DRUG PRICES: HCFA Moves to Lower Medicare Reimbursements
HCFA yesterday unveiled a revamped reimbursement schedule that could help save hundreds of millions of dollars a year in overpayments for roughly 50 Medicare-covered prescription drugs, the Wall Street Journal reports. HHS will send the list of "lower, more-accurate prices" to insurers who administer Medicare this week, although they will not be officially ordered to change reimbursement rates. Medicare generally covers outpatient cancer drugs administered by doctors and other medications that patients cannot administer themselves, reimbursing providers at about 95% of the medication's average wholesale price. But state and federal investigators have charged that those prices are artificially inflated by drug companies, which then provide their products at deep discounts to doctors. For example, Pharmacia Corp. lists a generic version of the cancer drug Toposar at $157.65 for a 20-milligram dose; the actual average wholesale price is only $9.70. One of Medicare's "costliest" drugs, leucovorin calcium, a cancer treatment, is priced in industry guides at $9.98 for a 10-milligram dose, but under the new government data, Medicare will now pay only $3.85 (McGinley/Cloud, 6/2). HHS's inspector general estimates that Medicare pays between 11% and 900% more for drugs than what it costs doctors to buy them. In a letter to House Commerce Chair Tom Bliley (R-Va.), HHS Secretary Donna Shalala wrote, "We are now moving administratively to take advantage of the newly available, more-accurate data on average wholesale prices developed ... as a result of Department of Justice investigations" (Love, AP/Washington Post, 6/2).
Is the Effort Enough?
The guidelines are voluntary, but the administration said it expects carriers to start using them on Oct. 1. Shalala and HCFA Administrator Nancy-Ann DeParle also recommended that the long term solution to the problem should base reimbursement rates on physicians' actual acquisition costs, plus a handling fee -- a recommendation that has been proposed before (Wall Street Journal, 6/2). Bliley and Commerce ranking minority member Rep. Pete Stark (D-Calif.) complained the present policy change does "not go far enough" in stopping the industry's fraudulent pricing practices. Bliley said, "The Clinton-Gore administration's proposal ... has serious flaws and looks to be little more than political window-dressing for a program in need of serious repairs." HCFA said it may formally adopt the lower price schedule, but that effort would require engaging in a lengthy rule-making process (Goozner, Chicago Tribune, 6/2).