Congressional Action Would Protect Patient Access to Critical, Innovative Medicines

WASHINGTON, D.C. (September 9, 2003) — Today, House and Senate conferees charged with reconciling differences between the two Medicare prescription drug coverage bills passed in June (S. 1 and H.R. 1), announced an agreement on several drug access provisions that will be included in final Medicare legislation. Biotechnology Industry Organization (BIO) President Carl B. Feldbaum issued the following statement in response:

"Bipartisan efforts to establish Medicare prescription drug coverage for the nation's elderly and disabled persons moved forward today and in the process, helped protect patient access to the latest and most innovative drugs and biologics.

"BIO thanks the conferees for their hard work and in recognizing that physicians are the most appropriate individuals for determining the most appropriate medicines for Medicare patients, not federal bureaucrats. These measures will help to ensure that physicians and hospitals can continue to offer patients the latest and most innovative drug therapies. We encourage the legislators to continue to resolve other outstanding issues related to patient access until the Medicare prescription drug coverage legislation is signed into law.

"The ratified Medicare provisions announced today by congressional conferees would help to remedy the drastic cuts in Medicare reimbursement for drugs and biologics administered in the hospital outpatient setting. These cuts, which were as deep as 50 to 70 percent, were implemented by the Centers for Medicare and Medicaid Services earlier this year as part of a new payment methodology for Medicare's hospital outpatient prospective payment system (OPPS).

"Reductions of this magnitude clearly were a threat to patient access to the most innovative medicines for such diseases and conditions as cancer, multiple sclerosis, heart disease, and arthritis along with drugs designed to treat rare genetic and other disorders. Congress has recognized this threat and has now taken steps to remove it."

Under the agreement announced today, payments for OPPS-covered drugs could not fall below 88 percent of average wholesale price (AWP) in 2004 and 83 percent of AWP in 2005. In 2006, reimbursement rates would be established by a different methodology based on a study of actual hospital costs in acquiring, handling and storing drugs and biologics intended for Medicare patients in the outpatient setting. Additionally, it is understood that orphan drugs — those products designed to treat especially rare conditions — would be reimbursed on a reasonable cost basis.

"These remedies are a recognition that far too many innovative medicines have been significantly under-reimbursed under the OPPS system for the past year, making it difficult for hospitals to afford to continue providing them to the patients who need them," Feldbaum said.

In addition to the OPPS measures ratified by the Medicare conferees, the legislators also reached an agreement to establish a drug discount card program for Medicare patients and a program that would allow physicians to transmit prescriptions electronically and to view online cost-effective alternatives and information related to formulary drugs.

Although each of the provisions is now part of the final Medicare prescription drug coverage bill, Congress must pass the legislation for the provisions to become law.

BIO represents more than 1,000 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states. BIO members are involved in the research and development of health-care, agricultural, industrial and environmental biotechnology products.