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The amendment suggests modifications to the calculation of a drug's average manufacturing price and to the reimbursement rate for infused medications.
The 21st Century Cures Act will see some revisions before the House votes on the bill later this week. On July 2, 2015, the House Committee on Energy and Commerce released a summary of major changes to the bill that reduce the funding to the National Institutes of Health (NIH) and Cures Innovation Fund to approximately $8.75 billion over the next five years instead of the $10 billion that was originally proposed. The funding amount was amended “to clarify the availability of a $9.3 billion advanced appropriation for FY2016–FY2020. $110 million is made available for FDA regulatory modernization activities annually from FY2016–FY2020.”
Other changes to the proposed bill include not requiring companies that receive NIH funding to report their data, and additional changes to how drugs are reimbursed, specifically, payment amounts for branded drugs and infused specialty drugs. For branded drugs, the proposal suggests excluding authorized generics from the calculation of a branded drug’s average manufacturer price (AMP). The amendment says that current law allows branded drug makers to artificially lower their brand-name rebate obligations because they are able to include sales of authorized generics in the calculation of AMP. The new policy, according to the amendment document, would “have the effect of increasing the AMP of brand drugs,” and would increase “the rebates drug manufacturers would owe to the states and federal government,” including Medicaid rebates.
The amendment suggests that infused drugs administered through durable medical equipment (DME) be reimbursed under Part B by average sales price (ASP) plus 6%, which is how most physician-administered drugs are already reimbursed. This legislative change is supported by The Department of Health and Human Services Office of Inspector General (OIG), states the document, as the OIG has pointed out in previous reports that current payments based on manufacturer sticker prices (set at 95% of a drugs’ average wholesale price [AWP] that was in effect on October 1, 2003) are incorrect, resulting in overpayment or underpayment for certain infused medications. AWPs greatly exceed drug acquisition costs, OIG said in a 2013 report, and "Basing payments for DME infusion drugs on AWPs set almost a decade ago raises concerns about whether Medicare payment levels are appropriate.” Thus, the amendment document concludes that “Applying the ASP+6 percent methodology to DME-infused drugs would result in payment amounts that reflect actual transaction prices.”
Overall, reforms in the 21st Century Cures Act are expected to reduce the deficit by $500 million in the first decade and cut federal spending an additional $7 billion in the second decade, according to calculations by the Congressional Budget Office.
Source: House Committee on Energy and Commerce