Biotech pushes for Medicare drug boost

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Biotech pushes for Medicare drug boost

By Todd Zwillich

Reuters, May 12, 2003

Washington - Biotech firms and patient groups want Congress to reverse a Bush Administration rule change that they say is making it harder to provide treatments for cancers and some rare disorders.

The biotech industry is pushing for lawmakers to change rules governing the way Medicare pays for drugs delivered to patients in hospitals or in hospital-affiliated outpatient clinics.

Unlike prescription drugs that are taken at home, Medicare does cover prescription drugs that have to be delivered to patients in hospitals or clinics. They include many drugs for cancer and rare and expensive "orphan" drugs that have to be infused by nurses or doctors.

But a regulation change that went into effect at the beginning of 2003 cut by an average of 35 percent reimbursements for drugs that are delivered in hospitals and clinics. That has some hospitals and companies that make drugs for rare disorders up in arms and asking Congress to restore their payments as part of this summer's expected Medicare reform legislation.

Lobbyists said that the change should be easy to make since it only makes up about 2 percent of Medicare's total pay-outs to hospitals.

"This particular part of Medicare is a small part," said Sharon Cohen, vice president of government relations for the Biotech Industry Organization (BIO). "(It is) one that we believe is small enough to fix."

Orphan drugs, or those used to treat diseases that affect fewer than 200,000 persons in the U.S., were once exempt from Medicare rules limiting reimbursements for drugs given in hospitals and clinics. That exemption also expired in January.

That is making it harder for hospitals to offer treatments to patients with rare diseases, since they must now do it at a financial loss, warned Diane E. Dorman, vice president of the National Organization for Rare Disorders.

Others warned that the cuts could provide a disincentive for biotech firms to develop orphan drugs. Firms already benefit from a federal law offering tax credits and other incentives for companies that develop orphan therapies.

The groups would like Congress to direct the Centers for Medicare and Medicaid Services to begin reimbursing hospitals and hospital-affiliated clinics for all reasonable costs associated with the drugs.

The change seems to have support from key members of the Senate Finance Committee, which has jurisdiction over the Medicare program. Committee Chair Charles E. Grassley, R-Iowa and ranking member Max Baucus, D-Mont., both sponsored a provider reimbursement bill last year that included the fix for orphan drugs and for drugs given in hospitals and clinics.

But the provision was stripped out after Medicare officials assured lawmakers that they could repair the cuts without changes to the law.

"It was not fixed," Dorman said.