BIO comments to the Health Care Financing Adminstration(HCFA) on the Prospective Payment System for Hospital Outpatient Services Proposed Rule

Health Care Financing Administration
Department of Health and Human Services
Attention: HCFA-1005_P
P.O. Box 26688
Baltimore, MD 21207-0488

Dear Sir or Madam:

Thank you for the opportunity to comment on the Prospective Payment System for Hospital Outpatient Services Proposed Rule published in the Federal Register on September 8, 1998 (63 FR 47552). The Biotechnology Industry Organization (BIO) is a industry organization representing 850 member companies that research and manufacture a diverse range of biotechnology-derived products, including drugs, vaccines, blood derivatives and related products, tissue-based products, and in vitro diagnostic products (hereinafter "biotechnology products and drugs").

After careful review and analysis of the proposed rule and in response to the Health Care Financing Administration's (HCFA's) request for comments, BIO is seriously concerned that the proposed Ambulatory Payment Classification (APC) system would disrupt access to quality health care and create severe underpayment for a broad range of biotechnology drugs and products. BIO believes that sufficient problems exist with respect to the methodologies used to compute APC payments as well as the concept of bundling drugs and biologics that we ask the HCFA administrator to urge the secretary of HHS to assert her authority and carve out several categories of drugs and biologics from the APCs.

BIO believes that the result of bundling drugs and biologics into APCs will decrease Medicare patients' access to quality health care.The current proposed bundling of biotechnology products and drugs into the APC groupings would create a grossly inadequate payment for these products, which is likely to result in:

decreased patient access to important and often life-saving therapies

incentives for hospitals to use biotechnology products and drugs in a less efficient manner

a potential shift of patient treatment to less intensive settings, such as physician offices, even when it is not clinically appropriate and

significantly decreased incentives to develop new biotechnology products targeted for indications that affect elderly populations.

We believe the rule's potential negative effects provide ample reason to question the proposed system's treatment of biotechnology products and drugs. When considered together, the threat of such disruptive and negative effects on health care makes it imperative that HCFA not bundle biotechnology products and drugs into the APCs.

In these comments we ask the HCFA Administrator to urge the HHS secretary to exercise her exemption authority with regard to biotechnology products and drugs. The Balanced Budget Act (BBA) of 1997 requires HCFA to establish groups of covered services that are comparable clinically and with respect to the use of resources. In addition, the BBA grants the secretary authority to exempt certain products or services from the outpatient PPS.

As detailed below, it is readily apparent from HCFA's methodology that the costs of biotechnology products and drugs were not carefully considered and in some cases were specifically ignored, in the formulation of the APC system. In addition, we believe the underpayment for biotechnology products will lead to frequent substitution of less clinically appropriate therapies. Accordingly, we propose that HCFA exercise its discretion under the BBA to exempt certain classes of biotechnology products and drugs.

In these comments BIO will explain: 1) our members' concerns with the flawed data collection process and data categories; 2) possible carve-outs that will mitigate the harm to patients who depend on the products they receive in the hospital outpatient setting; and 3) other issues of concern to the industry.

Seven categories of possible carve-outs and examples are detailed in these comments: 1) ôNewö technologies; 2) ôOrphanö drug products; 3) Chemotherapy agents and related supportive care drugs; 4) Biologics and drugs at high risk of not being provided to beneficiaries who need them; 5) Radiopharmaceuticals and other drugs required for nuclear medicine procedures; 6) Blood-derived products; 7) Drug products not covered by the ESRD composite rate.

If there are any questions, BIO and its member companies will be pleased to work with HCFA to find a solution. If there are any questions about these comments, please call Nancy Bradish Myers at (202) 962-9200. Again, we appreciate the opportunity to comment on the proposed rule.

Our comments are available from the following link:

http://www.bio.org/laws/apc721.html