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Medicare Plan Designs May Deter Sick Patients, Analysis Says 

By Kristen Hallam, Bloomberg.com

December 30, 2005 

Americans who use ``specialty'' drugs for diseases such as multiple sclerosis, AIDS and anemia may have to pay thousands of dollars more a year under new Medicare drug plans that begin Jan. 1, according to an analysis by health consulting firm Avalere Health LLC. 

``That will serve as a disincentive for some beneficiaries to enroll in a plan,'' said Dan Mendelson, president of Washington-based Avalere, in a Dec. 23 telephone interview. ``It is a way to ensure some plans attract healthier people.'' 
Traditional prescription plans have a three-tiered system that allows access to high-priced drugs, on appeal, without significantly changing patient cost. The new Medicare program lets plans use a fourth tier that imposes out-of-pocket costs of 15 percent to 25 percent for a wide range of biotechnology drugs, according to the Avalere survey of about 3,000 new plans. 

About 40 percent of the plans have created this fourth tier for drugs such as Amgen Inc.'s Aranesp for anemia, which costs about $36,000 a year, Serono SA and Pfizer Inc.'s Rebif for multiple sclerosis, at $25,000 a year, and Roche AG's Fuzeon for AIDS, which is $20,000 yearly. These drugs are among 20 that are routinely found in the fourth tier, the survey by Avalere found. 

``It's a concern that this may be opening a larger black hole where we see a lot of cost shifting to people who are chronically ill,'' said Laura Caruso, director of health policy at the Gay Men's Health Crisis in New York. 

``If they put all the MS drugs, and all the cancer drugs, and all the HIV drugs on the same cost-tier plan, they're really not discriminating against one disease group,'' Caruso said in a telephone interview yesterday. ``They're discriminating against anyone who must depend on higher-cost drugs.'' 

While Medicare rules in general permit patients to appeal most issues involving cost, the regulations don't provide for an appeal of the ``specialty'' status of a drug, according to the Centers for Medicare and Medicaid Services. 

``The conventional view on Wall Street is that the Medicare formularies mimic commercial formularies, and that's incorrect,'' Avalere's Mendelson said. ``These formularies are more stringent than what you see in the private sector.'' 
Mendelson founded Avalere in 2000 after working as associate director for health at the White House Office of Management and Budget, according to the company Web site. Avalere provides research to commercial and non-profit customers, including the Menlo Park, California-based Kaiser Family Foundation, which studies health policy. 

Biggest Expansion 
The drug benefit marks the biggest expansion of coverage in Medicare's 40-year history. Congress created the Medicare drug program in 2003 to address seniors' concerns about drug costs that were rising more than 10 percent a year. At the time, about one-third of Medicare patients had no prescription coverage, according to government estimates. 

Many senior citizens find the plan confusing, a November poll showed. Medicare is subsidizing almost 3,000 different prescription-drug plans in 34 U.S. regions under the new law, with the typical beneficiary facing a choice among 40 plans. 

As Medicare drug coverage begins next week, manufacturers and patient advocates say they will monitor the program to ensure patient affordability. 
The Biotechnology Industry Organization, which serves as a lobbyist for companies including Amgen and Biogen Idec, opposed the ``specialty tiers.'' 
``The policy discriminates against our members' products and the patients they serve,'' said Jayson Slotnick, the group's director for Medicare reimbursement and economic policy, in a Dec. 23 interview. 

Encouraging Patients 
Since the group lost that regulatory battle, its member companies are encouraging patients to sign up for a Medicare drug plan that will cover at least some of the costs of the treatments, Slotnick said. 

``Who will really have an access problem? That remains to be seen,'' he said. Some Medicare plans may allow patients to pay off the drug costs over time, while those with retiree health benefits may get richer coverage, he said. 
Centers for Medicare and Medicaid Services spokesman Gary Karr said poor beneficiaries can qualify for financial assistance, which would require them to pay only a small co- payment for the drugs instead of the top-tier prices. 

The National Multiple Sclerosis Society will monitor the Medicare drug program to ensure patients get access to treatment, said Arney Rosenblat, a spokeswoman for the New York- based group. Some patients are concerned that plans will change their covered drug lists after they enroll, which is permitted under Medicare regulations, Rosenblat said. 

``It's a little too soon to take a firm stand, since the program is just about to start,'' Rosenblat said. 

The organization is providing online and telephone counseling services to help patients navigate the Medicare program and choose a plan that works for them, Rosenblat said.


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