Medicare encourages more drug effectiveness information

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The Medicare Prescription Drug Plan, which began January 1, 2006, makes the federal government the largest purchaser of pharmaceuticals in the United States, and probably in the world. It is projected that the Centers for Medicare and Medicaid Services (CMS) will spend more than $1 trillion on medications over the next decade, a volume that will influence the pharmaceutical market more broadly and generate new initiatives to encourage utilization of more cost-effective treatments.

The Medicare Prescription Drug Plan, which began January 1, 2006, makes the federal government the largest purchaser of pharmaceuticals in the United States, and probably in the world. It is projected that the Centers for Medicare and Medicaid Services (CMS) will spend more than $1 trillion on medications over the next decade, a volume that will influence the pharmaceutical market more broadly and generate new initiatives to encourage utilization of more cost-effective treatments.

These trends support the development of more data on the effectiveness of drugs and medical treatments by the Agency for Healthcare Research and Quality (AHRQ). Section 1013 of the Medicare Modernization Act (MMA) calls on AHRQ to identify significant health conditions that warrant comparative analysis; to compare the effectiveness of alternative treatments for those conditions; and to make this information readily available to healthcare professionals and the public.

This assignment is part of a broader government strategy to help payors, plans, and patients select more appropriate treatment options, while also assisting clinicians in providing more effective care, explained Barry Straube, MD, acting director of CMS' Office of Clinical Standards and Quality. Better evidence is the "centerpiece" of the Medicare drug coverage program, he commented at a meeting sponsored by AHRQ last month. The meeting focused on obtaining public input for the next round of comparative effectiveness reviews (CERs) this year. CMS seeks to obtain more quality information by linking reimbursement for hospitals and physicians more closely to quality care and by improving the Medicare system for determining coverage of new medical products.

AHRQ's next set of priority health conditions, which the agency plans to identify this spring, will include medical problems important to Medicaid and state children's health programs, as well as the elderly and disabled in Medicare. AHRQ already has proposed studies to compare different drugs to treat Alzheimer's disease and hypertension and the effectiveness of coronary stents versus bypass surgery. In addition to examining comparative costs and benefits of pharmaceuticals, future CERs also may assess alternative delivery systems and management approaches for ensuring access to and continuity in care.

DRUG SPENDING SLOWS

Meanwhile, efforts to encourage utilization of more cost-effective medications appear to be having an impact. Total outlays for US healthcare did not rise as fast as expected in 2004, largely because of a noticeable slow-down in spending growth for prescription drugs. Analysts attribute this decline to the increased use of generic drugs and over-the-counter GI and allergy treatments, as important innovator medications lost patent protection. A lagging pace in the introduction of expensive new products, safety concerns about some leading medications, and increased use of lower-cost mail-order pharmacies also contributed to the slower growth rate, according to experts in the Office of the Actuary at CMS in the Department of Health and Human Services (HHS).

Overall US healthcare spending increased by 8% in 2004, faster than the rate of inflation but below the 8% to 9% growth rates of the 2 previous years. Expenditures grew noticeably faster for hospitals and physicians, accounting for more than 60% of the total spending increase that year.

Health plans and pharmacy benefit managers (PBMs) encouraged these trends through lower copayments and other strategies. Generic drug use grew at double-digit rates for the third straight year, driven by greater demand and increasing supplies, according to the report published in the January/February 2006 issue of Health Affairs (available at http://www.healthaffairs.org/).

Ms Wechsler is a veteran reporter specializing in federal and state healthcare and pharmaceutical issues.

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