Proposal to Reduce Medicare Drug Payments Is Widely Criticized

MAY 22, 2016

WASHINGTON — An Obama administration proposal to reduce Medicare payments for many prescription drugs has run into sharp bipartisan criticism, suggesting that it is easier to diagnose the problem of high prices than to solve it.

Patients’ advocates have joined doctors and drug companies in warning that the federal plan could jeopardize access to important medications. Every member of the Senate Finance Committee — 14 Republicans and 12 Democrats — and more than 300 House members have expressed concern.

In a letter to Sylvia Mathews Burwell, the secretary of health and human services, the advocacy arm of the American Cancer Society said the proposal “does not protect cancer patients’ access to the lifesaving drugs needed to treat their disease.” The plan “focuses more on the potential for cost savings” than on how to preserve and enhance the quality of care, it said.

The administration says Medicare’s current payment formula rewards doctors for prescribing expensive drugs. Ms. Burwell has proposed a five-year nationwide test to encourage doctors to prescribe less expensive therapies under Part B of Medicare.

In its proposal, the administration said “we intend to achieve savings,” but did not estimate the amount.

The first phase of the new “payment model” could begin as early Aug. 1. In the second phase, which could start as soon as January 2017, Medicare would link payment to a drug’s value. The government might, for example, pay more for drugs that it deemed more effective in treating or preventing a particular condition. Or it might pay the same amount for drugs that it judged to be “therapeutically similar.”

These drugs — to treat various types of cancer, rheumatoid arthritis, macular degeneration and other conditions — are typically administered in doctors’ offices or hospital clinics. They include drug products that are made from human or animal cells, as well as treatments that mobilize the body’s immune system to fight cancer and other diseases.

Medicare typically pays 80 percent of the cost, and beneficiaries are responsible for the other 20 percent, meaning that they have to pay thousands of dollars a year for some drugs and drug combinations.

Whatever the merits of the proposal, the administration has to date been outmaneuvered on Capitol Hill. Republican lawmakers say President Obama should withdraw the proposal, a step that appears unlikely at the moment. Many Democrats, alarmed at high drug prices, said the administration was making a worthy effort, but should not move ahead without doing more to protect beneficiaries.

Representative Lois Capps, Democrat of California and a nurse, said she was concerned about several aspects of the plan. She listed “the nationwide scope of the project, the possible impact on small medical practices in underserved areas, and the potential shifting of patients from provider offices to expensive hospital settings.”

Two dozen House Democrats, including black and Hispanic lawmakers representing large numbers of poor people, said the proposal could disrupt care for their constituents. Doctors practicing in small groups and rural health care providers have less purchasing power, often must pay higher prices for drugs and will be unable to absorb the “reimbursement cuts,” the lawmakers said.

Another 60 House Democrats, including some of the most liberal members of Congress, signed a separate letter listing even more questions and concerns.

It is not surprising that drug makers like Amgen, Genentech and Merck have asked the administration to withdraw its proposal. But some of their concerns seem to resonate with patients desperate for new treatments and cures.

Bari Talente, executive vice president of the National Multiple Sclerosis Society, said her group opposed the administration’s plan in its current form. The National Alliance on Mental Illness, an advocacy group for patients, said the proposal “could limit access to long-acting injectable antipsychotic medications” used to treat schizophrenia and other disorders.

In a letter to Medicare officials, Dr. Laurie H. Glimcher, dean of Weill Cornell Medical College in New York, said, “This experiment puts the care of patients at unnecessary risk.”

The proposal comes at a time when consumers, politicians and many doctors are denouncing drug prices — some over $100,000 a year — as exorbitant and unsustainable.

“This is not just a policy question anymore,” said Jayson S. Slotnik, a consultant to drug and device companies. “It’s a political issue: Does the White House want to make this policy change, despite all the objections, in the final months of the administration?”

Dr. James L. Madara, chief executive of the American Medical Association, said officials should focus on the causes of high drug prices, which are set by manufacturers, not by doctors. Moreover, he said, the proposed cuts in payment for some drugs could undermine the president’s “moonshot” to cure cancer and his “precision medicine initiative,” to devise treatments tailored to the genetic characteristics of individual patients. Medicare officials promised to address such concerns, but they declined to discuss the criticism in detail, saying they were still reviewing comments on the proposal.

At a public forum last month, Dr. Patrick H. Conway, the No. 2 official at the Centers for Medicare and Medicaid Services, said that “patient and consumer input into this model is critical,” and that the administration might consider exempting some doctors.

“We care deeply about independent physician practice and access to medications in various areas of the country,” Dr. Conway said.

Some Democrats and some consumer organizations have endorsed the proposal. “We are actively reforming every other aspect of our health care system to pay for value except pharmaceuticals,” said Representative Jan Schakowsky, Democrat of Illinois. “Drug manufacturers are the only entity that can charge Medicare anything they want.”

AARP, the lobby for older Americans, also supported the proposal, saying it could reduce out-of-pocket costs for beneficiaries, whose median income is less than $25,000 a year.

Dr. Debra Patt, a breast cancer specialist at Texas Oncology, a group of more than 400 doctors, said: “This is bad medicine for patients. It’s an experiment that is simply unworkable in cancer care.”

“In patients with certain types of advanced breast cancer,” she said, “many specialized targeted treatments don’t have low-cost alternatives. If patients are not able to get the more expensive therapy, they are more likely to die prematurely of their disease.”

Dr. Conway, the Medicare official, said, “Nothing in this proposal will prevent doctors from prescribing the treatment their patient needs.”

In the Affordable Care Act, Congress gave the health secretary power to waive federal Medicare law when necessary to test innovative ways of paying for health care. Citing this authority, the administration said it wanted to require “mandatory participation” for doctors and hospitals that provide Part B drugs to Medicare beneficiaries in about three-fourths of the country.

Representative Brett Guthrie, Republican of Kentucky, said Mr. Obama and Ms. Burwell were going far beyond what Congress envisioned. “They are using this process to amend the statute,” Mr. Guthrie said. “Our legislative authority is being infringed upon.”

Representative Gene Green, Democrat of Texas, said he too had “some concerns about the size and scope of the proposed demonstration and its potential impact on Medicare beneficiaries’ access to physician-administered drugs.”