Thursday, October 11, 2007

ASP History Lessons

Well, it turns out that the introduction of Average Sales Price (ASP) reimbursement for Medicare Part B did not signal disaster for community oncologists or their patients. Might I be so bold as to suggest some parallels to the current doom-and-gloom over Average Manufacturer Price (AMP) reimbursement for Medicaid?

My question is sparked by two recent studies that assess ASP with the benefit of hindsight.
  1. Patients perceive cancer care to be unaffected by the lower Medicare reimbursements. A new study in the peer-reviewed journal Cancer found: “[R]egardless of age, patients treated pre- and post-MMA reported a median wait to treatment time of 21 days and an average travel time of 30 minutes. Overall, there was no significant difference in treatment location between the groups.”

  2. Most oncology practices are purchasing products below ASP. A June 2007 OIG study found: “Nine of the twelve practices reviewed could generally purchase drugs related to the 15 selected payment codes for the treatment of cancer patients at or below the MMA-established reimbursement rates from April 1 through June 30, 2005.”
Guess what was predicted back in 2003?

No surprise -- community oncologists were furious about the 2004 introduction of the Average Sales Price (ASP) methodology for Medicare Part B.

See if the following quotes from the American Society of Clinical Oncology (ASCO) in November 2003 evoke a sense of déjà vu:
  • “The legislation shifts reimbursement for cancer drugs to a system that will not cover the prices of chemotherapy drugs available to many community practices, ASCO contends.”

  • “We remain concerned that this legislation will hinder access to cancer care for many elderly Americans.”

  • "The impacts on practices will be far-reaching and severe. Some practices will have to cut back on the number of Medicare patients they treat, or stop treating Medicare patients all together. For some patients, treatment will be delayed, if it can be done at all."

At one level, ASCO was correct. The existing system changed as individual practices modified their businesses. Yet the new payment methods also created new care delivery business models. (See my comments on creative destruction in the pharmacy supply chain from June.) The two studies cited above show that many of the devasting effects never happened.

ASCO’s doom-and-gloom should be familiar to readers of this blog because today’s pharmacy industry is making the similar arguments about AMP. Just look over the Reactions to AMP and read about "reckless disregard for patient welfare" or the "assault on neighborhood pharmacies." All this for a change that will reduce pharmacy reimbursement by less than 0.5% in 2008.

Similarly, I'm skeptical about patient access fearmongering. As I point out in Heretical Questions about the AMP War, consumers using independent pharmacies have access to many pharmacies within a reasonable driving distance.

Mark Twain once said: "History doesn't repeat itself, but it rhymes." With that quote in mind, what do you think we will reading in 2011 about the impact of AMP on retail pharmacy?

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