For years, they were among the most popular prescription drugs in the United States, making $8 billion a year for pharmaceutical companies. But Epogen, Procrit and Aranesp — a trio of anemia drugs — also came with a huge cost to both patients and taxpayers, as my colleague Peter Whoriskey describes in-depth Friday. And it’s precisely that kind of risk that Obamacare’s controversial Independent Payment Advisory Board for Medicare is meant to curb.
The story explains how Big Pharma massively overstated the benefits and downplayed the potentially lethal side effects. But it also explains how regulators — including the precursor to Medicare’s IPAB — tried to raise early warning flags about the pricey drugs, as one alone cost Medicare up to $3 billion a year. Here’s Whoriskey:
The profit margin for health-care providers — the “spread” between what they paid for the drugs and what Medicare paid in reimbursement — led the Office of the Inspector General to issue at least seven reports recommending either that the reimbursement price be reduced or the incentives changed. The Government Accountability Office and the Medicare Payment Advisory Commission made similar recommendations. At least a couple of times during the Clinton administration, the president’s proposed budget called for changing the incentives. But the measures didn’t make it through.
The problem was that neither GAO, the OIG, nor the Medicare Payment Advisory Commission’s recommendations were binding. So Medicare kept paying for the expensive, risky drugs, despite evidence from Medicare researchers that “the patients taking the drugs appeared more likely to die than those taking the placebo,” as Whoriskey notes.
Under Obamacare, the new IPAB’s recommendations to the Health and Human Services department will be binding, unless Congress explicitly decides to overturn them. The board’s mission is to “reduce the per capita rate of growth in Medicare spending,” and it will be reviewing new research comparing the effectiveness of different treatments. So it’s likely to be more skeptical of very expensive drugs with a spotty track record.
The concern is that it will end up shutting out valuable treatments in the name of saving money, prompting opponents to dub it a “death panel.” But letting Medicare go on paying for risky drugs can have deadly consequences as well.