Biotechnology and medicare's new technology policy: Lessons from three case studies

Health Affairs

Volumn 25, Issue 5, 2006, Pages 1260-1269

  Keenan, Patricia Seliger ^a   Neumann, Peter J ^b,c   Phillips, Kathryn A ^d  

^a YALE UNIVERSITY SCHOOL OF MEDICINE   (United States)

^b Center for the Evaluation of Value and Risk in Health   (United States)

^c TUFTS UNIVERSITY SCHOOL OF MEDICINE   (United States)

^d UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ANEMIA; BIOTECHNOLOGY; ECONOMICS; EVIDENCE BASED MEDICINE; HEALTH CARE DELIVERY; HEALTH CARE POLICY; HEALTH SERVICES RESEARCH; HUMAN; MEDICARE; NEOPLASM; PHARMACEUTICS; REVIEW; UNITED STATES;

ANEMIA; BIOPHARMACEUTICS; BIOTECHNOLOGY; EVIDENCE-BASED MEDICINE; HEALTH POLICY; HEALTH SERVICES ACCESSIBILITY; HUMANS; MEDICARE; NEOPLASMS; ORGANIZATIONAL CASE STUDIES; UNITED STATES;

EID: 33749330479     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.25.5.1260     Document Type: Review

References (68)

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2. For discussion of other treatments that share these characteristics, see T. Carino, S. Sheingold, and S. Tunis, "Using Clinical Trials as a Condition of Coverage: Lessons from the National Emphysema Treatment Trial," Clinical Trials 1, no. 1 (2004): 108-114;
3. M. Gillick, "Medicare Coverage for Technological Innovations - Time for New Criteria?" New England Journal of Medicine 350, no. 21 (2004): 2199-2203;
4. P.S. Keenan, "Implications of Rising Medical Care Spending" (Doctoral dissertation, Harvard University, 2005);
5. and M. McClellan and S. Tunis, "Medicare Coverage of ICDs," New England Journal of Medicine 352, no. 3 (2005): 222-224.
6. S.R. Tunis and J.L. Kang, "Improvements in Medicare Coverage of New Technology," Health Affairs 20, no. 5 (2001): 83-85;
7. S.B. Foote, "Why Medicare Cannot Promulgate a National Coverage Rule: A Case of Regula Mortis," Journal of Health Politics, Policy and Law 27, no. 5 (2002): 708-730;
8. and S.R. Tunis, "Why Medicare Has Not Established Criteria for Coverage Decisions," New England Journal of Medicine 250, no. 21 (2004): 2196-2198.
9. Centers for Medicare and Medicaid Services, "Factors CMS Considers in Opening a National Coverage Determination," 11 April 2006, http://www.cms.hhs.gov/mcd/ncpc_view_document.asp?id=6 (accessed 12 June 2006).
10. A.M. Garber, "Evidence-based Coverage Policy," Health Affairs 20, no. 5 (2001): 62-82;
11. Tunis and Kang, "Improvements in Medicare Coverage of New Technology";
12. and B.M. Straube, "How Changes in the Medicare Coverage Process Have Facilitated the Spread of New Technologies," Health Affairs 24 (2005): w314-w316 (published online 23 June 2005; 10.1377/hlthaff.w5.314).
13. P.J. Neumann et al., "Medicare's National Coverage Decisions, 1999-2003: Quality of Evidence and Review Times," Health Affairs 21, no. 1 (2005): 243-254.
14. For more details on CED policy, see S.R. Tunis and S.D. Pearson, "Coverage Options for Promising Technologies: Medicare's 'Coverage with Evidence Development'," Health Affairs 25, no. 5 (2006): 1218-1230.
15. We limit our scope to examining these policy changes that directly target new treatments. Other changes, such as the shift from averagewholesale price (AWP) to average sales price (ASP) for Part B drugs and the Medicare drug benefit, hold important implications but are outside the scope of this paper.
16. For more details, see T. Carino et al., "Medicare's Coverage of Colorectal Cancer Drugs: A Case Study in Evidence Development and Policy," Health Affairs 25, no. 5 (2006): 1231-1239.
17. Letters are available at CMS, "Initial Public Comments for Anticancer Chemotherapy for Colorectal Cancer, CAG-00179N, 05/02/03-11/17/03, " http://www.cms.hhs.gov/determinationprocess/downloads/id90.pdf (accessed 20 February 2006).
18. CMS, "Changes to the Hospital Outpatient PPS and Calendar Year 2003 Payment Rates," Federal Register 67, no. 212 (2002): 66756, Final Rule. The notice indicated that the CMS might review a drug if it were "novel, complex, or controversial," "may be costly," "may be subject to overutilization or misuse," or was FDA approved based on "surrogate outcomes." See also CMS, "Initial Public Comments for Anticancer Chemotherapy for Colorectal Cancer," letters from Chris Takimoto, University of Texas Health Science Center; Carolyn Aldridge, Cancer Research and Prevention Foundation; Cancer Leadership Council; Robert Comis, Coalition of National Cancer Cooperative Groups; Daniel Price, Washington Legal Foundation; and Richard Shilsky, University of Chicago.
19. G. Harris, "U.S. Weighs Not Paying for All Uses of Some Drugs," New York Times, 30 January 2004.
20. CMS, "Initial Public Comments for Anticancer Chemotherapy for Colorectal Cancer"; see, for example, letters from Robert Comis, Coalition of National Cancer Cooperative Groups; Richard Shilsky, University of Chicago; and Alan Venook, University of California, San Francisco.
21. R. Wittes, "Cancer Weapons, Out of Reach," Washington Post, 15 June 2004;
22. C. Arnst, "Cancer Superdrugs, Costly Side Effects," Business Week, 21 June 2004;
23. L. Szabo, "Price of Cancer Drugs Called 'Mind-Boggling'," USA Today, 22 July 2004;
24. and A. Dockser Marcus, "Price Becomes Factor in Cancer Treatment," Wall Street Journal, 7 September 2004.
25. CMS, "Initial Public Comments for Anticancer Chemotherapy for Colorectal Cancer"; see letters from Russell Ellison, Sanofi-Synthelabo; and Kathy Means, Patton Boggs.
26. CMS, "View Public Comments for Anticancer Chemotherapy for Colorectal Cancer (CAG-00179N)," http://www.cms.hhs.gov/mcd/ viewpubliccomments.asp?nca_id=90 (accessed 20 February 2006).
27. CMS, "Decision Memo for Anticancer Chemotherapy for Colorectal Cancer (CAG-00179N)," 28 January 2005, http://www.cms.hhs.gov/mcd/ viewdecisionmemo.asp?id=90 (accessed 12 June 2006).
28. CMS, "Factors CMS Considers When Making a Determination of Coverage with Evidence Development" (Baltimore: CMS, April 2005). Factors include (1) questions about whether a treatment is applicable to individual patients, and (2) instances when clinical evidence is suggestive but not conclusive regarding medical benefits.
29. CMS, "Fact Sheet: CMS Responds to Stakeholder Feedback regarding Coverage with Evidence Development," 12 July 2005, http://www.cms.hhs.gov/ MedicareCoverageGuideDocs/Downloads/guidfactsheet.pdf (accessed 30 January 2006);
30. and CMS, "National Coverage Determinations with Data Collection as a Condition of Coverage: Coverage with Evidence Development," 12 July 2006, http://www.cms.hhs.gov/mcd/ncpc_view_document.asp?id=8 (accessed 16 July 2006).
31. CMS, "Decision Memo for Radioimmunotherapy for Non-Hodgkin's Lymphoma (CAG-00163N)," http://www.cms.hhs.gov/mcd/viewdecisionmemo.asp?id= 38 (accessed 12 June 2006).
32. Harris, "U.S. Weighs Not Paying for All Uses of Some Drugs";
33. and C. Arnst, "Medicare versus Cancer Patients; Refusing to Reimburse Off-Label Treatment Is Far from the Best Way to Cut Costs," Business Week, 16 February 2004.
34. C. Arnst, "Medicare versus Cancer Patients; Refusing to Reimburse Off-Label Treatment Is Far from the Best Way to Cut Costs," Business Week, 2004.Ibid.;
35. and L. Lagnado, "Last Hope for Lymphoma, $28,000 a Dose," Wall Street Journal, 18 June 2003.
36. K. Schwartz, Patients Against Lymphoma, letter to Dennis G. Smith, CMS, 29 February 2004, http://www.lymphomation.org/cms-off-label.pdf (accessed 9 February 2006).
37. Harris, "U.S. Weighs Not Paying for All Uses of Some Drugs";
38. Arnst, "Medicare versus Cancer Patients";
39. and CMS, "Proposed Decision Memo for Radioimmunotherapy for Non-Hodgkin's Lymphoma."
40. CMS, "Decision Memo for Radioimmunotherapy for Non-Hodgkin's Lymphoma."
41. CMS, "View Public Comments for Radioimmunotherapy for Non-Hodgkin's Lymphoma (CAG-00163N)," http://www.cms.hhs.gov/mcd/viewpubliccomments.asp? nca_id=38 (accessed 20 February 2006).
42. Long-standing competition between these two products has also involved legal challenges over rights and charges of preferential pricing. See, for example, A. Pollack, "Johnson Sues Amgen over Sales Practice," New York Times, 13 October 2005;
43. and L. McGinley and D. Hamilton, "Drug Dispute Is Dragged to Capitol Hill," Wall Street Journal, 22 April 2003.
44. CMS, "Changes to the Hospital Outpatient PPS and Calendar Year 2003 Payment Rates," Proposed Rule.
45. Part of the rationale that the CMS cited was its authority in sec. 1833(t)(2)(E) of the Social Security Act to make adjustments to "ensure equitable payments." CMS, "Changes to the Hospital Outpatient PPS and Calendar Year 2003 Payment Rates," Final Rule, 66758. This approach is analytically similar to local policies targeting payments to lowest-cost equally effective treatments, referred to as "least costly alternative." However, functional equivalence differs because it applied nationally rather than through individual contractors' decisions, because it resulted in denial of new technology pass-through payments, and because it held potential to serve as a precedent for other national decisions. On least costly alternative, see Medicare Payment Advisory Commission, "Using Clinical and Cost Effectiveness in Medicare," chap. 8 in Report to the Congress: Issues in a Modernized Medicare Program (Washington: MedPAC, June 2005).
46. Amgen Inc. v. Scully, 234 F. Supp. 2d 9, 2002 U.S. Dist. LEXIS 24618 (D.D.C., 2002); McGinley and Hamilton, "Drug Dispute Is Dragged to Capitol Hill"; CMS, "Changes to the Hospital Outpatient PPS and Calendar Year 2003 Payment Rates," Final Rule;
47. L. McGinley and S. Lueck, "Harsh Medicine: As Medicare Chief Reins In Costs, Opposition Grows," Wall Street Journal, 16 July 2003;
48. and G. Harris, "Two Cancer Drugs, No Comparative Data," New York Times, 26 February 2004.
49. R. Pear, "U.S. Limiting Costs of Drugs for Medicare," New York Times, 21 April 2003.
50. R. Pear, "U.S. Limiting Costs of Drugs for Medicare," New York Times, 2003.Ibid.;
51. McGinley and Hamilton, "Drug Dispute";
52. and McGinley and Lueck, "Harsh Medicine."
53. "Congress Questions CMS Decision to Drop Pass-Through Status for Amgen Drug," Inside CMS, 7 November 2002;
54. "E+C Committee Eyes Changing Pass-Through Payment System in Medicare Reform Bill," Inside CMS, 13 March 2003;
55. and "Text: Johnson Letter Asking GAO to Expand OPPS Probe," Inside CMS, 27 March 2003.
56. Amgen v. Smith, 360 U.S. App. D.C. 88, 357 F.3d 103, 2004 U.S. App. LEXIS 2406 (D.D.C., 2004).
57. BIO, "Biotechnology Industry Organization, Milestones 2004," 30 January 2004, http://www.bio.org/speeches/pubs/milestone04/healthcare.asp (accessed 19 February 2006).
58. CMS, "Changes to the Hospital Outpatient PPS for Calendar Year 2006," Federal Register 70, no. 217 (2005): 68652.
59. See, for example, "Medicare Payment to Hospital Outpatient Facilities to Rise 4 Percent, CMS Documents Indicate," BNA's Health Care Policy Report, 8 November 2004;
60. and "CMS, Thomas at Odds over Scrapping Aranesp, Procrit Pricing Link," Inside CMS, 17 November 2005.
61. "Amgen Halts Push to Secure Congressional Support for Broad Ban on Tied Payments," Inside CMS, 26 February 2004.
62. See, for example, MedPAC, "Payment for New Technologies in Medicare's Prospective Payment Systems," chap. 4 in Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2003);
63. and MedPAC, "Context for Medicare Payment Policy," chap. 1 in Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2006).
64. W. Leary, "Debating the Benefits and Costs of Major Surgery for Emphysema," New York Times, 14 May 1996;
65. and Carino et al., "Using Clinical Trials as a Condition of Coverage."
66. Neumann et al., "Medicare and Cost-Effectiveness Analysis."
67. For example, in comparison, the range of options for the uninsured (such as private subsidies or public expansions) is familiar to participants in uninsurance policy debates and is a topic of multiple reports.
68. A. Berenson, "A Cancer Drug Shows Promise, at a Price That Many Can't Pay," New York Times, 15 February 2006.