Insurers, Drug Makers Battle Over How Government Should Set Rules
for Medicare Drug Coverage

WASHINGTON -- Insurers and drug makers are battling over how the
government should set rules for insurers to use in deciding which
medicines to cover in the Medicare prescription drug program.

Neither group was happy with a proposal released Thursday that could
form the basis of lists of drugs that would be covered when the Medicare
drug benefit begins in 2006.

Guidelines issued by United States Pharmacopeia, a nonprofit company
charged by Congress with developing the proposal, listed 146 classes of
drugs that should be covered in Medicare. The broad categories include
antidepressants, HIV/AIDS drugs, medicines to lower cholesterol and
anti-inflammatories.

The proposal is likely to undergo changes in coming months, as the Bush
administration decides how to insure access to medicines while also
controlling costs.

"The outcome of this process is important because it could determine
whether or not seniors get access to the drugs they take," said Tricia
Neuman, a Medicare expert with the nonpartisan Kaiser Family Foundation.

Medicare chief Mark McClellan declined to endorse the proposed
guidelines, saying they represent a first step in making sure
"beneficiaries have access to medically necessary drugs at the lowest
possible cost."

But with billions of dollars at stake, drug companies and insurers are
working to influence the way the drug lists are drawn.

Pharmaceutical manufacturers are seeking as many categories as possible
to insure that costly blockbuster drugs, heavily used by older Americans
on Medicare, will be covered.

The proposal "would set back treatment for conditions including but not
limited to diabetes, asthma, heart disease, depression, migraine,
epilepsy and gastrointestinal conditions," said a statement issued by
the Pharmaceutical Research and Manufacturers of America, the industry's
trade group.

For anti-arthritic drugs, cholesterol reducers and antidepressants, the
guidelines would lump together best-selling brand-name drugs with older
medicines, potentially allowing insurers to meet government requirements
by choosing to cover the older drugs.

However, insurers and pharmacy benefit managers want fewer, more broadly
drawn classes of medicines to give them more leverage in negotiations
with drug companies. The benefit managers administer drug plans for
employers and are expected to have a similar role under Medicare drug plans.

"If embraced, such an approach ... could have the unintended consequence
of increasing costs and jeopardizing a workable Medicare prescription
drug benefit for seniors," said Mark Merritt, president of the
Pharmaceutical Care Management Association, the benefit managers'
lobbying arm.

USP is accepting public comments on the proposal until Sept. 17, and has
scheduled a public meeting in for Aug. 27 in Baltimore.

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On the Net:

USP guidelines:
http://www.usp.org/pdf/drugInformation/mmg/draftModelGuidelines.pdf