Washington Editor

WASHINGTON - The government is considering revising its Medicare reimbursement system for certain drugs and biologics that cannot be self-administered or must be administered through durable medical equipment.

Currently, such products, including many intravenous and injectable cancer drugs, are reimbursed at 95 percent of the average wholesale price (AWP), a figure set by manufacturers. But Thomas Scully, administrator of the Centers for Medicare & Medicaid Services, has made no secret of the fact that he believes this system is flawed.

In a Senate hearing in January, Scully said AWPs often are exorbitant and based on an amount a company sees fit to charge. Regardless of the price, he said, the government pays the bill. (See BioWorld Today, Jan. 31, 2003.)

CMS's proposed rule for reimbursement includes a prepared statement released by Scully in which he says the new payment structure is designed to "make certain that Medicare pays appropriately for the drugs it covers and the costs that doctors incur when administering [covered] drugs."

He's making reference to the fact that doctors, as well as the Alexandria, Va.-based American Society of Clinical Oncology (ASCO), readily admit that overpayments supplement other expenses (i.e., nursing staff, family counseling) not covered by Medicare.

Indeed, Scully's statement said, "We ought to pay them the right amount for drugs and services, and this proposed rule will start the process to get us there." (CMS also is proposing a rule to increase the fee schedule of administering cancer drugs.)

The proposed rule for AWP reimbursement offers four options:

Option 1. Medicare would pay the same amounts for covered drugs that private insurers pay.

Option 2. Medicare would apply a discount of 10 percent to 20 percent of AWPs for 2004, and later establish a more reasonable rate. The reimbursement for new drugs and drugs coming off patent would be determined for the first year based on the government's review of information provided by the manufacturer about the expected widely available market price for that year.

Option 3. Medicare would define AWP to be the widely available market price, but would not set its payment limit below that market price.

Option 4. Medicare would establish a competitive bidding process.

The deadline for comments on the proposed rule is Oct. 14. Faxed and e-mailed comments will not be accepted. Written comments should be sent to Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention:CMS-1229-P, P.O. Box 8013, Baltimore, Md. 21244-8013.

The entire proposal can be viewed by visiting the Federal Register or CMS's website at www.cms.gov.

Congress Taking Look At Cancer Reimbursement

ASCO is particularly concerned about pending Medicare legislation that cuts cancer drug reimbursement.

Congress returns today from the annual August recess, and conference committee members representing both the House and Senate are expected to resume negotiations on prescription drug Medicare legislation.

Both the House and Senate versions of Medicare reform contain provisions that would reduce reimbursement for cancer drugs to physicians by $500 million in the first year and $16 billion over a decade.

ASCO representatives told BioWorld Today such reductions are of concern, particularly given that reimbursement for medical services associated with cancer have not been adequately increased to make up lost drug revenues.