The New York Times and Wall Street Journal both had articles yesterday about a new rule clarifying how Medicare would decide whether or not to pay for off-label uses of medicines to treat cancer.  These articles describe controversies around Medicare relying on several compendia containing information about such off-label uses to make these coverage decisions, how some of the compendia may have industry connections, and how the new rule might increase Medicare spending.

I have a long history with this issue.  As a Legislative Assistant working for Congressman Sander Levin in the early 1990s, I was very involved in writing the legislation that first changed Medicare law to require Medicare Part B to pay for off-label used of medicines to treat cancer.  This change was seen as promoting both good medicine and good fiscal policy:  It promoted good medical practice because there was evidence that physicians were admitting patients to hospitals to give them off-label chemotherapy for cancer because Medicare wouldn’t reliably pay for it in outpatient clinics.  Thus, patients had to travel farther, and were potentially at risk for hospital acquired infections and other problems from being in the hospital when they didn’t need to be.  And it was good fiscal policy because Medicare was paying more for these patients to be in the hospitals than it would for them to get the same treatments as outpatients.  This is why the Congressional Budget Office estimated that this change to Medicare law wouldn’t cost Medicare any money.  (They estimated saving for Part A of Medicare, and some additional costs for Part B, with the net costs being essentially zero.)

What the Times and Journal articles don’t mention is that under Medicare law, off-label coverage for cancer treatments also occurs if there is “supportive clinical evidence in peer reviewed medical” journals that have been approved by the Department of Health and Human Services.  (See the language for the entire provision in Section 1861(t)(2) of the Social Security Act.)  The peer reviewed literature option was included so ensure that Medicare paid for appropriate off-label cancer treatments for very rare or unusual cancers and treatments that might never make it into the compendia, and to include the most up to date published information for making coverage decisions.

The 1993 law, and the subsequent refinements to it, were designed to improve Medicare’s coverage for cancer treatments.  With about 50% of people with cancer being over age 65, Medicare’s policies thus drive many decisions about cancer treatments for all Americans.  And despite the requirements for off-label coverage, being treated for cancer certainly presents huge medical and financial burdens for many people – something that the creation of the Medicare Part D outpatient prescription drug program was intended to help with.  However, because of a peculiar wording in the 2003 law that created the Part D program, the coverage for off-label cancer treatments under Part D was more restrictive than under Part B.  (Essentially, it was easier to get Medicare to pay for an off-label cancer treatment when the medicine was injected by a physician than if the medicine was a pill.)  Fortunately – after a lot of discussion and lobbying by patient advocacy organizations including the Medicare Rights Center – that situation was changed by Congress in the summer of 2008.  So as of January 1, 2009, the rules for off-label coverage for cancer treatments are the same under both Parts B & D – although I’m sure there will be some snags and bumps in getting all the Part D plans up to speed on how to appropriately apply these coverage rules.

Balancing Costs v. R&D Incentives
How to control the costs of such treatments while also providing incentives for the development of new and better medicines is a difficult public policy balance.  Higher reimbursement amounts for cancer treatments would increase the incentives for developing new and better treatments and cures for cancer.  But high reimbursements could also increase costs for patients and their insurance companies.  This balance becomes particularly difficult when a new treatment is much more effective than previous treatments, it doesn’t produce very unpleasant (and costly) side-effects, it needs to be taken much less frequently, or if it actually produces a cure.  In such cases, the new medicine’s very high per dose costs can be criticized.  But this analysis may look very different when put into the context of the value the medicine provides to the patient, and the overall costs incurred by Medicare (or the private insurer) and the patient.

Cost & Clinical Effectiveness Research
Such challenging balances and calculations are what biopharma companies, biomedical researchers, clinicians, insurance companies, government regulators and others struggle with whenever a new treatment is developed for a serious condition.  This is the essence of clinical and cost effectiveness research – an area of health policy that is beginning to be much more widely discussed:  It has been part of bipartisan Congressional discussions and was highlighted in last year’s Presidential campaign.  How the government and others increase their support for this type of research, (i.e. inside government or through some independent or semi-independent agency), how the information from this research is reflected in reimbursement policies, and how clinicians are educated about and use this information, could dramatically improve the quality and value of the health care we all receive for cancer and many other conditions.  Only time will tell if that happens, or if too many competing interests snarl up the process with cost savings being put before quality improvement, with the goal of cost containment pushing the information into reimbursement decisions before it is fully analyzed – or as someone once said, trying to get to the dough before the bread is fully baked.  (Yeah, I know, very bad dough pun.)