Washington Editor

WASHINGTON - Word around Washington is that President Bush wants a Medicare modernization act complete with a prescription drug plan on his desk by July 4.

Signing the legislation less than a year after the Republican takeover last November would spark a celebration, given that lawmakers have been wrestling over the issue for years.

For the biotechnology industry, Medicare modernization is of particular interest when it comes to price controls and the related matter of government reimbursement.

The latter has prompted some lively conversations between the industry and government, beginning late last year when the Centers for Medicare & Medicaid (CMS, formerly HCFA) released its new plan for the hospital Outpatient Prospective Payment System, more commonly referred to as OPPS. The system determines the rates at which drugs and innovative biologics would be reimbursed for Medicare patients receiving treatment in the outpatient hospital setting. (See BioWorld Today, Nov. 4, 2003.)

People familiar with the issue might remember that Washington's Biotechnology Industry Organization believed the government overstepped its statutory bounds when it included the "functionally equivalent" section without seeking public input. Late last year, BIO vowed to educate lawmakers in an attempt to turn back the clock on some of the changes. (See BioWorld Today, Jan. 2, 2003.)

In a 16-5 vote, the Senate Finance Committee, chaired by Charles Grassley (R-Iowa), passed Medicare drug coverage legislation that contains a component to help patients access innovative drugs and biologics covered under OPPS.

According to a statement released by BIO, the legislation establishes a "floor" for reimbursement rates under which OPPS products could not drop below in 2004 and 2005. Next, it would authorize a study in the interim to collect acquisition and handling cost information to be used to create reimbursement rates.

Finally, it would stop CMS from using the functional equivalence policy in the future as a basis for setting product reimbursement rates.

Of the legislation, Carl Feldbaum, BIO's president, released a prepared statement saying, "Although Congress is several weeks away from passing final Medicare reform, BIO is encouraged by the strong bipartisan support that has been demonstrated in working to protect existing medical benefits already available to Medicare patients as legislators strive to develop a larger drug coverage benefit."

By way of a reminder, it was that "functionally equivalent" element of OPPS that captured attention, especially for two companies based on opposite coasts.

It all started when CMS determined that Thousand Oaks, Calif.-based Amgen Inc.'s anemia drug Aranesp was functionally equivalent to Procrit, a similar product made by New Brunswick, N.J.-based Johnson & Johnson. The products would be reimbursed at the same rate even though Amgen argued that the classification was a mischaracterization. The companies agreed to a National Cancer Institute study of their respective products to determine whether the drugs are the same.

Committees Wading Through Medicare Reform

The Senate's bipartisan Medicare reform bill (S1), which would go into effect in 2006, offers senior citizens a choice in prescription drug coverage, Grassley said in a prepared statement. "If enacted, the legislation will offer prescription drug coverage to be overseen by the government, offered through heath care companies like those serving other Americans and financed in part through government payments," he said.

Under the Senate plan, seniors would pay an annual $275 deductible, and Medicare would pay half their drug costs from $276 to $4,500. There would be no coverage from $4,500 to $5,800, and after that, Medicare would pay 90 percent of the cost.

The Senate is debating the bill.

Meanwhile, in the House, the Ways and Means Committee approved a bill (HR2473) that ensures a prescription drug benefit under Medicare for any senior who wishes to participate, according to a statement released by the committee's chair, Rep. Bill Thomas (R-Calif.). The bill would be effective in 2010.

The House version would require an annual $250 deductible, plus premiums of about $35 per month, or $1 a day. Like the Senate version, under the House plan 80 percent of a senior's prescription drug costs would be covered from $251 to $2,000, and there would be no coverage from $2,000 to $4,900. From $4,901, Medicare would pay 100 percent.

Also, low-income beneficiaries would pay up to $2 per generic drug and $5 for a brand-name prescription.

The House Energy and Commerce Committee is crafting its own version of the same bill.

AMA: Stem Cell Use For Biomedical Research OK

The Chicago-based American Medical Association (AMA) approved recommendations by its Council on Ethical and Judicial Affairs stating cloning for biomedical research is consistent with medical ethics.

Nevertheless, the council's report on the subject also said appropriate oversight should be exercised in that arena of research.

Specifically, the adopted recommendations focused on biomedical research using stem cells derived from cloned embryos through somatic cell nuclear transfer.

The recommendations also said individual physicians should remain free to decide whether to participate in such research and people participating in research governed by the standards also should be notified of relevant risks and benefits.