Earlene Lipowski, PhD

Insurance plans often lack the data needed to decide which healthcare option represents the best value. 

Purchasers presumably would spend resources more efficiently if they had information about how and when the various therapeutic options work best. Comparative effectiveness research evaluates the outcomes of different therapies for the same condition. 

Overall costs per Medicare beneficiary vary widely in different sections of the country. This variation is not explained by differences in the respective populations nor does it result in better health outcomes in the higher-spending regions. Moreover, the variation in expenditures is the greatest for conditions for which comparative data are lacking. This suggests that it may be possible to achieve the same, or better, results at lower costs. 

Expense is a major reason few comparative clinical trials are done. The recent study comparing coronary stents with drug treatment cost approximately $33.5 million, while the ALLHAT study (comparing different antihypertensive and lipid-lowering drugs) cost more than $83 million. Although several federal agencies conduct some health services research, none focuses on supporting comparative studies. Clinical trials by the private sector focus on establishing efficacy for FDA approval rather than comparing treatment options. 

The Agency for Healthcare Research & Quality has received roughly $15 million per year for comparative effectiveness projects pursuant to Section 1013 of MMA. AHRQ set up the Effective Health Care Program that includes Evidence-based Practice Centers to perform systematic reviews of existing research, the Centers for Education & Research on Therapeutics (CERTs) and the DeCIDE network (Developing Evidence to Inform Decisions about Effectiveness) to support new research, and the John M. Eisenberg Clinical Decisions and Communications Science Center to disseminate the knowledge. 

MedPAC (Medicare Payment Advisory Commission), the Blue Cross Blue Shield Association, and the Institute of Medicine have all issued calls for more legislation and resources to compare the effectiveness of new and existing procedures, drugs, devices, and biologics. Emerging from the ongoing debate are several areas of agreement, including: 

1. Priorities for comparative effectiveness data should be set, and the research should be conducted by an institute that is governed by both public and private sectors. 

2. Adequate and stable funding should be provided by both government and private payers. 

3. An institute should be protected from political pressures so it can establish and maintain a reputation as a credible source for information. 

4. Given the mission and requisite budget, the operations and work of the institute must be transparent.  

5. A broad range of research is needed, including syntheses of existing research and clinical trials that compare options head-to-head. 

6. Significant education programs and incentives must be included, and electronic health records should be required to incorporate the findings into clinical decision support tools.  

An analysis prepared by the Congressional Budget Office suggests that it could take a decade or more before an investment in comparative effectiveness would amass enough data to offset the required investment in that research. Underutilized services that prove to be cost-effective could even result in increased Medicare spending. In its model, CBO projects that expenditures of $600 million in comparative effectiveness research over the next five years might generate $100 million in savings. Expenditures totaling $2.4 billion over 10 years could produce $1.3 billion in savings, after which continued investments could begin to generate savings in excess of research expenditures. 

THE AUTHOR is associate professor, Department of Pharmacy Health Care Administration, University of Florida College of Pharmacy. 

Articles

Most Medicare providers and beneficiaries are unaware of the provision for comparative effectiveness research which is part of the Medicare Modernization Act. Politicians, policymakers, and manufacturers view it as a key initiative for the future of Medicare and beyond.

Comparing the effectiveness of drug treatments

President Bush stated that he would refuse to sign any bill requiring price negotiation, maintaining that the benefit has strong incentives for plans to seek price discounts to control costs and attract enrollees through lower premiums and reduced cost-sharing. 

It is the opinion of the Congressional Budget Office (CBO) that direct negotiation with pharmaceutical companies would have a negligible effect on spending for the Medicare prescription benefit. CBO maintains that the government would not have the leverage to lower prices unless Medicare, like the VA, had the power to establish a formulary that restricted the number and types of drugs available. CMS reported that nearly a million veterans who were eligible for prescription benefits through the VA elected to enroll in Part D. Presumably these veterans were willing to pay the Part D premium in exchange for a wider choice of drugs. 

HHS secretary Michael Leavitt contends that the market power of millions of individual consumers in the private sector is apt to obtain greater discounts than government officials who would be responsible for bargaining prices for more than 4,400 different drugs covered by Medicare. 

Part of the difficulty in resolving this debate is that Congress does not have access to information about the prices that have been negotiated by PBMs and the Medicare drug plans. Although prices paid by the plans are reported to CMS, the agency will not disclose that information. FTC, along with CBO and the PBM trade association, supports the position that public disclosure of prices will reduce the ability of the plans and PBMs to obtain substantial discounts. The House Oversight and Government Reform Committee has asked the Medicare drug plans to disclose data that will allow the committee to examine their profits and the degree to which discounts are passed to beneficiaries. 

It is undeniable that Medicare beneficiaries who formerly obtained their prescription benefits from Medicaid or the VA are now getting medication at a higher price than under the previous coverage. A potential compromise could require negotiation on behalf of Medicare where savings are greatest and politically justifiable. For example, a bipartisan Senate bill could direct the HHS secretary to seek price concessions when (1) a brand-name drug is the only product available in a particular therapeutic class, (2) the drug's development was dependent on government-funded research, or (3) a Medicare-approved plan requests assistance. 

Even limited negotiation will face opposition from those who are concerned that short-term savings will produce undesirable effects in the long run. Opponents claim that price reductions and restrictive formularies lower drug prices below those set by the market, reducing the incentives for the capital market to invest in research and development of new medicines for treating chronic conditions common among the elderly. 

The shift from Republican to Democratic control of Congress ensures ongoing debates about requiring Medicare officials to negotiate directly with pharmaceutical firms for lower drug prices. The Medicare Modernization Act (MMA) expressly forbids interference from the HHS secretary in negotiations between manufacturers and pharmacies or PDP sponsors, and prohibits the establishment of a formulary or price structure for reimbursement under Part D.

Who's for and against negotiated prices?

MTM services under Part D are the financial responsibility of the prescription drug program (PDP) as part of the administrative overhead provided by CMS. There is little or no incentive for a stand-alone PDP to provide a comprehensive program because MTM is just one more administrative expense to be managed. Medicare Advantage-Prescription Drug (MA-PD) programs have a greater incentive to provide MTM because any reduction in the use of other medical services due to better medication use generates savings for the plan. 

Pharmacists and other qualified healthcare professionals can be contracted to provide MTM under an agreement that is separate from the dispensing function. Most Part D sponsors employ pharmacists in their MTM program, but very few are using community pharmacists. CMS reported that out of 553 MTM programs in operation for 2006, 46% relied on internal programs whereas 36% contracted with a third party. The agency estimated that 18% of plans created MTM services that included community pharmacists in their program, a proportion that is consistent with a survey published recently by APhA.   

Therefore, a pharmacist may have an agreement for MTM services with one PDP but not with another plan in the same region. This could lead to a potentially confusing array of program services for beneficiaries and challenges for pharmacists who want to participate. Having standard billing codes, a single interface with programs, and being held to the same quality standards would facilitate future participation of all parties in MTM programs. 

CCRx, developed by NCPA, is one example of an Internet-based program for managing service. The plan refers patients to a pharmacist in the network and provides the pharmacist with a medication history, any clinical alerts, and money-saving tips to discuss with the beneficiary in a face-to-face session. The pharmacists submit bills for service to CMTM using the same interface. 

CMS supported the launch of the Pharmacy Quality Alliance (PQA) in response to the call for measurement of outcomes to document the quality and value of services provided. The alliance is a partnership among pharmacy organizations, health plans, employers, consumers, and many others that will suggest strategies for defining and measuring pharmacy performance. After CMS selects the criteria for quality standards, it will use integrated data from Parts A, B, and D to characterize those beneficiaries who appear to benefit from MTM. 

In addition to the PQA initiative, the Medicare Modernization Act gave quality improvement organizations (QIOs) the authority to provide assistance to MA and PDP plans. There are 53 QIOs operating in every state, territory, and the District of Columbia. Under a three-year contract from CMS, QIOs in Florida, Maryland, and the District of Columbia will follow roughly 55,000 Medicare beneficiaries for 12 months and perform analyses of clinical data. Outcomes Pharmaceutical Health Care, with its national network of pharmacists and programs from Humana and CCRx, is involved in QIO assessments. A report on the findings is due late this year. Other MTM initiatives outside of the Medicare program are being organized for evaluation in Iowa, Minnesota, and adjoining states. 

THE AUTHOR is associate professor, Department of Pharmacy Health Care Administration, University of Florida College of Pharmacy.

As many pharmacists are aware, all Medicare Part D plans must offer medication therapy management (MTM) to assist beneficiaries who (1) have multiple chronic diseases, (2) take multiple medications, and (3) are likely to spend more than $4,000 on medications annually. MTM services are intended to promote patient understanding about medication use, increase adherence to drug regimens, and detect drug-related problems.

Pharmacists seek greater role in MTM

In 1981, pneumococcal pneumonia vaccine became the first preventive service covered under Medicare. Immunization against hepatitis B was added in 1984, the PAP test was added in 1990, and the screening mammogram soon followed in 1991. Further expansions included flu shots in 1995 and, in 1998, diabetes self-management training, bone mass measurements, pelvic exams, and colorectal cancer screenings became covered services. More recent additions to the list of preventive services include screening for prostate cancer (2000) and glaucoma (2002) along with medical nutrition therapy for diabetes and renal disease patients.  

The Medicare Modernization Act (MMA) further expanded eligibility for preventive services. It provided for a onetime physical when persons first enroll in Medicare, also known as the "Welcome to Medicare" exam. In addition MMA added cardiovascular screening blood tests, diabetes screening tests, and smoking-cessation programs. 

Members of Congress have been supportive of expanding preventive services. Legislative proposals have been introduced that would make such services even more accessible by extending the period for Welcome to Medicare physicals from six months to one year and eliminating the coinsurance for mammography and colorectal cancer screening tests.  

Starting in 2007 Medicare will cover ultrasound screening for abdominal aortic aneurysms for certain patients. CMS envisions working with community organizations as it did to promote enrollment in Part D to increase the awareness and use of both the enrollment examination and the continued use of preventive services.  

AHRQ is contributing to the outreach effort by supporting the development of guidelines for preventive services and their dissemination to primary care providers. AHRQ sponsors the U.S. Preventive Services Task Force, a panel of private-sector experts in primary care and prevention. The task force bases its recommendations on a rigorous assessment of the scientific evidence in support of the efficacy and cost-effectiveness of these services. The 2006 guidelines include 53 new or revised recommendations, including screenings for obesity, HIV, mental health and substance abuse, and metabolic disorders, as well as diet and behavioral counseling. 

AHRQ has partnered with the United Health Foundation in distributing 400,000 copies of the 

Guide to Clinical Preventive Services, 2006,

 to clinicians nationwide. A copy of the guide can be obtained at 

									http://www.ahrq.gov/clinic/pocketgd.htm

 or requested from the agency. AHRQ also devised a wall chart, the Adult Preventive Care Timeline, which summarizes who needs preventive services and when. The chart can be accessed and printed at 

									http://www.ahrq.gov/ppip/timelinead.pdf

To promote greater use of preventive services, AHRQ developed the Electronic Preventive Services Selector (ePSS) as an aid for primary care providers. To use the ePSS, a clinician inputs the patient's age, gender, and specified behavioral risk factors such as smoking, and the software program generates an individualized health report that can be printed and given to the patient.   

The ePSS software matches patient characteristics against 110 recommendations covering 59 separate preventive service topics, including screenings, immunizations, and patient education. Many of these preventive services are already being offered by practitioners in pharmacy settings and the ePSS reports also may be appropriate for distribution in pharmacy settings. The ePSS software will work on both Palm and Windows operating systems and may be downloaded for free at 

Medicare Part D has gone a long way toward closing an important gap in healthcare coverage by providing a prescription drug benefit to enrollees. Now several government agencies are aiming to close the gap between the availability and use of covered preventive services among persons with Medicare. The goal is to do more to help beneficiaries manage their medical care rather than just paying the bills.

Feds push worth of ounce of prevention

Medicare beneficiaries currently receive more than three million prescriptions every day. Part D will shift spending from Medicaid and the private sector to make Medicare the largest prescription drug purchaser in the country. Medicare spending will grow from 2% of prescription drug expenditures in 2005 to 27% of the total for 2006, and is projected to rise to 37% by 2010.  			

Reducing the out-of-pocket cost of drugs will encourage higher consumption. A study released by PhRMA in October 2006 tracked a group of people who made cash payments for prescriptions in 2005 and transitioned to Part D in 2006. The average number of prescriptions per month increased from 2.5 to four when Part D coverage was instituted, while the average out-of-pocket expense decreased from $59 to $29 per person. The number of distinct drugs used over a three-month period increased from 2.8 to 4.1 in parallel with the increase in the number of prescriptions.  

At the same time, the extent of generic drug use has surprised Medicare administrators. Data from the first two quarters of 2006 showed generic usage among all types of Part D plans at 60.1% compared with 51.9% among payers nationally. Part D plans increased the growth rate of generic utilization up to three times faster than the overall market. Medicare Advantage plans that include drug coverage displayed the highest generic utilization rates, likely due to their previous experience with Medicare enrollees and coordination of their benefits. 

Drug prices are being closely monitored by stakeholder groups. AARP's quarterly wholesale price report for the first quarter of 2006 found an average 3.9% increase in the cost of 193 Rx drugs commonly used by seniors. Of these, the prices of 63 drugs on the list increased by more than 5%. Families USA reported that the median price for the top 20 drugs rose by 3.7%. Virtually all of the Medicare Part D plans are increasing their premiums for 2007, which critics fear is the result of plans passing on price increases without pressuring for moderation. 

While the reported drug price increases are higher than the general rate of inflation, they are within the rate of inflation for healthcare costs. The wholesale price for drugs to manage chronic conditions, for example, increased by 4.1% during the first half of 2006. While prices of prescription drugs increased in 2006, the prices of generic drugs remained flat. 

Democrats assumed a majority in both the House and Senate amidst promises to curb drug prices. One strategy they propose to drive lower prices would be to give Medicare the ability to negotiate directly with drug manufacturers. Another would be to permit importation from Canada and other countries. But it is argued that neither alternative is likely to result in drug prices lower than those achieved in a competitive market. Prices negotiated for the Department of Veterans Affairs are considerably lower, but that result comes with fewer therapeutic choices in its national drug formulary. 

Stock prices of pharmaceutical manufacturers dropped in the wake of the election, some by as much as 5%. It is likely that the industry will suffer only rhetoric from Congress, but it is apt to see dampened stock prices continue. While there is hostility toward perceived gains to PhRMA from Part D, many patients seem to be satisfied with the program. Republicans will oppose changes to this landmark legislation. Any change that threatens to reduce therapeutic options would not have widespread support from the American public. 

It is probably safe to say that pharmaceutical manufacturers as a group approached the implementation of Medicare Part D with mixed feelings. Although the benefit is seen as likely to increase access to medication among those eligible, large government programs run the risk of concentrating purchasing power, thereby lowering prices and decreasing profits over time. Early indicators remain mixed.

The impact of Part D on manufacturers

Satisfied beneficiaries are well advised to verify that the premium, benefit scheme, and drug coverage provisions remain unchanged in their existing plan. Pharmacists likewise are advised to verify the terms of their contracts. Changes to evergreen contracts often are in the form of an addendum that clearly describes new terms whereas recontracting requires a reading and comparison of the complete contract document. 

Marketing guidelines for the open-enrollment period remain virtually unchanged from 2006. That is, promotional activities must be in compliance with federal and state laws, including prohibitions against inducements to beneficiaries in violation of antikickback statutes. The marketing guidelines are of particular concern to providers working with residents of nursing and assisted-living facilities. Pharmacist consultants argue that they, long-term care staff, and personal physicians are often called upon to help residents with physical and cognitive impairments choose a plan that best meets their needs. 

Timeliness of reimbursement was among the chief complaints of R.Ph.s, along with related issues such as receiving checks dated weeks before postmark, checks intended for other pharmacies, and multiple reimbursement checks in a single envelope. In rebuttal, the plans argue that payment of clean claims in 30 days is the industry standard for providers, including hospitals and physicians. Pharmacists have argued that their suppliers routinely use 15-day payment schedules. CMS pledged to consider plan performance in selecting which plans would be allowed to remain in the program. 

In addition CMS streamlined the exceptions and appeals process by adding requirements for timely processing and tracking performance failures. It also implemented strict requirements for processing of enrollment and co-pay requirements for beneficiaries who are eligible for a low-income subsidy. Plans must provide pharmacists with information necessary for billing the beneficiary's plan even if the beneficiary does not have a plan benefit card. CMS is also urging persons with Medicare to make their plan choices or changes well before the Dec. 31 deadline to ensure that their benefit is in place on Jan. 1. 

Formulary specifications from CMS for 2006 required plans to cover a minimum of 336 products. CMS updated the formulary requirements for Part D coverage in 2007, adding 23 therapeutic classes and unique therapeutic agents primarily for oncology and biotechnology products. The average plan formulary covered about 1,400 drugs, well beyond the minimum. 

Previous columns examined the Medicare decisions that plans faced for 2007 and the choices available to enrollees. Pharmacists, too, will be facing some plan adjustments as the new year begins. In some cases pharmacy providers must sign and return a contract to continue their participation in pharmacy networks associated with the plans. Many pharmacies work with a third-party contracting organization that will sign the agreement on their behalf. Although many existing contracts expire on Dec. 31, 2006, CMS is encouraging plans to adopt automatic renewals, or evergreen contracts, for subsequent years.