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Drug Costs, Ads Concern Congress's Medicare Advisers

By Kerry Young, CQ Roll Call

October 9, 2015 -- Federal officials and lawmakers soon may face tough decisions on whether to peg payments for new medicines to the value they deliver for patients, with the aging of the population and ads directed at consumers set to increase Medicare's pharmaceutical costs, advisers to Congress said.

The Medicare Payment Advisory Commission (MedPAC) on Thursday engaged in a broad preliminary discussion of potential approaches to managing the future cost of buying drugs for the nation’s elderly and disabled. MedPAC is only in the early stages of considering what themes and specific advice it will provide to Congress next year in its influential reports. The panel is not close yet to settling on any formal recommendations regarding drugs.

Still, there appeared to be broad consensus about a need to make Medicare, the nation’s single biggest purchaser of health care, a much more demanding customer when it comes to drugs for the more than 50 million people for whom it provides health care.

“I think we all agree that there’s a problem with the reimbursement in Medicare” for the so-called Part B drugs, which are administered in doctors’ offices and clinics, said Kathy Buto, a MedPAC member who earlier served with the agency now known as the Centers for Medicare and Medicaid Services (CMS).

About $19 billion worth of Part B drugs were administered in doctors’ offices and clinics to people enrolled in Medicare in 2013, according to MedPAC. That included so-called biologics, products made by genetically altering living cells to produce mass quantities of therapeutic proteins, as opposed to the more traditional mixing of chemical agents in factories to make pills.

Drugmakers are trying to boost sales of biologics with commercials aimed at consumers, many of which feature older actors, said William J. Hall, a MedPAC members who is a geriatrician and a professor of medicine at the University of Rochester School of Medicine. That will draw the attention of people enrolled in Medicare and make them more likely to seek out these medicines, which can put people at risk for complications. There can be significant human capital costs in terms of monitoring the people who use these medicines for side effects, Hall said. Yet the ads race through the details of potential complications, Hall said.

“If you pay just a little bit of attention to these ads, I would defy you to really understand what is being said in these sound bites,” Hall said. “It’s sort of like the used car market in how the ads race though the warning.”

The MedPAC discussion touched on a major debate underway in the United States, the question of how much to pay for drugs that may offer little benefit for many patients. This is increasingly an issue with treatments for cancers. More targeted oncology treatments may help smaller populations of patients and sometimes may add only months to a person’s life, but new products sometimes cost more than $10,000 a month.

European nations are more active than the United States in looking for ways to peg reimbursement to results, Buto said. In the United Kingdom, many of the newer cancer drugs go through a special program that allows some patients access to expensive medicines that haven’t been proven to have significant benefit over existing treatments. But these products are not cleared for widespread use.

More research would need to be done on how Medicare might look to these kinds of models, but MedPAC should explore this topic, Buto said.

The commission “needs to look at this issue of how the government can be a more proactive participant in that area,” said Buto, who also served as a vice president of global health policy at the pharmaceutical giant Johnson & Johnson.

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