Budget Bill Makes End Run Around Medicare Payment Policy For Omidria, Amyvid
Executive Summary
Surprise provision directs favorable Medicare Part B reimbursement for a handful of therapeutics beginning later this year.
A provision in the US omnibus budget bill circumvents Medicare Part B reimbursement policy by reinstating "pass-through" payments in certain narrowly drawn circumstances.
The bill is a disappointment to the broader bioharma industry in that it does not provide a hoped-for reduction in Medicare Part D discounts required for branded drugs. (Also see "No Deal: Omnibus Spending Bill Moves Without Part D Discount Relief" - Pink Sheet, 22 Mar, 2018.) However, it offers a surprise Medicare reimbursement benefit for four therapeutic agents. The legislation passed the House on March 22, the Senate on March 23, and was signed by the President later that day after a brief veto threat.
The provision reverses payment decisions announced in the Medicare 2018 hospital outpatient prospective payment system (OPPS) final rule, published in the Federal Register December 14, 2017.
The beneficiaries are:
- Omeros Corp.'s Omidria (phenylephrine and ketorolac injection), a drug used in cataract surgery or intraocular lens replacement;
- Eli Lilly & Co.'s Amyvid, an amyloid PET imaging agent used to help diagnose Alzheimer's disease;
- Organogenesis Inc.'s PuraPly, an antimicrobial wound matrix; and
- Bracco Diagnostics Inc.'s Lumason (sulfur hexafluoride lipid microspheres), an ultrasound contrast agent.
The bill allows for higher Medicare payments for a two-year period beginning Oct. 1, 2018 for "a drug or biological whose period of pass-through status … ended on Dec. 31, 2017 and for which payment under this subsection was packaged into a payment for a covered [outpatient] service (or group of services) furnished beginning Jan. 1, 2018."
Although the four agents are not named in the bill, that description applies to Omidria, Amyvid, PuraPly and Lumason, ADVI Director Lindsay Bealor Greenleaf told the Pink Sheet. The bill also directs the General Accountability Office to conduct a study on the impact of "packaging" high cost agents after pass-through status has expired.
The Centers for Medicare and Medicaid Services determined in the OPPS final rule that the agents would begin in 2018 to be reimbursed as part of a "package" along with surgery or a diagnostic despite requests from the manufacturers for continued pass-through payments.
Prior to that, the products received individual pass through payments based on the Part B average sales price (ASP) plus 6% formula. A packaged reimbursement rate is expected to be lower than the individual rate.
Pass-through payments were designed to allow Medicare reimbursement to encourage innovation. Medicare payment rates are generally based on past claims, so new treatments face the possibility of being reimbursed at the same level as older agents.
A Page From Amgen's Playbook?
Omeros has been lobbying hard for continued pass-through payments for Omidria, both at CMS and on Capitol Hill. The company's success in getting Congress to reverse a CMS decision is unusual but not unprecedented.
Amgen Inc. won a notable victory involving Medicare reimbursement for dialysis drugs in 2013 by getting a provision included in the "fiscal cliff" legislation that delayed price constraints on certain oral treatments, including its Sensipar (cinacalcet). (Also see "Fiscal Cliff Legislation Adjusts ESRD Payment Bundle To Help Offset Doc Fix" - Pink Sheet, 2 Jan, 2013.)
Omidria is Omeros' only marketed product, with 2017 sales of $64.8m. (Also see "FDA OK's Omeros cataract surgery drug Omidria; eyes on pricing" - Scrip, 2 Jun, 2014.) Sales for the drug began to flag early this year at the prospect of less favorable Medicare reimbursement, the company reported March 1.
"Given uncertainty regarding separate payment for Omidria, sales in Q1 have been reduced at both [ambulatory surgical centers] and hospitals," CEO Gregory Demopulos said during the company's earnings presentation.
"A substantial majority of our customers are awaiting resolution regarding reimbursement. And most are largely suspending use or employing the product on a selective basis only. We expect this situation to persist until separate payment has been restored for Omidria."
Lilly confirmed the bill offers an advantage for Amyvid but said it did not lobby Congress for the change. "We appreciate what this provision may mean to patients to ensure appropriate access for Amyvid, but Lilly was not focused on this being included in the omnibus bill," a spokesperson said. Medicare currently pays for Amyvid only in the context of clinical trials under a CMS national coverage determination. (Also see "CMS’ Amyvid Final NCD Clarifies Trial Outcomes Goals" - Pink Sheet, 2 Oct, 2013.)