HHS announces that it will slash prices for infusion drugs
HHS announces that it will slash prices for infusion drugs
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The Department of Health and Human Services (HHS; Washington) will instruct its fiscal intermediaries to implement revised average wholesale prices (AWP) for pharmaceutical products, including infusion drugs, effective Oct. 1, HHS Secretary Donna Shalala said last week. The move comes in the wake of pressure by House Committee on Commerce Chairman Thomas Bliley (R-VA).
Earlier in the month, Bliley told Shalala that he was concerned about the "excessive reimbursements" that Medicare is paying for certain drugs paid for by Medicare and probed Shalala on what actions the Health Care Financing Administration (HCFA; Baltimore) and HHS have taken in the area.
Shalala told Bliley May 31 that HHS is now moving administratively to take advantage of the newly available, more accurate data on AWP developed for Medicare as part of Department of Justice (DOJ; Washington) investigations. Shalala said these data are from catalogs of drug wholesalers, which DOJ said make up a significant portion of the wholesale market.
According to Shalala, DOJ and state Medicaid Fraud Control Units have compiled data for about 400 national drug codes. In order to implement these new codes quickly, Shalala said, HHS will provide carriers the average of the wholesale catalog prices, just as it has been calculated by First Bank, a company that specializes in the compilation of drug pricing data. Shalala said these drugs represent about one-third of Medicare spending on drugs.
"In June, we will send this information to Medicare carriers so they can use it when they determine AWPs for their next quarterly update of Medicare drug allowances, which will become effective on Oct. 1, 2000," Shalala wrote Bliley. She said the HHS General Counsel indicated this is the fastest way to implement the changes absent the formal rule-making process.
The National Home Infusion Association (NHIA; Alexandria, VA) is aggressively challenging implementation of the new methodology and the revised and "dramatically lower" AWPs. It reported that the new AWPs developed by DOJ were provided to all the state Medicaid agencies prior to May 1. NHIA said the list is comprised of roughly 50 inhalation, infusion, and injectable agents that in some cases fall below acquisition costs. Moreover, the association reported that this is considered only the first phase in implementation and that additional drugs are also being evaluated.
NHIA told HHBR last week that it believes 14 states, including Alaska, Arkansas, Connecticut, Idaho, Illinois, Indiana, Maine, Maryland, Missouri, New Hampshire, New Jersey, Oklahoma, Pennsylvania, and Wisconsin, may already have implemented these new rates.
Bliley noted that the HHS Office of Inspector General has already issued a series of reports that have identified what he called significant discrepancies between the prices Medicare pays for certain drugs and prices available to private sector purchasers. "In its December 1997 report, the OIG estimated that in 1996 alone, Medicare could have saved $447 million by reducing the Medicare-allowed price for just 22 drugs to the actual prices available in the private wholesale sector," he said.
He also pointed out that the OIG reported Medicare could have saved at least 40% of the current allowance for almost half of the 22 drugs and a whopping 90% for one particular drug by limiting reimbursement to available private sector prices.
Bliley said several drug manufacturers recently confirmed this trend. Moreover, he said, his committee is continuing to investigate the practices of certain drug manufacturers relating to allegations that they manipulated the AWP of particular drugs in order to increase the sales of these drugs.
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