Community Oncology Alliance Statement on White House Budget Proposal Drug Price Recommendations
Administration’s Budget has Numerous Smart, Overdue Policy Solutions; but Certain Medicare Part B Proposals Ignore History and will Backfire
Washington, DC – February 13, 2018 – Today, the Community Oncology Alliance (COA) released the following statement regarding the White House’s proposed budget recommendations and a recent report from President Trump’s Council of Economic Advisors on strategies to reform biopharmaceutical pricing.
Ensuring patients can afford and access life-saving therapies to fight cancer is a top concern for oncologists, nurses, practice administrators, and other cancer care professionals. Every day we are faced with the grim reality that the prices for critical cancer drugs in the United States are too high and unsustainable. COA believes that all stakeholders in our health care system must come together to reduce the cost of cancer care.
COA commends President Trump and his Administration for moving forward with several bold reforms to tackle drug prices. Notably, this includes the recent Centers for Medicare & Medicaid (CMS) change to hospital payments in the 340B Drug Discount Program. The White House budget proposal recommendations for continuing 340B reforms are absolutely correct and will help ensure that cancer patients in need benefit, not large hospitals. Along with efforts underway in Congress through legislation, such as the 340B PAUSE and 340B HELP acts, COA is hopeful that we will finally be able to achieve transparency and accountability in the runaway 340B program in hospitals.
The White House budget proposal for sharing manufacturer rebates and discounts with seniors in Medicare Part D is also a great idea. Pharmacy benefit managers (PBMs) have been enriching themselves with these rebates for too long, and their growing scale has resulted in higher drug costs for everyone. COA believes that the proposed Part D change to share rebates and discounts proposed will lower costs for patients, taxpayers, and the government.
Additionally, COA believes that President Trump’s proposal to expand Medicare’s policy on site-neutral payments is an extremely wise move. While saving Medicare $33.9 billion over the next decade, paying hospitals and independent physician practices the same rate would also lower patient costs for cancer care and reduce incentives for hospitals to take over independent practices.
However, COA cautions the White House that several elements of the budget could, if enacted, have extremely negative unintended consequences for patients and the cancer care system. In particular, the proposals to cut payments for Medicare Part B drugs, as well as shifting the Part B program into the Part D program are misguided. History shows that these changes will backfire, raising drug prices, driving consolidation of our nation’s cancer care system into the much more expensive hospital setting, expanding the negative influence of PBMs, and reducing patient access.
Proposal to Cut Medicare Part B Reimbursement
COA completely disagrees with the White House proposal to cut provider reimbursement for new drugs in Medicare Part B. For community oncology practices this would put reimbursement for many drugs below acquisition cost, jeopardizing the ability of oncologists to deliver the therapies and causing the practices to close their doors.
It should be noted that CMS under previous administrations has already substantially cut Medicare Part B drug reimbursement by requiring the inclusion of wholesaler prompt pay discounts starting in 2005 and the application of the Medicare sequester to Part B drugs starting in 2013. These past cuts did not reduce drug prices, but rather fueled them and drove a huge shift of cancer care to the more expensive hospital setting, increasing costs to patients with cancer and taxpayers.
In 2004, 84 percent of chemotherapy was delivered in independent community oncology practices, but by 2016 that had fallen to 51 percent, with the remainder delivered in the far more expensive hospital outpatient setting. This significantly increased costs to Medicare—in 2014, it cost Medicare $2 billion more for just chemotherapy than had the site-of-service not shifted to the hospital setting. Now, the White House has proposed cutting Part B reimbursement even more with the expressed purpose of lowering costs and drug prices, despite clear evidence that it will increase Medicare costs and further raise drug prices.
Finally, it is insulting to suggest that oncologists paid under Medicare Part B practice medicine based on financial profit incentives, not the best interests of their patients. This is not only highly offensive and derogatory, but also simply not grounded in fact. Numerous independentstudies have shown that the ‘incentive’ of reimbursement rates does not change oncologists’ prescribing patterns. Rather, it is the introduction of new, groundbreaking drugs and clinical evidence that dictates which treatment is in the best interest of the patient.
Proposal to Move Medicare Part B to Part D
COA is also extremely concerned by the White House proposal to move some prescription drugs currently paid for under Medicare Part B to Medicare Part D. This is an extremely risky proposal for patients battling cancer who already have extremely negative and dangerous experiences dealing with the influence of the large PBMs that dominate the Part D program. Today, PBMs control an estimated 80-85 percent of drug benefits for over 260 million Americans who are forced to deal with these expensive, bureaucratic corporate middlemen.
Patients battling cancer have experienced a very clear, negative shift in their ability to access needed medications in the Medicare Part D program because of PBMs. COA encourages the administration to read our series of white papers documenting the horror stories that patients face in dealing with PBMs, including a complete indifference to sick patients, dangerous mistakes, and deadly bureaucracies. Additionally, policymakers should note that the growth of middlemen PBM corporations in Medicare Part D has only served to increase drug prices.
COA applauds the administration for continuing to work on reducing drug prices. As providers on the frontlines of our nation’s fight against cancer, we see firsthand the impact that high drug prices have on patient care, access to treatment, and the entire health system. We also commend the administration for taking real steps towards reform of the broken 340B program and look forward to more action from Congress in the future.
However, the search for solutions to high drug prices should be done thoughtfully and with consideration of the lessons learned from history. Oncologists have seen several of these proposals before and they have had extremely negative unintended consequences for patients with cancer. COA urges the administration to use extreme caution and reconsider some of the proposals put forth as they will backfire, raising costs and reducing access.
Community oncology providers and COA stand ready to work with policymakers on reforms that will have a meaningful impact on reducing the cost of drugs and cancer care. We are fully committed to reducing the cost of cancer care and have been working on oncology payment reform for a number of years. Currently, COA is helping practices participating in the Oncology Care Model (OCM) succeed while planning for a future iteration of the effort we are calling the ‘OCM 2.0’ which incorporates concepts such as value-based insurance design and value-based payments for cancer therapies. These hold great promise and should be explored seriously.
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The Community Oncology Alliance (COA) has filed a lawsuit in the U.S. District Court for the District of Columbia to stop the United States Department of Health and Human Services (HHS) and the White House Office of Management and Budget (OMB) from applying the Medicare sequester cut to reimbursement for Part B drugs.
In the lawsuit, COA, which represents more than 5,000 independent, community-based oncologists, shows the sequester cut has harmed patients, decimated the nation’s independent community cancer care system, and cost seniors and taxpayers billions in unnecessary health care spending.
Sequestration is an automatic cut to Federal government spending triggered because Congress was unable to negotiate a balanced budget in 2011. The blunt budget cutting gimmick has been extended multiple times, with the current sequester scheduled to continue through 2027. Beginning in 2013, the Centers for Medicare & Medicaid Services (CMS) began to apply a 2% budget sequester cut to all Medicare Part B reimbursement, including for drugs. The lawsuit seeks injunctive relief to specifically stop CMS from applying the sequester cut to Part B drug reimbursement.
The application of the sequester cut to cancer drug payment set up the nation’s cancer care system for the closure or consolidation of independent community oncology practices, where the majority of Americans with cancer are treated. This has created access problems for patients as cancer care moves into the much more expensive hospital system, driving up costs for seniors with limited mobility and fixed incomes, as well as all taxpayers who fund Medicare.
As the 2018 Community Oncology Practice Impact Report notes, since the sequester started in 2013, approximately 135 independent community cancer clinics – many comprised of multiple locations – have been forced to close their doors, and approximately 190 clinics have been acquired by hospitals. Research has found that the consolidation of community cancer practices into hospitals cost Medicare and taxpayers an extra $2 billion in 2014 alone. In addition, Medicare beneficiaries responsible for the 20% coinsurance saw their bills rise by $500 million in that same year.
The lawsuit notes that application of the sequester cut to Part B drug reimbursement is both illegal and unconstitutional. This is because Part B drug reimbursement was set by Congress at average sales price (ASP) plus 6% in law in the Medicare Modernization Act of 2003. By applying the sequester cut to Part B drug reimbursement, the Administration has bypassed Congress and the law by lowering Part B drug payments to ASP plus 4.3%. As such, HHS and OMB are violating the separation-of-powers doctrine of the Constitution. Simply put, the Executive Branch cannot amend legislation passed by Congress under the guise of executing the laws.
In conjunction with the complaint, COA also sent a letter to HHS Secretary Alex Azar explaining why legal action was a last resort, providing preliminary input on why proposed Medicare Part B changes in the President’s blueprint on drug prices will be harmful to cancer patients, and outlining some of COA’s solutions to increasing cancer drug prices, as well as reiterating community oncology’s desire to work together with the Trump Administration.
“We are filing this lawsuit on behalf of the millions of Americans who face cancer and should be able to get high-quality, affordable, cancer care close to home. The sequester has been one of the biggest reasons why they can’t do that, and it is time for this to stop,” said Jeff Vacirca, MD, FACP, president of COA and CEO of NY Cancer Specialists. “I see the impact of the sequester cut to Part B drug reimbursement to patients and practices on a daily basis. Because of it, our country is left with less access to cancer care in communities – particularly in rural and underserved regions – as well as unnecessarily high spending to receive it in hospitals.”
“Filing this lawsuit was a last resort after numerous meetings, discussions, and letters to HHS and OMB that went nowhere. We had hoped that the current Administration would have fixed what is a constitutional violation that is clearly harming seniors with cancer,” said Ted Okon, executive director of COA. “Community oncologists support and want to work together with the Administration on solutions to reduce drug prices and health care spending. However, the sequester cut does not do that. It has backfired in spectacular fashion, costing seniors and Medicare billions. It is time for this madness to stop.”
Independent community oncology practices and providers are dedicated to lowering the escalating cost of cancer care. They have been pioneering oncology payment reform for years, including private payer programs based on the Oncology Medical Home, the Medicare Oncology Care Model (OCM), and working on the next-generation, improved OCM 2.0 model that includes payment for cancer drugs based on value.