WASHINGTON – Consumer watchdog Public Citizen is pointing toward flawed Medicare reimbursement practices for compounded drugs as a reason for the fungal meningitis outbreak that has killed 34 people.
The group said the Centers for Medicare and Medicaid Services (CMS) is required by law to deny Medicare reimbursement for any drug that is not “reasonable and necessary” and that the agency generally considers drugs that haven’t received FDA approval – which would include many compounded formulations – not to have met that standard.
Yet despite those regulations, CMS nonetheless provided reimbursement to centers such as the New England Compounding Center (NECC), allowing large-scale compounding pharmacies to flourish.
“CMS, through its inconsistent Medicare drug reimbursement policies concerning compounded drugs and coverage decisions allowing routine coverage for such drugs, appears to have created inadvertent financial incentives for inappropriate use of compounded drugs,” Public Citizen wrote in a letter Monday to Health and Human Services (HHS) Secretary Kathleen Sebelius.
In the letter, the watchdog asks for HHS’ Office of Inspector General to launch an investigation of CMS’ reimbursement policies and regulatory decisions.
Contaminated steroids produced by the NECC in Framingham, Mass., have been linked to 478 cases of fungal meningitis and 34 deaths since the outbreak began in late September. Drugs thought to be sterile were produced in unsanitary conditions that tainted products later shipped across the country, regulators found.
CMS has stated in guidance documents that Medicare doesn’t cover compounded drugs in violation of the premarket approval and manufacturing requirements of the Food, Drug, and Cosmetic Act (FDCA).
“Drugs manufactured by compounding pharmacies – as opposed to registered drug manufacturers – typically do not meet these FDCA requirements,” Public Citizen wrote.
CMS could have issued a national coverage determination to exclude or limit coverage for specific classes of compounded drugs. “CMS demonstrated poor judgment by not using this authority, particularly since CMS obviously recognized the dangers posed to Medicare beneficiaries by compounded drugs,” the letter stated.
The agency used this authority in 2007 when all four regional durable medical equipment contractors issued local coverage decisions denying coverage for compounded inhalation drugs administered with nebulizer devices. The reason given was that such drugs weren’t tested for safety or efficacy.
Public Citizen said that rationale is applicable to compounded drugs given to Medicare patients.
The group points out a few areas of concern, including:
- CMS guidance on compounded drugs is ambiguous and conflicting, stating at first compounded drugs made in violation of the FDCA are excluded from coverage. The agency still ordered carriers to reimburse for compounded drugs unless the FDA and CMS take specific action to stop payment.
- CMS appears to have no mechanism to implement this guidance since it has “no regular form of coordination with the FDA” to allow CMS to identify when the FDA has deemed that a compounded drug was produced in violation of the FDCA.
- CMS hasn’t issued a national coverage determination excluding coverage on any class of compounded drug, leaving the determination up to local carriers.
Like CMS, the FDA could have eliminated the widespread, large-scale production of compounded drugs if it had properly used its authority, Public Citizen said.
Last month, Public Citizen urged Sebelius to launch an investigation headed by the HHS Office of Inspector General (OIG) into what it deemed failures by the FDA to properly oversee the conditions that led to the fungal meningitis outbreak at the NECC. Its letter this week asked Sebelius to expand that investigation to CMS.
Whether or not Sebelius heeds the request for an OIG investigation, Congress is looking into the matter and even considering legislation to clarify the FDA’s authority over compounding pharmacies.
In separate hearings last week in the House and Senate, lawmakers from both parties said they were either crafting legislation to give greater oversight to compounding pharmacies that resemble large-scale manufacturers, or were open to such a bill.
While compounding pharmacies are regulated by state boards of pharmacies, manufacturing is overseen by the FDA, and the line separating the two has been blurred by court cases rejecting the agency’s actions in regard to such facilities, the FDA said. That limited authority allowed the NECC to sidestep FDA and state oversight as a manufacturer, and to produce contaminated products.
Source: http://www.medpagetoday.com/PublicHealthPolicy/Medicare/36046?utm_content=&utm_medium=email&utm_campaign=DailyHeadlines&utm_source=WC&xid=NL_DHE_2012-11-21&eun=g514381d0r&userid=514381&[email protected]&mu_id