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Marguerite.Baxter{at}verizon.net
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CONGRESS BEGINS ACTION ON NIH BUDGET |
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 Top Congress Begins Action on... National Institutes of Health...Congress Shapes A Prescription... |
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On June 25, 2003 the House Labor-HHS Appropriations Committee completed action on its version of the FY 2004 funding for the social, health, and education programs under their jurisdiction. The bill’s funding level represents a 4% growth from the FY 2003 funding levels. The Committee provided $27.664 billion to the National Institutes of Health (NIH), $682 million above FY 2003.
The Senate Labor-HHS Appropriations Committee also completed Committee action on June 25, 2003. Under the Senate proposal, the NIH would receive $28.9 billion, an increase of $1 billion over FY 2003, and substantially above the House recommendation for the NIH.
The National Cancer Institute (NCI) is slated to receive an increase of $178 million under both the House and Senate proposals for an appropriation of $4.77 billion. Therefore, if the conferees of the House and Senate take the approach of "splitting the difference" between the House and Senate numbers, the NCI funding proposal is likely to be unaffected. If funding differences between the two measures are addressed through alternate strategies, like an across-the-board reduction, the final recommendation for the NCI would be reduced from the current proposal.
Under the Senate bill, the Centers for Disease Control (CDC) and Prevention would receive an appropriation of $4.4 billion, an increase of $148 million above FY 2003 funding. This recommendation is below that provided by the House, which proposed an increase of $304 million to the CDC’s budget for FY 2004. Funding for Chronic Disease Prevention and Health Promotion programs, where many of the cancer-related programs are located, under the Senate bill is recommended to be $801 million, an overall increase of approximately $12 million. The House bill recommended that the Chronic Disease Prevention and Health Promotion programs be increased $72 million over their FY 2003 funding levels.
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NATIONAL INSTITUTES OF HEALTH SUBJECT OF ETHICS INVESTIGATION |
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TopCongress Begins Action on...National Institutes of Health...Congress Shapes A Prescription... |
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CONGRESS SHAPES A PRESCRIPTION DRUG BENEFIT |
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TopCongress Begins Action on...National Institutes of Health...Congress Shapes A Prescription... |
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There are substantial variations in the two proposals that will need to be ironed out in a Conference between the two chambers when they return from recess. While the intent of the Republican leadership is to complete this step and send a final package to the President prior to September, concerns over whether or not the plan will work may slow or impede this political milestone from being realized.
The alterations to the Medicare program that will support a drug benefit envisioned in each of the bills, as well as the President’s proposal, are dependent upon private insurance in two ways. First, a separate policy for drugs will be required. Second, a preferred provider network will need to be launched within the context of Medicare. While younger beneficiaries are broadly using this type of a network, few Medicare patients participate in them. At the present time, there is no commitment by insurers to take part in these programs, leaving open the question in many venues as to whether or not the proposals included in the House and Senate bills are even viable. The fundamental question of whether or not the existing 40 million beneficiaries would be able to find a plan is now being asked, even though the House and the Senate have enacted separate bills in their respective chambers.
Whether or not the insurance industry’s participation would be a sound business decision for the private sector is dependent upon several factors that have yet to be determined:
Each of these issues is dealt with differently in the House and the Senate versions, and therefore it is not possible for the insurance industry to establish at this juncture whether or not the incentives will be created to support a business decision to participate.
The House and the Senate bills each set-aside $400 billion over the next 10 years to establish a prescription drug benefit within Medicare. The program would be voluntary and presents the beneficiary with two options: stay in traditional fee-for-service Medicare and purchase drug coverage through a separate policy, or move into coverage from a private health plan that includes a drug benefit, such as a preferred provider network. Under each of these options the drug plan would be the same and the federal government would subsidize the costs as well as catastrophic costs associated with pharmaceutical expenditures.
The Senate bill, S. 1, the Prescription Drug and Medicare Improvement Act, addresses rural health care equity where competition in the marketplace is low or non-existent and improves Medicare medical benefits through the creation of programs including disease management and preventative treatments. Drug coverage is proposed to begin in 2006 with a transition period beginning in January 2004 through the use of a Medicare-approved prescription drug card that will enable them to realize discounts of 10 to 25 percent. Once the drug benefit is in place, beneficiaries are expected to pay a monthly premium of $35 and an annual deductible of $275. Medicare would pay 50 percent of drug costs from $276 to $4,500/year. The beneficiary would then pay all drug costs up to about $5,800/annually. Medicare would pay 90% of all costs above $5,800. Low income beneficiaries would be eligible to receive subsidies from the government, including subsidies to pay for cancer treatments. In addition, the Senate bill includes provisions that alter existing patent law for novel therapies in an effort to shorten patent life and market exclusivity for brand products and increase the number of generic products in the marketplace.
The House version, HR 1, the Medicare Prescription Drug and Modernization Act of 2003, varies somewhat from the Senate bill. While the private sector insurance programs are similar, the House bill recommends that beneficiaries pay a $250 deductible and that the government would assume 80% of a beneficiary’s drug costs up to $2,000. Then a "doughnut hole" would be created in that no further benefits would be provided to the beneficiary until they reached expenditures of $4,900 at which point a catastrophic-type benefit would cover all costs associated with prescription drugs.
Additional modernizations are included in the House version. These include an initial physical upon entry into Medicare, cholesterol screening, disease management, rural relief, and reforms for pricing of drugs administered by physicians, including oncologists.
Presently, reimbursement for cancer therapies is 95 percent of the average wholesale price (AWP). Medicare pays 80 percent of the cost; patients pay the 20 percent co-payment. Companies submit the AWP to several reference sources but are reimbursed at acquisition costs. The so-called "spread" between the cost of acquiring the drug and the actual reimbursement rate is used to pay for physician costs of drug administration that are not reimbursed under the current relative value reimbursement scale. The Senate bill proposes to lower the reimbursement rate to 85 percent of AWP, and it is estimated that the savings to the government would be $16 billion over 10 years. At the same time the Senate bill would boost payments to oncologists by $250 million annually to cover the costs of administration in the office setting. This amount is far short of what the American Society of Clinical Oncology (ASCO) has stated is required to sustain chemotherapy administration in the office setting. The House Ways and Means bill proposes to discontinue the practice of AWP reimbursement altogether. It sets up a competitive bidding system whereby Medicare would directly reimburse independent contractors who will provide product to physicians. The House Energy and Commerce proposal sets the new reimbursement for cancer therapies at the Average Sales Price plus 12 percent to cover the costs of the chain of commerce as well as key administration functions. Under this proposal the physicians would realize an additional $200 million annually for costs incurred in the administration of chemotherapy in the office setting—below the Senate proposal and well below the reimbursement rate received currently. The Energy and Commerce proposal is estimated to save the government $8 billion over 10 years. House and Senate conferees will determine the final outcome of these various proposals.
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