Because federal law mandates that a hospital, which doesn't offer a drug to Medicare patients, cannot offer it to patients with private insurance, either, many doctors fear hospitals will discontinue use of the treatment if they lose nearly $14,000 each time the treatment is administered. "Because of that extra issue, this could be a death sentence for … an excellent therapy that needs to be used more," Silver said.
CMS maintains that the reimbursement changes were based on hospital cost reports for the last three years. According to Don Thompson, acting deputy director of the Hospital and Ambulatory Police Group for CMS, the claims data submitted by hospitals in the past revealed "widely varying reimbursement rates" for radioimmunotherapies. CMS reports that in 2007 the average Medicare payment was $15,400 for Bexxar, and $21,550 for Zevalin. Based on these numbers, Thompson said CMS is "actually increasing payment [for radioimmunotherapies] in 2008."
The proposed 2008 payments are part of Medicare's new strategy to create a national program where all hospitals are paid the same for providing the same services.
However, doctors and drugmakers claim the decision to make these payment changes was based on inaccurate data.
"What we realized is that somewhere along the line, the methodology that [CMS] was using is way below what the acquisition price [of Bexxar] is," said Dave Moules, vice president of the oncology unit of GlaxoSmithKline. Instead of basing the amount of reimbursement for Bexxar on the average cost of the drug provided by GSK — which Moules said is $26,780 — CMS based the reimbursement rate on the cost reports provided by hospitals.
Moules said he believed the data CMS received from hospitals was skewed, because the claims information CMS received on the acquisition price of Bexxar ranged from a low of $44 to a high of $66,000.
One of the reasons for this wide range of charges may be that manufacturers sometimes offered the drug to hospitals at discounted prices.
"Why would a hospital get a drug for … $27K, and only report the charge as $16K? It may be because those hospitals are only being charged by the manufacturers for $16K, and not $27K," a CMS spokesperson said.
However, Moules said the only discounts offered to hospitals for Bexxar are the "customary discounts — 2 percent."
According to Moules, the price of the radioimmunotherapy drugs cannot be lowered, due to the complicated manufacturing and delivery process that the medicines require.
"The cost is $26,780 for Bexxar, and there is also the radiopharmacy charge for the compounding, which is about $3,000," said Moules. "There has been a significant cost to develop the drug and bring it to the market."
"This is not a drug you just take off a shelf," Kaminski explained. "The drug has to be manufactured weekly, because the radioactivity has a limited half-life. It is tailor-made and delivered overnight to the patients."
In reaction to the new Medicare rules, Sen. Debbie Stabenow, D-Mich., proposed an amendment to stop the ruling, which prevents hospitals from providing radioimmunotherapy treatments to non-Medicare patients if they don't offer the treatment to Medicare patients.
"I have an amendment that would extend the payment [by] one year," Stabenow said. "It is a very small cost, less than $50 million. In the context of the federal budget, this is a rounding error."