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Merrill Goozner, Editor
Goozner

A little extra in the fiscal deal

Backroom deals are bad medicine and no way to set payment policy


By Merrill Goozner
Posted: February 2, 2013 - 12:01 am ET
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Legislators in Washington all claim they want to hold down healthcare spending, recognizing it is the main driver of the nation's long-term deficit. Yet that doesn't stop them from tinkering with the Medicare payment system to reward favored friends at the expense of taxpayers, insurers or providers.

The latest cases of special-interest dealing came in the fiscal-cliff deal passed during the waning hours of the last Congress. The legislation contained at least two provisions that needlessly rewarded companies with well-heeled lobbying operations.

The first involved Amgen and its drug Sensipar, which is used in dialysis patients. Five years ago, Congress created a bundled payment system for dialysis, which is Medicare's most expensive program. The bundle included all drugs except oral medications such as Sensipar, which were delayed until 2014. The fiscal-cliff bill delayed their inclusion again—until 2016 at a cost estimated at $500 million.

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A story in the New York Times highlighted Amgen's 74 lobbyists and their ties to Sen. Max Baucus (D-Mont.), Sen. Orrin Hatch (R-Utah) and Sen. Mitch McConnell (R-Ky.), who played key roles in getting the rider inserted in the bill. So it goes in Washington. But there is a different reason for finding their actions contemptible.

Sensipar is an oral medication that reduces the overabundance of a hormone produced by the parathyroid gland, a secondary effect of kidney failure. Without treatment, it can lead to high calcium levels, brittle bones and easy fractures. Treatment usually relies on high doses of active vitamin D, which is cheaply available because the CMS included it in the bundle. Generic and brand manufacturers now compete on price in order to sell their products to dialysis clinic operators.

However, each year, treatment failure causes about 1% of dialysis patients to have their parathyroid surgically removed, a relatively minor operation. Sensipar has been sold as a way of reducing that number. About 20% of dialysis patients now take it.

A large post-approval trial sponsored by Amgen showed Sensipar did cut the surgery rate in half—from 1 in 100 to 1 in 200—but did not reduce mortality, cardiac problems or bone fractures compared with vitamin D. And, it has a severe side-effect problem—lots of nausea and vomiting.

Keeping Sensipar, which is the only drug in its class, out of the bundle means it doesn't have to compete with vitamin D. And because it is paid for by Medicare Part D, clinic operators and nephrologists have no incentive to balance its costs against its actual medical value. Putting the drug in the bundle would require Amgen to lower its price to compete.

Senate Majority Leader Harry Reid (D-Nev.) did a similar favor for Varian Medical Systems, whose Linac X-ray radiation machine competes with Swedish firm Elekta's high-precision gamma knife. While both machines cost more than $5 million, the gamma knife is used almost exclusively for brain tumors because it requires fixing its target—possible with the skull but impossible with, say, the pancreas or prostate.

Reid, whose home state has deep ties with Varian, inserted a provision in the fiscal-cliff deal that reduced Medicare's payment for a gamma knife session from $7,000 to $3,000—the same as a Linac radiation session. That ignored the fact that brain tumors treated with standard X-ray radiation devices—even the latest generation of high-precision machines—often require multiple sessions and, medical literature suggests, cause more collateral damage. There is no evidence that either machine produces a superior outcome in terms of reducing cancer recurrence.

And that, really, is the bottom line. Medicare payment policy is being set on Capitol Hill without regard to medical evidence or cost-effectiveness. The nation will never get its healthcare costs under control as long as that continues to be the case.

Merrill Goozner, Editor



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