Rx Price Website For Part D Could Hold Off HHS Drug Negotiations

Maintaining the Medicare drug price comparison website after the Part D prescription benefit begins could help hold off proposals to allow HHS to negotiate prices for the program, Centers for Medicare & Medicaid Services Senior Policy Advisor Tim Trysla told a Pharmacy Care Management Association/Health Strategies Consultancy specialty pharmacy conference in Washington, D.C. June 16.

Asked if the pricing transparency available through the Medicare website for the drug discount program would be carried over to the Part D benefit, Trysla suggested that maintaining the site would help prove that competition is effective in driving down prices.

"In order to kind of react to this 'why can't we directly negotiate the drug prices,' I think you're going to have to show that prices will come down and do come down in a competitive model," Trysla said.

Trysla also said it is possible CMS "will politically be required that we make sure that things are transparent and competitive" by continuing the price comparisons.

There have been calls in Congress to eliminate the "non-interference" provision in the Medicare Rx law that prohibits HHS from negotiating drug prices for Medicare (¹ (Also see "HHS Rx Price Negotiations Could Gain Bipartisan Support, Consultant Says" - Pink Sheet, 14 Jun, 2004.), p. 25).

The price comparison website may also be a necessary tool to allow beneficiaries to shop among health plans, since coverage limits and the so-called "donut hole" mean that seniors would still benefit from price shopping.

"With the donut hole...I don't see how you can move away from making prices transparent," Trysla said. "The genie's out of the bottle; you can't put it back in," he added.

CMS launched its price comparison website at the end of April to support the Medicare-endorsed discount card program (² (Also see "Rx Price Comparison Site Launches With 20 Cards; HHS Urges Patience" - Pink Sheet, 3 May, 2004.), p. 31). CMS Administrator Mark McClellan said the agency is considering continuing that service after the full Medicare drug benefit starts in 2006 (³ (Also see "CMS Considering Price Comparison Website For Full Medicare Rx Benefit" - Pink Sheet, 5 Apr, 2004.), p. 18).

Trysla was also asked about physician responses to the shift in Part B drug reimbursement from an average wholesale price-based model to average sales price and competitive acquisition.

"My biggest concern is that [the ASP rule] doesn't give people enough certainty in order to make business decisions," he said.

"The natural reaction is to say 'well, we're just going to shift the patients to the hospital and get out of the Medicare business.'"

"That may be a short term response, and there might be a lot of physicians going along with that, but it would really be incumbent on CMS and others to actually get that data in, make sure it's accurate, and then hopefully eliminate some of that uncertainty from before."

CMS issued an interim final rule on ASP in April and is collecting pricing data in preparation for the move to ASP-based reimbursement in 2005 (⁴ (Also see "“Average Sales Price” Rule Issued; Definition Mirrors Medicare Rx Law" - Pink Sheet, 5 Apr, 2004.), p. 13).

Starting in 2006, physicians may choose to receive drugs from a provider through a competitive bidding process.

Trysla said he believes many physicians will prefer competitive acquisition.

"The competitive model in 2006 may be preferable in the sense that you again put the providers back in the driving seat." Under that model, "they will be able to manage around their costs and their overhead and be able to directly impact how they can acquire the drugs and the services that they want," he said.

CMS is debating the basic elements of the implementing regs for competitive bidding of drugs.

"We don't have a real good sense of what the best models would be," Trysla said. "I think that this will be proposed in a very limited means in the sense that it will be largely based on what the market can bring."

How much regulatory authority CMS will have in overseeing competitive bidding is one of the issues the agency is working to resolve.

"The real question in my mind is not whether we're going to build on private sector models, which I think is fairly obvious. It's really how much oversight will we have and how much regulatory strength do we put in this," Trysla said.

"Accountability" will be built into the regulation, he added. "We will want to understand what is being reimbursed and what those drug prices are, but also those value-added services."

Trysla noted that he does not expect ASP to catch on widely in private industry because it is not a more reliable measure of actual price than AWP. He emphasized that he was expressing his own opinion and not that of CMS.

"I don't want to be cynical at all about this, but the fact that a lot of people lobbied for ASP, I think it will be similar to...the system we're moving away from," he said. "I can't imagine that this is going to be anything that's even remotely going to be binding in the industry."

He added that no one can explain what AWP is, "and I think we're going to have the same kind of mechanism with ASP."

Aetna VP-Aetna Pharmacy Director Jeff Taylor agreed that the uptake of ASP in the private sector could be slow.

"We're sort of watching at this point," Taylor said. "We have to look at our contracts that we have with our outpatient treatment facilities and our hospitals to look at what changes need to be made in those going forward."

"At this point, we don't really know how the oncologists are going to react to all of these changes and whether there's going to be shifting of treatment sites from physician offices back into hospital," Taylor said.

"It's going to depend also on the market area," he added. "You can't do a global situation for across the country....The way we handle that in Philadelphia is going to be different than the way it's handled in California because the models are completely different."

"If the physicians do stop administering the product or close a treatment facility" and send patients to hospital outpatient facilities, Aetna will consider "what kind of contract changes do we need to have, and those take a couple of years to really implement."