Healthy Skepticism Library item: 10801

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Johnson A.
Feds May Rejigger Payment for Bundled Drugs
The Wall Street Journal Health Blog 2007 Jul 3
http://blogs.wsj.com/health/2007/07/03/feds-may-rejigger-payment-for-bundled-drugs/?mod=yahoo_hs

Full text:

The government is looking to adjust a reimbursement policy that’s drawn harsh criticism from doctors. The adjustment, proposed yesterday, could help doctors who say they’re getting strong-armed by Amgen’s strategy of bundling multiple drugs.

Since 2005, Medicare has been reimbursing physicians who administer injected and infused drugs based on a metric called “average sales price.” It’s meant to be an average of all the prices in the market, including the deep discounts to big buyers.

Doctors have been steamed though, especially cancer docs who use anti-anemia medicines made by Amgen and Johnson & Johnson. They say that in order to get a good price on Amgen’s cancer drug Neulasta, they often need to sign up to buy a lot of Aranesp. J&J’s fought back with deep discounts on its own product and has even sued Amgen. As a result of all the rebates, the ASPs for both anemia drugs – and the Medicare reimbursement paid to doctors–are being pushed down.

The report that the proposal is based on gives this example: Drug A and Drug C (say, Aranesp and Neulasta) are bundled together and have a discount of $200,000 on sales of $1 million. If Drug A sells $600,000, under the new rules the drug maker would now have to put 60% of the discount toward that drug’s ASP.

In an interview with the Health Blog, Geoffrey Porges of Sanford Bernstein called the change “a shot on Amgen.”

The proposed change could make drug companies rethink their bundles. It could push down the reimbursement amounts for Aranesp, giving doctors potentially less incentive to buy Aranesp. That would be good news for doctors who say that the way Amgen is packaging its drugs is forcing them to make choices based on economics instead of clinical benefit.

An Amgen spokeswoman says the company is reviewing the impact of the proposal and intends to comment. A spokeswoman for J&J’s Ortho Biotech, which makes Procrit, says it’s reviewing the proposal and will be commenting to CMS during the comment period.