MFF Forum, edition 5

Medicare Reimbursment for Orphan Drugs

In a major victory for patients, the House and Senate have agreed to several provisions designed to restore Medicare reimbursement to drugs and biologics provided in the hospital outpatient setting. Because access to orphan drugs for rare diseases were being threatened, the Mycosis Fungoides Foundation went to Washington to support this issue for patients.

Since January 1, the federal Centers for Medicare and Medicaid Services had reduced Medicare reimbursement for many outpatient drugs and therapies administered at hospitals, making it difficult for hospitals to continue to provide the medications to patients who need them.

The Medicare hospital Outpatient Prospective Payment System (OPPS), used by the Centers for Medicare and Medicaid Services to reimburse hospitals for services and supplies provided to outpatients, was at the heart of the problem. Treatments for rare disorders were bundled for payment with high-volume, non-orphan products that often cost considerably less. The result is that Medicare patients suffering from rare diseases like ours were being denied access to the newest -- and perhaps best -- treatments available.

Since January, many hospitals have reluctantly absorbed the cost of providing such treatments despite the fact that a number of facilities are operating under heavy budget deficits. However, hospitals cannot continue this practice without adequate funding. The new rule has cut reimbursement rates to hospitals by an average of 35 percent and is forcing hospitals to weigh the impact of new medicines on the lives of patients against the cost of the medications. None of us wants our doctors to be forced to make patient treatment decisions based on cost. But with this new rule, that is exactly what was happening.

Before the new payment system took effect, a few orphan drugs meeting new criteria were exempt from the standard reimbursement rate. This made sense, as demand for these treatments was low and variable, yet extremely costly to manufacture and stock. The new rule places far too stringent criteria around exempt orphan drugs and the Centers for Medicare and Medicaid Services isn't applying its own criteria uniformly. Only four therapies obtained this exemption with the new rule, leaving dozens of other products inadequately reimbursed.

The new rule also had the potential to limit patient access by reclassifying diagnostic and therapeutic radiopharmaceuticals. Although the Food and Drug Administration has classified these products as "drugs" or "biologicals," the Centers for Medicare and Medicaid Services has determined that it will not recognize them as such. This effectively limits reimbursement and thereby patient access to therapies that were previously available.

Although these provisions are now part of the final Medicare prescription drug coverage bill, Congress must pass the legislation for the provisions to become law. The Mycosis Fungoides Foundation will be following this closely, to make sure that seniors do not lose access to innovative drugs and cutting-edge.

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