MEDICARE: Drug Reimbursement Reductions Delayed
Clinton administration officials announced yesterday that, due to "intense pressure" from cancer doctors and some members of Congress, they will postpone plans to reduce Medicare reimbursements for cancer and hemophilia drugs, the Wall Street Journal reports. HCFA had announced in June that it planned to reduce by this fall Medicare "overpayments" for about 50 drugs, following a government investigation that found several drug companies were reporting average wholesale prices -- used as guidelines for setting Medicare and Medicaid reimbursement rates -- that were higher than the actual selling price. The tactic makes drugs more attractive to physicians, who are able to keep the difference between cost and reimbursement, the Wall Street Journal notes. Cancer doctors, drawn together by the American Society of Clinical Oncology, have waged an aggressive war against HCFA's planned payment reductions, claiming "they wouldn't be able to afford to administer chemotherapy in their offices if the price cuts went into effect." Although doctors acknowledge that Medicare reimbursements for cancer drugs are inflated, they assert that the higher reimbursements are needed to cancel out "sharp underpayments" for cancer therapy administration. Congress is now investigating cancer treatment costs to determine whether reimbursements should be increased. While the battle over cancer drugs brews, HCFA plans to issue a notice to private insurance companies that process Medicare claims, urging them to lower reimbursements for other drugs reimbursed by Medicare.
More Trouble in Texas
Meanwhile, the state of Texas announced yesterday it is suing three drug companies that allegedly reported inflated drug prices to the state Medicaid program. The state claims that Napa, Calif.-based Dey Inc.; Columbus, Ohio-based Roxane Laboratories Inc.; and Reno, Nev.-based Warrick Pharmaceuticals Corp, a unit of Schering-Plough Corp., cost the Texas Medicaid program $20 million in overpayments for respiratory drugs. Texas seeks to recover the overpayments in addition to $58 million in penalties (McGinley/Cloud, 9/8).