Life Science Compliance Update

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October 05, 2017

CMS Announces the End of Part B Demonstration

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The Centers for Medicare & Medicaid Services (CMS) announced it will officially withdraw the controversial Obama-era Medicare Part B Drug Payment Model Demonstration, almost ten months after the Obama administration announced that they would not finalize the demo. Under President Obama, CMS ultimately decided to withdraw the proposed rule after an overwhelming backlash from bipartisan lawmakers, the pharmaceutical industry, and patient stakeholders.

The Demonstration

The two-phase nationwide demonstration, driven by the Center for Medicare and Medicaid Innovation (CMMI), would have tested reformed Average Sales Price (ASP) payment for Medicare Part B medicines using ASP plus 2.5 percent and a flat fee during Phase I. A planned Phase II had envisioned the application of value-based purchasing tools, potentially including reference-based pricing, indications-based pricing, risk-sharing agreements, and other methods.

Stakeholders Against Demonstration

Republicans and even some Democrats in Congress objected to the proposed demonstration, arguing that it could limit patient access to certain drugs, is too large in scope, and could harm independent, small and rural physician practices. Many pharmaceutical stakeholders, doctors, and some consumer groups opposed the demonstration, and will likely point to it as evidence to why Congress should consider curbing the wide-ranging authority of CMMI.

Example of Physician Position

Many physician groups opposed the Part B Demonstration, but the American College of Rheumatology’s statement explains the general concerns they held with the Demonstration.

Statement from Dr. Sharad Lakhanpal, MBBS, MD, President of the American College of Rheumatology:

"The American College of Rheumatology commends the Centers for Medicare and Medicaid Services (CMS) for finalizing its decision to withdraw the Part B Drug Payment Demonstration. We thank CMS leadership for listening to the rheumatology community's concerns about the negative impacts this proposal would have on patient choice and access to life-saving biologic therapies.

"For millions of Americans living with painful and debilitating rheumatic diseases, safe and reliable access to biologic infusion therapies is not a luxury but a necessity. That's why the ACR has strongly voiced opposition to this proposed rule and its potentially negative, unintended consequences for rheumatology patients and providers alike.

"The ability for our Medicare patients to access biologic therapy infusions - particularly in rural and underserved areas of the country - is already tenuous because the current payment structure does not fully cover the cost of procuring and administering these therapies in the outpatient setting. If the additional payment cuts from the demonstration project were to go through, many rheumatology providers would be forced to stop administering biologic infusion therapies altogether. This would in turn force patients to seek treatment in less safe and more expensive settings, if they were able to access biologic therapies at all.

"While the ACR has vigorously opposed the Part B demonstration project, we remain supportive of CMS' broader effort to improve healthcare quality, accessibility and affordability in the Medicare system while reining in excessive drug costs. In the future, we look forward to working with CMS to develop a payment model that achieves these goals while also ensuring patients can continue to access high-quality rheumatology care and treatments."

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