Judge rules against CMS

Sunday, November 30, 2008

Medicare cannot pay for respiratory drugs based on the least costly alternative, a federal court ruled Oct. 16.

At issue was whether Dey Laboratories’ brand-name drug DuoNeb could be reimbursed at the same rates as separate vials of generic albuterol and ipratropium. Judge Henry Kennedy found that Medicare and some of its contractors had unlawfully limited payments for DuoNeb, according to a Nov. 4 article in the New York Times.

It’s a victory for industry stakeholders, who said that drugs should be covered based on clinical effectiveness, not cost, said Mickey Letson, president of Decatur, Ala.-based Letco Companies.

“This weakens CMS’s stance to say ‘In our opinion these drugs are the same and we are going to reimburse them the same,’” he said.

CMS had planned to begin paying the least costly alternative for DuoNeb on Nov. 1, but after the judge’s ruling yanked its local coverage determinations (LCDs).

CMS officials have said they are considering options. But with DuoNeb reimbursement so low, it would probably cost the agency more to fight the decision, Letson said.