Optimists sit tight

Friday, April 30, 2004

WASHINGTON - As its 2005 start date draws closer, the new average sales price reimbursement for Part B drugs continues to draw fire - as well as questions and concerns - from those in the respiratory business.

“There is no way patients will have access to care if [the ASP reimbursement] is implemented as written,” said Miriam Lieber, president of Lieber Consulting. “I understand that it was bloated, but I think [MMA] went overboard and beyond.”

The MMA revised the reimbursement for respiratory medications to be 106% of the average sales price, which would gouge profit margins and render nebulizer-meds all but undeliverable, according to industry watchers. Still, the ambiguous nature of the law and the lack of a final rule have eased tension among optimists who say things could change before Dec. 31, including the addition of a fee for service.

An interim final rule released April 6 regarding how manufacturers will submit average sales price data did answer some lingering questions, although it stayed fairly true to the statutory requirements, said Lisa Smith, a healthcare attorney at Brown & Fortunato in Amarillo, Texas.

Manufactures began submitting sales data on April 30 and subsequent reports must be made each quarter, according to the rule, which also said all price data must include any discounts or rebates.

CMS will allow comment on this rule until June 7, but it is not expected to change much in its final form, said Smith.

“I guess my concern is that pharmacies don’t usually get their drugs directly from the manufacturer,” she said. “So, to the extent that the reimbursement is going to be based on the ASP of the manufacturer plus 6%, that is effectively cutting out the price increase the drug distributor or wholesaler puts on it.

This concern and others have taken their toll on the respiratory market. Lincare, which has been slow to recover from its plunge in stock price in November, estimates an 80% cut in reimbursement in 2005 if the ASP is implemented, according to the company’s annual report to the SEC from March. Apria predicts a $56 million decline in its respiratory business in 2005, according to its SEC report.

“If the inhalation drug reductions are implemented as currently interpreted and estimated for 2005, the untenable nature of the new reimbursement model would cause Apria to begin transitioning out of this product line late in the fourth quarter of 2004,” said the report.