Chairman Camp, Parity Reimbursement Policy for LHRS Agonists 

December 9, 2011

The Honorable Dave Camp
House of Representatives
Washington, DC 

Dear Chairman Camp,

I am writing to suggest that you consider supporting legislative action that would revise a Medicare Part B policy that is causing the government to squander millions of dollars annually.

In 2004, the Department of Health and Human Service’s (HHS) Office of Inspector General (OIG) concluded that implementing a parity reimbursement policy would produce $40 million per year in savings just for two drugs used to treat prostate cancer – Lupron and Zoladex.

Acting on this recommendation, the Centers for Medicare and Medicaid Services (CMS) directed Medicare carriers to apply the parity reimbursement policy to another type of prostate treatment, known as luteinizing hormone-releasing hormone (LHRH) agonists. This policy helped curb excessive LHRH category spending and ensured that physicians would make treatment decisions for their patients based upon the best clinical options, not economic incentives. However, in April 2010, as a result of the CMS’s interpretation of a court decision that concerned an unrelated Part B drug class, the parity reimbursement policy was withdrawn.

Since that decision, Medicare Part B spending for LHRH agonists has increased dramatically. In the six months after the parity reimbursement policy was rescinded, spending for these drugs shot up by 26 percent. This trend is continuing in large part because the elimination of parity gives a significant financial incentive to healthcare providers to prescribe the product with the highest average sale price, for which they receive higher payment. These products are clinically equivalent, so taxpayers bear the burden of higher costs, and patients gain no benefit from receiving the most expensive treatment.

We respectfully request that the parity reimbursement policy for LHRS agonists be reinstated in the most appropriate Medicare legislation, such as the SGR legislation, that will be addressed by your Committee this year. It is our understanding that the Congressional Budget Office scored the savings from this proposal at $300 million over 10 years.

The Medicare program has a $37 trillion unfunded liability and cannot continue to sustain unnecessary spending. We urge you to support reimbursement policies that will again cause physicians to prescribe drugs based on clinical outcomes rather than economic incentives.

Sincerely,

Thomas Schatz,
President