Medicare may experiment with caps to cancer-drug reimbursements

Look out, cancer drugmakers--the U.S. is weighing changes to how Medicare reimburses docs for administering pricey oncology drugs.

A recent memo from the Centers for Medicare and Medicaid Services told Medicare contractors who process payments to set up a system that lets the government vary how much it reimburses physicians for cancer-fighters and other drugs they administer, according to their geographic location, Bloomberg reports. Then, according to the memo, the U.S. government could initiate a pilot program to see how putting a cap on Medicare Part B reimbursement affects which drugs doctors choose.

CMS told Bloomberg that the memo was released prematurely, and it's been removed from the agency's website.

As it currently stands, Medicare typically pays doctors a drug's average sales price, plus an added 6%, for treatments they administer in their offices--including cancer infusion therapies and pricey new products whose price tags can exceed $100,000 a year, Bloomberg notes. Some opponents have pointed out that the system gives healthcare practitioners a financial incentive to dole out the priciest treatments.

Beyond that, the current reimbursement system "does not take into account the effectiveness of a particular drug, or the cost of comparable drugs, when determining the Medicare payment amount," the memo said.

Both of those factors are regularly looked at by countries around the world when it comes to government drug coverage. In the U.K., for instance, manufacturers often have to offer up discounts to get their new treatments past cost-effectiveness gatekeepers. Germany's iQWIG requires new therapies to deliver an additional benefit beyond already-available drugs if they want to secure premium pricing.

But absent such a body, drug prices have skyrocketed recently in the U.S., a phenomenon that's drawn its fair share of attention from presidential hopefuls. Candidates on both sides of the aisle have talked up plans to give Medicare power to negotiate drug prices for itself, with Republican frontrunner Donald Trump most recently joining the chorus.

Other groups have come up with their own recommendations to curb rising costs, particularly for expensive cancer treatments. Last June, Memorial Sloan Kettering Cancer Center rolled out an interactive calculator, dubbed DrugAbacus, to value meds based on side-effect data, survival benefits, disease incidence, R&D spending and more. And a couple of months prior, oncologists from the Mayo Clinic released a paper arguing for value-based pricing.

February 10, 2016 | By Carly Helfand

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