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Inside Health Policy

MedPAC Eyes Axing ESRD Drug Add-On Pay As Trump Touts Kidney Care

January 24, 2020

Some kidney care stakeholders say the Medicare Payment Advisory Commission seems to be at odds with the administration over the need for innovation in treatments for end stage renal disease patients after commissioners at their January meeting leaned toward eliminating the transitional drug add-on payment adjustment to the ESRD pay bundle. But the payment advisors raised concerns the add-on pay could lead drug makers to raise prices for new ESRD treatments that aren’t any better than existing ones.

MedPAC commissioners on Thursday (Jan. 16) discussed policy options for revising the TDAPA policy for certain new ESRD-related drugs in an existing functional category. The intent of the add-on is to facilitate beneficiary access to certain qualifying new drugs by allowing for reimbursement outside the pay bundle while data on the drug’s use is collected, according to CMS.

For new drugs in an existing functional drug category in the ESRD bundle, the providers can have a TDAPA payment at the average sales price for two years, in addition to the full ESRD base rate. After that, the new drug is included in the bundle with no change to the base rate.

MedPAC staff raised concerns that paying separately for drugs that already fit into a functional category temporarily unbundles the ESRD treatments, inhibits competition among drugs in a category and provides no incentive to reduce new drug launch prices. Staff also said the payment is duplicative of the bundle and will increase pay for new drugs that don’t offer an improvement over existing ones.

Commissioners discussed either eliminating the TDAPA for new drugs in an existing functional category or limiting it to drugs that offer clinical improvements. Under both options, the policy for new drugs that don’t fit into an existing category wouldn’t change.

Chair Francis Crosson noted that after the discussion, commissioners seemed to lean toward eliminating the TDAPA for new drugs that fit into an existing drug category, along with a possible exceptions process and periodic rebasing of the bundle. Commissioner Kathy Buto, for example, said she didn’t think there was a strong justification for paying extra for drugs that already fit into a functional category, and they should be paid for under the bundle.

Commissioner Pat Wang, however, did raise that Medicare is the biggest purchaser of ESRD drugs, and asked whether eliminating the pay could discourage manufacturers from research and development of these drugs. She suggested an exceptions process.

Kidney Care Partners, however, has maintained that the bundle is underpaid as it is and even the current TDAPA policies don’t do enough to fix that.

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