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Hearing Spurs Calls for Broad Look at Drug Costs

By Kerry Young, CQ Roll Call

June 28, 2016 -- Senate Democrats on Tuesday called for a broader look at how to address rising drug costs, while agreeing with GOP colleagues on concerns about a pending Medicare test of alternative payment for medicines administered in doctors' offices.

Members of both parties questioned the nearly nationwide scope of the proposed Part B drug model at a Senate Finance hearing, at which Patrick Conway, the chief medical officer for the Centers for Medicare and Medicaid Services (CMS), was the only witness. The lawmakers also expressed concerns that people living in rural areas might lose access to medicines, with doctors finding it difficult to afford to provide certain drugs under the plan.

Sen. Debbie Stabenow, D-Mich., asked whether these efforts should be focused more on what she termed "the elephant in the room," Medicare's $90 billion in annual expenses in the Part D pharmacy program. Medicare's proposed test focuses instead on the $22 billion in drugs infused and otherwise administered in doctors' offices annually that are covered by Medicare's Part B program. Lawmakers should schedule a hearing to analyze the costs of the insurer-run Part D program, Stabenow said.

Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, pointed out that even with Medicare paying much of the tab, many of the nation's senior citizens struggle to pay for their medicines. Some newer drugs can leave senior citizens and people with disabilities enrolled in Medicare on the hook for annual costs of $9,000 or more, according to a 2015 Government Accountability Office report.

"The fact is, seniors are getting pounded by drug costs," Wyden said.  "And in my view, there is an enormous amount of work that has to be done to guarantee that seniors have affordable access to the medications they need."

At the hearing, Republicans stuck to the topic at hand, the details of the proposed Medicare Part B test. Senate Finance Chairman Orrin G. Hatch, R-Utah, noted that there is significant opposition to the test, including from many medical groups and lawmakers. Sen. Pat Roberts, R-Kan., repeated a common GOP request and asked Conway at the hearing to withdraw the proposal.

In the CMS project, some doctors would continue with the current reimbursement of an about 4.3 percent premium to the reported average sales price for drugs. Others would get a premium of less than 1 percent along with a new add-on payment of $16.53, according to the American Society of Clinical Oncology's estimate of the sequester's effect on the new payment. Maryland would be exempted from this Part B test due to other work that the state already is doing with Medicare on alternative forms of payment.

Sen. Richard M. Burr, R-N.C., pressed Conway about whether CMS intended to proceed with this model, asking him to answer "yes or no."

"We are evaluating the public comments now and intend to take those comments into account in the finalized rule," Conway replied.

The test proposal has angered medical groups, as doctors would get paid less in some cases for the drugs they administer in their offices, particularly for costly cancer medicines and treatments for rheumatoid arthritis. But CMS also has support from the senior advocacy group AARP and some labor unions, including the AFL-CIO and the United Auto Workers, also known as the UAW. In a Monday letter, they joined with about two dozen groups to ask Senate Finance to allow the test to move forward, while making sure steps are taken to preserve people's access to medications, particularly in rural areas. The groups described the test as a way to aid both in efforts to tie Medicare payments to higher-quality care and to help people now struggling to pay for drugs.

"Prohibiting the Part B Drug Payment Model from moving forward would halt progress in transforming how the Medicare program pays for care and perpetuate a system that allows those with less to go without needed medicines," the groups said in their letter to the Senate Finance Committee.

Congress likely will face continued demands for actions to rein in the rising costs of drugs, regardless of what happens with the Part B drug model.

New Orleans-based Ochsner Health System called this proposal "a very rough and blunt approach to changing physician prescribing behavior that is not well designed for broad application across individual patients, particularly for the treatment of cancer." In its comment to CMS on the model, though, Ochsner also said it "certainly agrees that the rising cost of drugs is a major problem affecting Part B spending and increased expenditures across the entire Medicare program and health care system."

Mark Beckstrom, Ochsner's director of government relations, suggested in the comment "that CMS adopt an array of strategies designed to increase transparency and competition in drug pricing, foster demonstration of value in drug approval, coverage, and pricing decisions, and seek enhanced authority provided by Congress for additional tools to address the rising cost of drugs."

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