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Critics say Medicare rule could cut access to life-saving drugs, violate Obamacare

Affordable Care Act supporters hold up signs outside the Supreme Court as they wait for the court's decision on Obamacare on Thursday, June 25, 2015.
Bill Clark | CQ Roll Call | Getty Images
Affordable Care Act supporters hold up signs outside the Supreme Court as they wait for the court's decision on Obamacare on Thursday, June 25, 2015.

A proposed new test of different ways for Medicare to pay for drugs — including linking how much the program will pay to a medication's effectiveness — is drawing fire from critics who warn it could lead to reduced access to potentially life-saving treatments, and say it would directly conflict with Obamacare rules.

A group of health providers and patient advocates in a letter Wednesday wrote that there are "inherent dangers" in the proposed federal rule to use a method that compares the potential benefits to patients from a drug to its overall cost, which the group says "has no place in the modern medical system."

"We believe the use of this measurement system to devalue people will inevitably lead to the use of price controls and other barriers to access that will ration health care," said the letter to Senate Finance Committee Chairman Charles Grassley, R-Iowa, from more than two dozen patient and provider groups.

Grassley's committee is holding a hearing about the new rule next Tuesday.

Ted Okon, executive director of Community Oncology Alliance, told CNBC that "people should not only be concerned, they should be alarmed" about the proposed rule.

"The government is proposing, basically, an experiment on seniors' health care," said Okon said, whose group signed the letter.

But unlike any clinical experiments, he argued, senior citizens involved would not be asked whether they want to participate, educated about the risks or be assured that "their care is going to be closely monitored during the experiment."

The warning by Okon and others comes as federal health officials are issuing an advisory of their own about the high cost of prescription drugs, and the strain that puts on the Medicare program.

"High-cost drugs are a major driver of Medicare spending growth," said Andy Slavitt, acting administrator of the federal Centers for Medicare and Medicaid Services, during a press conference about Medicare's financial outlook on Wednesday.

"For the second year in a row, we saw spending growth for prescription drugs dramatically outpace cost growth for other Medicare services," Slavitt said.

He mentioned the proposal to study alternative payment models for Medicare Part B drugs during the press conference.

Medicare is the federal government's health coverage program that primarily covers people ages 65 and older. Part B is the section of Medicare that covers treatment from physicians, including drug treatment administered in doctors' offices.

Those drug treatments, which can include cancer medications, antibiotics, or eye-care treatments, cost Medicare about $20 billion annually.

"Of course, costs are a concern," said Jonathan Wilcox, co-founder and policy director of the advocacy group Patients Rising.

"But patients and their medicines are the last place we should be cutting," said Wilcox, whose group also signed the letter.

Under the proposed rule, Medicare would study the effects of a set of "value-based pricing strategies" that would include so-called "indications-based pricing."

Such pricing "would vary the payment based on its clinical effectiveness for different indications," according to a CMS fact sheet about the proposal."The goal is to pay for what works for patients," the fact sheet said.

The rule, as proposed, gives an example of how this might work, suggesting that if a new drug is introduced with indications for treating two types of cancer, Medicare would pay more for the drug when it is used for the type of cancer where clinical trials had indicated it performed "significantly better," and less when used for the type of cancer in which it had less success in clinical trials.

The letter to Grassley notes that CMS proposes to use, among other resources, reports from the non-profit Institute for Clinical and Economic Review (ICER), "to more closely align drug payment with outcomes for a particular clinical indication."

A recent example of ICER's work was a report last year, which found that the $14,000 or more list price of new cholesterol drugs known as PCSK9 inhibitors was well above the "value-based price benchmarks of $5,404 to $7,735," meaning that the new drugs represent a "low" long-term value for patients.

The letter points out that ICER, which analyzes the effectiveness and value of treatments, itself "relies on a measurement known as Quality Adjusted Life Year (QALY) that scores potential benefits against the overall cost of the medication."

The groups that penned the letter argue that QALY "was designed in an era when health-care resources were scarce and had to be rationed," and that it has no place in today's health-care world. They also noted that "the Affordable Care Act prohibits the use of QALY."

"By using ICER's research, the CMS would directly violate both the letter and the spirit of the Affordable Care Act," the letter said.

Seth Ginsberg, president of the Global Healthy Living Foundation, said that argument is the easy answer about why the proposed rule should not be implemented.

"The longer, harder answer is that the methodology is flawed, so regardless of whether that methodology is allowed, it's not right," he said.

"The immediate impact [of the rule] will be restricted access and limited availability [of medication], and denial of care, and worsening of disease," Ginsberg said.

He added that ICER's review process "focuses on financial, and only financial [considerations] instead of the health benefits."

"There are no patients involved in the process," Ginsberg said. "We're offended that patients aren't incorporated into this."

"They're ignoring so many metrics and so many variables that we patients value so much," he said. "They're ignoring quality of life. They're ignoring things like productivity."

Ginsberg also argued that ICER, which gets some of its funding from health insurance companies and whose advisory board has members from the insurance industry, is "an arm of the insurance industry."

Sarah Emond, chief operating officer of ICER, disputed that claim. She the group's evaluation process "includes input from all of the major sectors" in health care.

"We take into account the payor perspective," meaning insurers, "the same way we take into account the patient perspective and the clinician perspective," she said. Insurance companies' views, she added, do "not have more or less weight than another other piece of that coalition."

Emond also said that the QALY methodology is both "unfortunately named" and a "misunderstood metric."

"It in no way disadvantages patients with illness and disabilities," she said. "It really does come down to a way for people to compare the improvements that come in patients' lives from 'Drug A' compared to 'Drug B' versus 'Surgery C.' "

Emond said that QALY is just one component of ICER's analytical work. "It's not meant to be the only metric that's important when thinking about the value that drugs bring to patients," she said.

She added that ICER's "entire mission is to open up the black box about how judgments are made about the prices of these drugs," which "now happen behind closed doors."

"We don't set prices," she said. "We give decision makers another piece of information about what a price could be that reflects the value that the drug brings to the patient, as well as to society."

When asked about the letter to Grassley, CMS spokesman Aaron Albright said, "We continue to review comments" on the proposed rule.

"Americans from all walks of life have felt the impact of the high cost of prescription drugs, and it continues to be a prime driver of spending across the health care system," he said.

"The administration's Part B proposal seeks to deliver better value for consumers and Medicare, while ensuring that doctors and patients continue to have access to life-saving drugs. Nothing in this proposal will prevent doctors or other clinicians from prescribing the treatment their patient needs. That's why the proposal enjoys support from a diverse set of voices — from AARP to the American Academy of Family Physicians to the former head of the Centers for Medicare and Medicaid Services under George W. Bush."

Benjamin Wakana, spokesman for the U.S. Health and Human Services Department, took issue with the letter to Grassley focusing on ICER.

"To guide our testing of models with value-based purchasing approaches, we would draw on the range of existing research and data on how different drugs affect patient outcomes," Wakana said. "The proposed rule mentions one example of evidence-based analysis. It does not cite a single source as having a monopoly on formative research, and we look forward to gathering input from doctors, patients, researchers, and the public."