Feds revising drug discount proposal
Outpatient drug reimbursement also targeted
The Bush administration is once again preparing to offer discounts on medicines sold to Medicare beneficiaries, even though an injunction on its original plan still is in place.
In late November, administration officials told the New York Times (NYT) that the president would formally propose a new plan in the next several weeks. "We are just trying to get seniors cheaper prices," Thomas A. Scully, administrator of the Centers for Medicare and Medicaid Services (CMS), told the newspaper.
The original plan was blocked in September by a federal district court judge, who said the president "acted without legal authority" and did not provide proper notice and an opportunity for public comment on the plan.
Scully told the NYT that the new proposal "has a little more structure to it and is much more detailed" than the original plan. He said the administration also would seek public comment on it. The statutory authority of the plan, however, still is in question.
There are many opinions as to when this plan might be released, says Susan C. Winckler, RPh, Esq., group director of policy and advocacy for the American Pharmaceutical Association (APhA) in Washington, DC. "Some say it is ready to go; others say it is not. We’re just watching every day."
The administration’s desire to use "market forces" to get lower prices continues to be a concern, she says. "Does that mean that they would be securing mandatory rebates from manufacturers or mandatory rebates from community pharmacies? And who would be securing those rebates?"
Fixing flaws’ in outpatient drug payments
Bush administration officials are not the only ones looking at drug prices. The House Committee on Energy and Commerce is considering changing the current reimbursement system for outpatient drugs covered by Medicare, too.
Committee Chairman W.J. "Billy" Tauzin has written a letter to CMS Administrator Scully outlining a plan to replace the pricing structure from one based on a drug’s average wholesale price (AWP) to one that relies on an "average sales price" (ASP). Tauzin is concerned that drug manufacturers use the AWPs to dramatically inflate the payments made for drugs by Medicare and Medicaid beneficiaries.
Tauzin says the ASP will be clearly defined and will include manufacturer-provided rebates, chargebacks, and other discounts to purchasers.
Although Winckler agrees that some change from the AWP structure needs to be made, any change has to recognize that the AWP spread has been paying for services that are required to get those medications to patients.
"If you change the formula to get a more accurate assessment of what the medication costs, that has to be accompanied by a dispensing fee or fee to cover what it takes to get the medication into the pharmacy or into the physician’s office and keep it for a while," she explains. "It also needs to cover the preparation of the medication and then the services to make that medication work. You can’t just change the product end of the formula without building in payment for those other services."
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