Seeking to contain costs for six protected drug classes, CMS faces wide opposition

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

Image by Amanda M Hatfield via flickr.

Image by Amanda M Hatfield via flickr.

Patient care advocates, drug companies, and both Republicans and Democrats are arguing against a proposal from the federal Centers for Medicare & Medicaid Services to eliminate protections for certain classes of drugs, including those for depression and schizophrenia.

Reporting on the proposal last week, Katie Thomas and Robert Pear wrote in The New York Times, “Opponents warn that the proposal, if enacted, could harm patients. Federal officials say it would lower costs and reduce overuse of the drugs.”

CMS estimates that the proposal will reduce overuse of some drugs and result in cost savings of $720 million by 2019, according to an AP article by Ricardo Alonso-Zaldivar.

Opponents say the proposal could result in increased hospital and physician services if patients can no longer get or afford the medications in six classes of drugs: anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants. Antidepressants and immunosuppresants would lose protected status in 2015 and antipsychotics would lose it in 2016. The other three classes (anticonvulsants, antineoplastics and antiretrovirals) would continue to be protected in 2015 pending further review by CMS, the proposal said.

For patients with mental illness, the proposal means seniors would have access to about 15 antidepressants and anti-psychotics, down from the current 57, according to reporting by Tracy Jan in The Boston Globe. The proposal also would help limit over-prescribing of some expensive drugs, Jan wrote.

The purpose of affording protections for these six classes is to ensure that patients will not be denied treatment or discouraged from continuing treatment by cost-control techniques such as quantity or formulary limitations, prior authorization or step therapy, according to a study done by Milliman, actuaries and consultants. Milliman did the study in 2008 when a similar proposal was introduced.

Given the potential for patient harm, those who oppose the proposal want CMS to proceed with caution. A. Mark Fendrick, M.D., director of the Center for Value-Based Insurance Design (VBID) at the University of Michigan, suggests that CMS should use incentives and disincentives that are clinically nuanced and not driven by price alone. A professor in the university’s departments of Internal Medicine and Health Management and Policy, Fendrick has long argued that CMS and other health care purchases should use a scalpel and not a chainsaw when cutting benefits. In fact, focusing on costs alone may be misguided, he says.

“We’re concentrating more on the cost of care and less on the health we’re getting for the money. The more we can move from the former to the latter the better,” he says.

Regarding the proposal to eliminate the protected classes of medications, Fendrick says, “No one knows what will happen when drugs come off the protected class. What’s needed are clinically nuanced levers that restrain cost growth.”

VBID will not necessarily reduce costs but rather it should ensure that inappropriate barriers to care are removed. The key to value-based insurance benefits is to ensure that patients have access to the care and medications needed to make and keep them healthy. Providing such access may drive up some costs because patients will be getting the appropriate care they need, he says.

“There are sometimes significant and subtle differences among the drugs in a class, and individuals react differently to different medications,” Fendrick explains. “Therefore, the more options clinicians have the better because individuals often will require more than one agent. That’s why the issue of the protected classes is important.”

If removing the protections results in limiting the number of medications available to patients or causes costs to rise, then patients may not be able to get the medications they need. “If a patient has an adverse side effect from taking one drug and your plan offers only a minimum of two drugs, that puts the prescribing doctor in a really tough spot,” Fendrick says.

Patient advocates are making similar arguments about how removing the protections for certain classes under Part D (the Medicare prescription drug benefit) could cause patients to require more serious and costly hospital (Medicare Part A) or physician care (Part B). Members of the Senate Finance Committee expressed these concerns in a letter sent Feb. 5 to CMS Administrator Marilyn Tavenner (PDF).

Matthew Bennett, senior vice president of the Pharmaceutical Research and Manufacturers of America said the CMS proposal could disrupt care for millions of beneficiaries and is unnecessary and harmful: “Quite simply, it is a solution in search of a problem.”

Rebecca Farley, director, policy and advocacy for the National Council for Behavioral Health, an organization that represents mental health providers, says the council opposes the proposal because it could affect patients’ access to medications. “There is a substantial amount of research that when patients can’t get the access to medications they need, there are adverse health outcomes that would have been avoidable if they had been able to stay on their medications. We believe restricting patient’s access to medications is going to result in increased hospitalizations, emergency room visits and generally poor health outcomes that will require more health care expenditures,” she adds.

Even if the proposal results in savings under Medicare Part D, those savings will be offset by increased spending in Medicare parts A and B, she says. “If CMS removes the protection status, the drugs in those six classes would be treated just like any other class of drugs,” she said. “That means Part D plans would have more leeway to include those drugs on their formularies or not.” If a drug is not included on a plan’s formulary, the plan will not pay for it.

The Globe’s Jan quoted Andrew Sperling, chief lobbyist for the National Alliance on Mental Illness, making similar comments. “This rule would severely limit the choice physicians have to work with their patients to figure out which medications work best for them,” Sperling told Jan. “It troubles me that CMS would move forward with something like this without any scientific basis, just to save a dime.”

Matthew Bennett, senior vice president of the Pharmaceutical Research and Manufacturers of America said the CMS proposal could disrupt care for millions of beneficiaries and is unnecessary and harmful. “Quite simply, it is a solution in search of a problem.”

But Jonathan Gruber, a professor of economics at MIT and director of the National Bureau of Economic Research’s Program on Health Care, offered a different point of view, telling The Globe, “At the end of the day, the government cannot provide all things to all people.”

Gruber’s comment echoes the concerns of CMS in its proposal, which said:

“We are concerned that requiring essentially open coverage of certain categories and classes of drugs presents both financial disadvantages and patient welfare concerns for the Part D program as a result of increased drug prices and overutilization. The principal disadvantage is that an open coverage policy substantially limits Part D sponsors’ ability to negotiate price concessions in exchange for formulary placement of drugs in these categories or classes. Since the beginning of the Part D program we have heard from stakeholders that this policy—frequently referred to as the ‘‘protected classes’’ policy—significantly reduces any leverage the sponsor has in price negotiations and results in higher Part D costs.”

Comments on the proposal, “Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs; Proposed Rule,” are due by March 7.

 

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