A lit­tle ex­tra in the fis­cal deal

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


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.

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.

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