BIO Statement on Proposed Part B Drug Payment Model

Washington, D.C. (March 9, 2016) –Biotechnology Innovation Organization (BIO) Executive Vice President for Health Policy Dan Durham released the following statement regarding yesterday’s proposed Part B Drug Payment Model and ASPE Issue Briefs:

“BIO is thoroughly reviewing the Medicare Part B Drug Payment Model released yesterday, and we intend to submit comments reflecting our comprehensive feedback on the proposal. However, upon initial review we are gravely concerned that the Model threatens to disrupt the successful reimbursement framework for drugs covered under the Medicare Part B program, particularly for rural and smaller provider groups. We are also disappointed that CMS developed this proposed model with little, if any, stakeholder input, despite its broad impact on a vital government program.

“The patients served under Part B include those fighting cancer, multiple sclerosis, and rheumatoid arthritis—those most in need of the medicines their doctors prescribe. Reducing provider reimbursement for these patients’ therapies can disrupt patient access, diminish their health outcomes, and increase overall healthcare expenditures—which can offset any short-term savings. Moreover, evidence shows that the ASP framework is working. A 2011 study found that "proposals to alter Medicare Part B drug reimbursement place a successful program and the patients it supports at risk, and thus, are neither sound nor sustainable reform policies that support overall debt reduction." The same study also found that the current reimbursement formula "constrain[s] costs in an efficient market-driven manner that allows both small providers in rural areas and large practices to provide ongoing care to Medicare beneficiaries.”

“Further, cutting reimbursement to community providers risks accelerating the shift of patients into more expensive care settings, which studies have found drives up overall costs.

“Any approach to refining the program should focus on improving patient access, the quality of care they receive, and their long-term outcomes, not just on the short-term cost of care alone. Any such approach also should include a study of the impact on patients and providers, while also taking into account the cuts already imposed through sequestration. Moreover, while value-based reimbursement arrangements can be one promising mechanism to recognize the value of innovative therapies, they must be considered thoughtfully and must eschew a limited range of approaches to avoid stalling innovation in the long term. BIO will continue to explore policies that achieve these goals, but the Part B Drug Model released yesterday fails to meet these basic criteria.

“We are also concerned that the ASPE Issue Briefs released this afternoon, purportedly to justify the need for the Model, fail to accurately represent the overall marketplace and value proposition of prescription drugs. They do this by cherry-picking data from years with unusually high prescription drug expenditure increases. Historically, expenditures on prescription drugs have been quite stable as a percentage of overall health spending, even if rates of growth vary cyclically as new, high-value therapies become approved and older therapies face generic competition. Further, these reports fail to accurately and fully account for the savings which medicines produce in other areas of healthcare spending by reducing the need for services such as hospital stays or physician visits.

“We urge the Agency to consider input from all affected stakeholders in deciding whether to proceed with this demonstration.”

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