New Medicare Rules Bar Cancer Drugs for Patients

Sharp Reimbursement Cut May Force Hospitals to Stop Treatments


Dec. 10, 2007 —

When Jacqueline Foster was 67 years old, she was diagnosed with orbital lymphoma, a non-Hodgkins form of lymphoma found behind the eye.

Three years later, in 2002, the disease had progressed so much that Foster was forced to begin chemotherapy. After suffering through several months of chemotherapy treatment — and, of course, the loss of her hair — Foster learned there was still some residual lymphoma. In the summer of 2007, she was finally offered another treatment option.

Foster's doctor, Mark Kaminski, director of the leukemia and lymphoma program at the University of Michigan Comprehensive Cancer Center, suggested she try a radioimmunotherapy treatment drug called Bexxar. The treatment required Foster to be injected with the drug — a radioactive antibody that targets radiation to cancer cells — only twice over the course of a week.

"Within a week or 10 days, I could feel the tumors going away in my neck and my arms. I literally could feel them disappearing," Foster said. "There is no comparison. Bexxar is a one-shot deal with no or very few side effects. … This should be the front line of treatment for lymphoma."

But new Medicare rules for this class of radioimmunotherapy cancer drugs may bar thousands of lymphoma patients from receiving the treatment, which is usually reserved for lymphoma patients with tumors sensitive to radiation.

Beginning Jan. 1, Medicare will reimburse only $16,000 of the $30,000 total cost for hospitals to acquire and administer each treatment of radioimmunotherapy drugs. Currently, only two drugs — Bexxar and Zevalin — fall under this class of therapy.

Up to 10-Year Remission Rate

The Food and Drug Administration first approved Bexxar in 2003, after about 13 years of ongoing clinical trials, to prove the safety and efficacy of the drug. Kaminski, who helped develop Bexxar, said he hoped the drug's success in clinical trials would have encouraged the Centers for Medicare and Medicaid Services (CMS) not to cut reimbursement for the treatment.

"The thing that is quite terrifying for many patients and physicians is not having this option available if there cuts actually take place," Kaminski said, adding that therapies like this have proven successful for many forms of lymphoma.

"About 30 percent of patients [who receive Bexxar] achieve a remission that goes on for years, even beyond five to 10 years, despite if they may have already had prior treatment which was refractory, or not having responded to previous treatment at all," Kaminski said.

While the class of drugs is small and underutilized, many doctors, patient advocacy groups and drugmakers insist this sharp cut in reimbursement for the drugs will force hospitals to stop offering radioimmunotherapy as a treatment option altogether, and put a chill on further research in this area.

According to Dr. Samuel Silver, chair of the subcommittee on reimbursement for the American Society of Hematology and professor of medicine at the University of Michigan, Medicare cuts such as these "have a pervasive effect on the payer community."

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.

Low to High Cost of Bexxar

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."

However, because the CMS ruling on these new policies came so late in the year, many believe there is little that can be done before the changes are instituted in less than month.

Legislatures in Washington have a small window of time left to intervene before the end of the year. "It is just not right for the government to take away a treatment that is so effective and is life saving," Kaminski said.

Doctors are hoping legislative action can halt the payment cuts for now so that more accurate calculations can be gathered over the next year to further refine the costs.

"We tell our patients to write their congressmen," said Silver.

Meanwhile, Foster continues to speak out on behalf of the treatment that saved her life and hopes the decision of CMS to cut reimbursement is somehow reversed.

"They are penalizing patients if they eliminate this therapy," she said. "It would be an absolute travesty if people aren't given this treatment."