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QUALITY OF LIFE, COST EFFECTIVENESS RELATIVE TO OTHER TREATMENT OPTIONS

Executive Summary

QUALITY OF LIFE, COST EFFECTIVENESS RELATIVE TO OTHER TREATMENT OPTIONS would be reviewed by the Advisory Council on Breakthrough Drugs under the revised version of President Clinton's Health Security Act as it was introduced in the House and Senate Nov. 20 (HR 3600/S 1757). Previous drafts of the legislation did not include cost effectiveness or quality of life among the considerations for determining a launch price to be "reasonable." A draft of the health care reform legislation released Oct. 27 stated that the Advisory Council on Breakthrough Drugs would evaluate the "reasonableness" of the launch price of a breakthrough drug based on four criteria: the price of other drugs in the same therapeutic class, manufacturer cost information, the price of the drug in certain other countries, and "projected prescription volume, economies of scale, product stability, special manufacturing requirements and research costs" ("The Pink Sheet" Nov. 1, p. 4). Language that has been added to the health care reform legislation since the Oct. 27 version instructs the advisory council to consider "cost effectiveness [of a new breakthrough drug] relative to the cost of alternative course of treatment options, including nonpharmacological medical interventions." In addition, the council would assess "improvements in quality of life offered by the new product, including ability to return to work, ability to perform activities of daily living, freedom from attached medical devices, and other appropriate measurements of quality-oflife improvements." The change in the legislation to reflect the value of cost efficacy and quality-of-life effects suggests an attempt by the Administration to address the drug industry's contention that its pricing should be considered in light of the savings from use of pharmaceuticals. A provision granting HHS the authority to use prior authorization in the Medicare outpatient drug benefit program that had been left out of the Oct. 27 draft has been added back to the Health Security Act ("The Pink Sheet" Nov. 8, p. 6). The bill states that the HHS secretary "may require advance approval for a covered outpatient drug which the secretary finds is subject to misuse or inappropriate use, is not cost effective, which is a multiple source drug with a restrictive prescription, or is subject to negotiation" on price. In addition, the provision states that the secretary may "establish maximum quantities per prescription and limits on the number of prescription refills." The secretary is instructed to "ensure that any advance approval requirements...do not restrict the access of patients to medically necessary covered outpatient drugs on a timely basis, and assure prompt determinations of approval or disapproval and provide a means for providers and patients to appeal a decision to disapprove a drug. The formal version of the legislation removes a provision relating to "civil money penalties for excessive charges," which would have provided penalties for a pharmacy that "presents or causes to be presented to any person a request for payment" for drugs dispensed to a Medicare Part B enrollee "for which the amount charged by the pharmacy is greater than the amount the pharmacy charges the general public." The last area of direct authority over drugs that remained with the National Health Board after the breakthrough drugs committee was moved to HHS appears to have been removed in the formal legislation. The HHS secretary, instead of the National Health Board, is now responsible for identifying the medical compendia to be used to support usage of a drug. In another change, July 1, 1996 has been set as the earliest possible date for exclusion of a drug from Medicare coverage.
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