Pharma wins battle against proposed Medicare reimbursement changes

CMS Director Jonathan Blum--Courtesy of Centers for Medicare & Medicaid Services

Following a huge outcry from drugmakers, insurance companies and patient advocates, the Obama administration said Monday it had abandoned proposed changes to the Medicare Part D drug benefit. The changes, initially suggested in January, would have dropped automatic coverage for antidepressants and immunosuppressants used in organ transplants, and potentially done the same for antipsychotics after 2015.

The proposed rule drew ire from a range of organizations, including the Pharmaceutical Research and Manufacturers of America (PhRMA), which released a statement in February saying the proposed changes would not only restrict patient access to needed medications but would also constitute unlawful interference in the free market for drugs. Late last week, 370 organizations asked the Centers for Medicare and Medicaid Services (CMS) to withdraw the plan, according to Reuters.

In a letter sent Monday to Congress and obtained by Reuters, CMS Administrator Marilyn Tavenner said the agency would not finalize the proposals at this time. "We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years," she promised.

CMS Director Jonathan Blum had defended the plan in February at a hearing of the U.S. House Energy and Commerce Health Subcommittee, suggesting that if the requirement to cover all drugs in a class were removed, drugmakers would have to negotiate to keep their products on plan formularies. That would help lower expenses for Part D, which has rung up $346 billion in costs since it was implemented a decade ago, he argued.

But the proposed rule change was a major threat to several Big Pharma players, including some that are developing and launching new antidepressants in a bid to recover lost revenues on off-patent blockbusters. They include Forest Labs ($FRX), which introduced Fetzima last year, and Lundbeck, maker of the new entry Brintellix. Other branded antidepressants remain among the companies' top sellers.

One industry group is unhappy about the abandoned rule changes: community pharmacists. That's because CMS had also planned to broaden the number of pharmacies covered by Medicare Part D plans, which the agency believed would further control costs. Now that plan has been dropped, too.

"We are deeply disappointed in CMS' decision not to move forward at this time with the pharmacy choice provision," B. Douglas Hoey, chief executive officer of the National Community Pharmacists Association, told Reuters. "In many rural communities, independent community pharmacies are the only pharmacy provider and they are often excluded from preferred pharmacy arrangements."

- here's the Reuters story
- read more at the WSJ (sub. req.)

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