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MEDICARE TO CONTINUE COVERING GROUP C BUT NOT TREATMENT IND DRUGS

Executive Summary

MEDICARE TO CONTINUE COVERING GROUP C BUT NOT TREATMENT IND DRUGS, according to draft final rules under review by the Office of Management and Budget. Codifying the Health Care Financing Administration's procedures and criteria in making coverage decisions, the rules state that Treatment IND drugs will continue to be ineligible for coverage because they are experimental. More than 400 commenters on the agency's 1989 proposed rule urged HCFA to allow coverage of Treatment IND products. They included 300 commenters concerned with AIDS or cancer care, and House Energy & Commence/Health Subcommittee Chairman Waxman (D- Calif.) ("The Pink Sheet" April 10, 1989, p. 10). HCFA acknowledges that Medicare has covered National Cancer Institute-designated "Group C" cancer drugs since the 1980s even though they also have not been approved by FDA. "We believe we can justify covering Group C drugs because: (1) they are in advanced stages of clinical trials; (2) there is sufficient scientific evidence to establish safety and effectiveness; and (3) unique oversight exists for the NCI," HCFA says. "We do not, consider however, Treatment INDs and 'modified' Group C drugs to be 'reasonable' and 'necessary' because they are at an earlier stage of investigation and there is no comparable evidence of safety and effectiveness." HCFA adds that Group C drugs "have shown significant evidence of effectiveness" in treating one or more tumor types, and do not require highly specialized supportive care. In addition, when Medicare began covering Group C, "it was informed at the time that most Group C cancer drugs had completed Phase III," and further, some of the products' manufacturers had decided not to seek FDA approval due to the small number of patients involved. The rules note that Medicare already pays for a number of costs associated with receiving a Treatment IND, though not for the drug itself or its administration. If a patient is hospitalized, for example, the Treatment IND drug's costs would not be subtracted from the diagnosis-related group flat payment rate, unless the sole purpose for admission is to receive the drug. In addition, Medicare would pay for covered services needed to treat a complication or condition caused by a Treatment IND therapy. As before, Medicare will cover a service when it is within Medicare's scope of benefits and it is "reasonable" and "necessary," which is defined as safe, effective, and nonexperimental, the draft document states. HCFA bases these decisions on "authoritive data" or general acceptance in the medical community. For drugs, HCFA generally relies upon FDA approval. The agency notes the contractors often cover unlabeled uses of drugs, advising that this is permissible as long as the drug has at least one approved indication and the unlabeled use meets the reasonable and necessary test. In an effort to improve consistency in carrier judgments, the final rules would give a more explicit role to the medical compendia in evaluating unlabeled uses. HCFA says the three standard reference compendia -- the USP Dispensing Information, American Medical Association Drug Evaluations, and American Hospital Formulary Service Drug Information -- are "nationally representative of acceptable standards and provide expert guidance." The draft final rules would revise current regulations to state that products approved "by FDA are considered safe and effective for Medicare purposes when they are used for indications (a) specified in their labeling; (b) not specified in their labeling, but the indications have been determined acceptable by authoritative compendia specified by HCFA; or (c) are determined to be medically accepted as safe and effective in accordance with authoritative medical evidence." Certain factors could still bar coverage, such as the statutory prohibition against payment for self-administered drugs. For the first time, the final rules would allow HCFA to consider cost-effectiveness in coverage decisions. "A technology is considered cost-effective if it is: very expensive to the program, but provides significant medical benefits not otherwise available; less costly and at least as effective as an alternative covered intervention; more effective and more costly than a covered alternative, but the added benefit is significant enough to justify the added cost; less effective and less costly than an existing alternative, but a viable alternative for some patients," the rules state.
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