Washington Editor

WASHINGTON - Following an all-night session, the House Energy and Commerce Committee Friday morning approved a GOP prescription drug plan considered favorable to the industry.

Even though the Washington-based Biotechnology Industry Organization has stopped short of endorsing the plan, Sharon Cohen, BIO's vice president for government relations, told BioWorld Today that the measure approved Friday, as well as a similar measure approved earlier last week by the House Ways and Means Committee, contains provisions supported by the industry.

However, she said BIO is troubled that neither bill includes a provision to restore cuts to the Medicare pass-through payment system imposed April 1.

A pass-through payment is somewhat of an incentive payment made to a hospital outpatient center when it uses innovative drugs or biologics, usually cancer drugs or other orphan products, Cohen said.

The Centers for Medicare and Medicaid Services (CMS), formerly HCFA, reduced by 68.9 percent the pro rata pass-through payment, which makes up a percentage of the total cost the government will pay for an innovative product. The percentage is not flat; rather, it's based on a government formula. (See BioWorld Today, Dec. 3, 2001.)

But a final national prescription drug plan is months off, so there's plenty of time for adjustments. Indeed, Cohen said changes related to pass-through payments could be handled at the administration level.

In the meantime, the two measures passed will be turned over this week to the House Committee on Rules, which is charged with consolidating the GOP bills into one. BIO expects the legislation to be on the House floor for a full vote Thursday. (See BioWorld Today, June 21, 2001.)

According to a prepared statement released by Rep. Bill Tauzin (R-La.), chairman of the House Energy and Commerce Committee, the legislation passed Friday, referred to as "The Medicare Modernization and Prescription Drug Act of 2002" (HR4956), provides an affordable and permanent prescription drug benefit to all seniors for as little as $35 a month.

Also, the legislation includes a standard benefit that begins with a $250 deductible and pays 80 percent of spending up to the first $1,000 and 50 percent up to $2,000. Medicare beneficiaries who meet the low-income criteria (44 percent of beneficiaries nationally) would pay less than $5 per prescription. All participants are protected against catastrophic costs, with out-of-pocket expenditures capped around $3,700 per year, according to the committee.

In total, the GOP plan would cost about $350 billion over a 10-year period and is expected to provide seniors with a savings of 60 percent to 85 percent on prescription drugs. The plan would be administered by the private sector through insurance companies or private health plans.

By contrast, the House Democrats were floating a 10-year, $800 billion plan administered by CMS that included a $2,000 out-of-pocket cap and premium payment based on income.

Rep. Dick Gephardt (D-Mo.) released a prepared statement calling the Republican plan a sham. "I don't think anyone can take Republican claims seriously that they are interested in cutting the costs of prescription prices. Their sham bill forces seniors into the private market, creates a big donut hole through which seniors will fall and takes a big step toward privatizing Medicare."

The Senate is expected to begin discussions on prescription drugs in July.