U.S. Medicare chief defends proposed Part D drug benefit reforms

WASHINGTON Tue Feb 25, 2014 6:27pm EST

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WASHINGTON (Reuters) - The Obama administration's top Medicare official on Tuesday defended proposed changes to the popular Part D drug benefits program for the elderly and disabled that are fiercely opposed by a broad network of drugmakers, insurers, healthcare providers and patient advocates.

The Centers for Medicare and Medicaid Services (CMS) proposed a new rule in January that would fundamentally alter the program's private insurance coverage for certain drugs, change the pharmacy networks that some plans cover and limit the number of policies available to beneficiaries in any given region.

That has stirred concern about the potential for turmoil that critics fear could leave some beneficiaries without coverage for the drugs they need and with fewer choices overall.

But Medicare chief Jonathan Blum said in written testimony to a congressional panel that the 2015 policy changes are needed to head off higher costs to the program from expensive new biologic therapies and rising subsidies for insurers and lower-income consumers.

"In order for Part D to remain successful, we have to celebrate its successes and address its vulnerabilities," Blum told the House Energy and Commerce Health Subcommittee in remarks for a Wednesday hearing at which he is slated to testify.

CMS, which is part of the U.S. Department of Health and Human Services, is under mounting pressure to withdraw the proposed rule.

More than 200 companies and groups called for the rule's withdrawal "in the strongest terms" last week, saying in a letter to CMS Administrator Marilyn Tavenner that the changes were unnecessary for a program that has proved effective and popular up to now.

The proposals have also become fodder for this year's congressional election campaign, with Republicans warning that the changes would jeopardize the entire Part D program. Some Democrats have also expressed misgivings.

Part D, a $70 billion program launched a decade ago under former President George W. Bush, provides private insurance for prescription drugs to nearly 40 million elderly and disabled Medicare beneficiaries. Over 10 years, its costs of $346 billion have been 45 percent lower than initially projected.

Ninety-five percent of Part D beneficiaries say they are satisfied with the program, and government officials note that it has saved $8.9 billion on prescription drug costs for Medicare recipients.

One of the proposed rule's most controversial provisions would remove a requirement that insurers cover all drugs in two classes: antidepressants and immunosuppressants used in transplants. Three other protected classes would remain: antineoplastics used in chemotherapy, anticonvulsants for epilepsy and bipolar disorder and antiretrovirals used in the treatment of HIV.

Another class, antipsychotics, would remain protected at least through 2015 while CMS evaluated the need to retain its status.

In his testimony, Blum assured lawmakers that beneficiaries would still have access to the drugs they need and that there would be adequate notification for patients before a drug could be removed from a plan's coverage.

He suggested the change would lead to greater competition and lower prices.

"Once the requirement to cover all drugs in a class was removed, we would expect manufactures to negotiate for their products to remain on many (insurance plans) in order to retain as much market share as possible," Blum said.

A proposal to widen the preferred pharmacy networks that plans offer beneficiaries in exchange for lower co-payments would also improve market driven competition, he said.

"A few sponsors have actually offered little or no savings on aggregate drug prices in their preferred pharmacy pricing, particularly in mail order claims for generic drugs," he said.

Blum said a proposal to limit the number of Part D plans in any given region to two would help clarify the choice of plans available by presenting beneficiaries with "meaningfully different benefits and transparent costs."

(Reporting by David Morgan; Editing by Cynthia Osterman)

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