Life Science Leaders Comment on Medicare Part B Drug Payment Proposed Rule

The Arizona Bioindustry Association (AZBio) together with 42 other state bioindustry associations submited comments to the Centers for Medicare & Medicaid Services’ (CMS’s) Center for Medicare and Medicaid Innovation (CMMI) Medicare Part B Drug Payment Proposed Rule, released March 8, 2016.

The comments, as filed on Monday May 9, 2016 at 4:25 EDT are provided below.

May 9, 2016

Sylvia Matthews Burwell
U.S. Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C. 20201

Andrew M. Slavitt
Acting Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard,
Baltimore, M.D. 21244

Dear Secretary Burwell and Acting Administrator Slavitt:

We, the 43 organizations listed below representing the Council of State Bioscience Associations (CSBA), are writing to express our strong concerns with the Centers for Medicare & Medicaid Services’ (CMS’s) Center for Medicare and Medicaid Innovation (CMMI) Medicare Part B Drug Payment Proposed Rule, released March 8, 2016.
We collectively represent members across the country dedicated to developing therapies that prevent, treat, and cure disease. Access to these therapies can greatly improve patients’ lives and reduce healthcare expenditures across the Medicare program. We are therefore deeply concerned that the Proposed Rule, if implemented, will:

  1. Adversely affect access to care for Medicare patients with complex, chronic conditions;
  2. Force patients to travel farther for care and/or seek care in higher-cost settings; and
  3.  Negatively impact the innovation ecosystem, threatening investment in future treatments and cures for certain diseases.


Moreover, we are deeply troubled that the Proposed Rule was developed in the absence of stakeholder feedback and insight, and does not adhere to the statutory requirements for developing a CMMI demonstration in the first place. Based on these concerns, we strongly urge the Agency to withdraw the Proposed Rule in its entirety.

First, Medicare Part B beneficiaries suffer from some of the most complex conditions, including, but not limited to: cancer, macular degeneration, hypertension, rheumatoid arthritis, Crohn’s disease, ulcerative colitis, and primary immunodeficiency diseases. These patients often must try multiple prescription drugs and/or biologics before finding the most appropriate treatment regimen for them. Thus, patients and their providers must have flexibility to make decisions based on the expertise and training of the provider and the individual clinical circumstances of the patient. The Proposed Rule threatens this critical patient/provider clinical decision-making process by proposing a drastic reduction to Part B reimbursement for these therapies, which would apply on top of the two-percent cut already made by sequestration.

Second, the more difficult it is for a provider to obtain a Part B therapy at or below the Medicare reimbursement rate, the more likely it is that patients will not get access to needed therapies or will need to seek care outside of the community setting—namely in hospital outpatient departments. In this way, the Proposed Rule will exacerbate the trend toward hospital/provider consolidation, forcing patients to travel farther and increasing the costs of care, both to the patient and to the Medicare program.

Third, over the longer-term, inadequate reimbursement for innovative therapies also will negatively impact the ecosystem that sustains biopharmaceutical innovation. This can lead to diminished investment in research and development for therapies that may be covered by Part B. Considering that treatments and cures are the most likely healthcare interventions to improve the health outcomes of patients suffering from the diseases and conditions identified above, and are the most likely to offset costs across the healthcare system, disincentivizing innovation in this space would undermine the Administration’s efforts to achieve improve quality of care and decrease overall expenditures over time.

Finally, the process used to develop the Proposed Rule deviated from statutory requirements and principles of good policymaking. CMMI is statutorily required to ensure that its initiatives target “defined populations” to address “deficits in care.” CMS did not meet this requirement in the Agency’s approach to the Proposed Rule. The Agency not only failed to explain the “deficits in care” the model was designed to address, but we question the existence of such “deficits in care” across the diverse Part B population in the first place, particularly given that the Part B program’s current reimbursement methodology has been shown to help stem the growth in spending and facilitate patient access to the most appropriate treatments.1 Moreover, CMMI is statutorily prohibited from expanding the scope and duration of a model until the Agency has conducted a careful assessment of the model’s impact on quality of care, patient access, and Medicare spending. However, notwithstanding the fact that CMMI conducted no such assessments, the proposed model would apply broadly on a nationwide basis—to all states except Maryland—and would include the majority of Part B therapies.

A 2015 Moran analysis that compared volume-weighted ASP to CPI-M by quarter, from 2006 through the third quarter of 2014, found that while CPI-M has gradually been increasing from 2006 to the present, the volume-weighted ASP has maintained a flatter line (see The Moran Company. 2015. Trends in Weighted Average Sales Prices for Prescription Drugs in Medicare Part B, 2006-2014. Figure 4, p. 5, available at:
Moreover, there is evidence to suggest that the ASP methodology does not drive provider decision making. For example, in a 2015 study published in Health Affairs, researchers found that, when Medicare providers were confronted with two therapies of similar efficacy, providers prescribed the less expensive therapy more frequently, “despite financial incentives for physicians to prescribe the more expensive agent[,]” see Pershing, S., et. al. 2015. Treating Age-Related Macular Degeneration: Comparing The Use Of Two Drugs Among Medicare And Veterans Affairs Populations, p. 234. Health Affairs 34(2): 229-238.

In sum, we strongly urge CMS to permanently withdraw the Part B Drug Payment Model. In the future, as CMS contemplates payment and delivery system reforms, through the Innovation Center or otherwise, we urge the Agency to rectify the significant shortcomings of the process utilized to develop the Proposed Rule. In particular, the Agency should ensure that demonstrations focus holistically on the entire continuum of patient care in an effort to improve care quality, rather than myopically focusing on cutting costs.


Arizona Bioindustry Association (AZBio)
Bio Nebraska Life Sciences Association
Bioscience Assoc. of North Dakota
Bioscience Association of Maine
Bioscience Association of West Virginia (BioWV)
California Life Sciences Association
Colorado Bioscience Association
CURE (Connecticut United for Research Excellence)
Delaware Bio
Georgia Bio
Idaho Technology Council
Illinois Biotechnology Industry Organization—iBIO®
Indiana Health Industry Forum (IHIF)
INDUNIV Research Consortium/Bio Alliance of Puerto Rico
Kentucky Life Science Council
Life Science Tennessee
Life Science Washington
Medical Alley
Montana BioScience Alliance
New Mexico Biotechnology & Biomedical Association (NMBio)
North Carolina Biosciences Organization (NCBIO)
Oregon Bioscience Association
Pennsylvania Bio
Rhode Island Tech Collective
South Dakota Biotech
Tech Council of Maryland
Texas Healthcare & Bioscience Institute (THBI)
Virginia Bio


Posted in AZBio News, Government Affairs Blog, Inside the Belt Way.