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Medicare: We Want Proof On Anemia Drugs

Right on the heels of my previous blog entry about an analyst saying a Medicare reconsideration of its anemia drug reimbursement policy may be in the offing comes this news out of the agency.

It does not yet constitute a formal reconsideration by Medicare, but the agency today has sent a letter to U.S. Oncology, ASCO and ASH (American Society of Hematology) telling them that in order for Medicare to reconsider its anemia drug reimbursement level decision that the groups need to provide "new evidence" or "arguments" that the agency "misinterpreted existing evidence." Medicare is giving the groups 30 days to respond with a convincing case.

A Medicare spokesman says "courtesy copies" of the letter were also sent to about a dozen other interested parties possibly including Amgen and Johnson & Johnson and that another division may have sent federal lawmakers, who recently passed a bill urging reconsideration, copies of the letter as well.

Anemia drugs are multi-billion dollar products that are used to combat the sometimes overwhelming fatigue that occurs in cancer patients getting chemotherapy. The agency's under pressure to reloosen the purse strings when it comes to payment for the drugs. Recent reports and studies indicate doctors may have been overprescribing the drugs resulting in higher risk of heart trouble, tumor growth and death.

So, Medicare announced it was reducing its reimbursement levels. Cancer doctors balked. In the letter to the doctors' groups, Medicare says it did an "exhaustive review" of hundreds of studies and thousands of comment letters it had received to arrive at its new policy. Now, Medicare wants scientific proof that it should consider overriding its own decision.

Update: In a research note to clients FBR biotech analyst Jim Reddoch writes, "We do not expect CMS (Medicare) to change its stance. After this letter and our Washington consultants' interpretations of it, we think it is less likely CMS will change its coverage policy on Aranesp." Reddoch has a Market Perform rating and $56 price target on AMGN. FBR makes a market in Amgen.

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