised code also bans the pens, clipboards and other trinkets that companies give to doctors. It states that salespeople can’t take doctors out to eat, though modest meals in doctors’ offices are still OK. Companies will also begin to fund continuing medical education programs differently, using unrestricted grants so that pharmaceutical money won’t directly pay for meals, receptions or happy hours.
PhRMA’s members unanimously backed the new code, but drug companies were not so willing to go along with new advertising limits announced by Pfizer last week. Pfizer became the first commercial supporter of CME to stop directly funding the programs, responding to criticism that drug makers are influencing doctors’ prescribing practices.
And speaking of gifts, it seems the HHS Inspector General is not so concerned about health care groups offering presents to dissatisfied Medicare beneficiaries. The IG ruled July 7 that providing $10 gift cards to Medicare patients whose service expectations were not met would not violate anti-kickback statutes.--Donna Haseley