12:00 AM
Aug 20, 2012
 |  BioCentury  |  Regulation

(Part) A for effort

How CMS approved additional reimbursement for Optimer, BTG inpatient drugs

BTG plc and Optimer Pharmaceuticals Inc. are the first drug developers in a decade to take advantage of a program whereby the U.S. Centers for Medicare & Medicaid Services provides hospitals additional reimbursement to treat Medicare beneficiaries in an inpatient setting with newly approved products that are both effective and expensive.

Under Medicare Part A, CMS reimburses hospitals for the costs of treatment in an inpatient setting. The agency's fixed payment is based on a patient's diagnosis-related group (DRG), which reflects the average cost of treating Medicare patients with similar symptoms and comorbidities.

CMS recalculates the DRGs annually using data from claims for inpatient services for the two prior fiscal years. As a result, hospitals may be less apt to use new - but expensive - products if they are left holding the bag for the incremental cost.

To address this problem, CMS in 2001 introduced the new technology add-on payment (NTAP) program to offer hospitals supplemental reimbursement for using products that, in addition to being new, meet two criteria: the drug must increase the overall cost of treatment, and demonstrate a "substantial clinical benefit" over standard of care (SOC).

According to Peter Kelly, a manager at healthcare consultancy Avalere Health LLC, NTAP has largely been pursued by device manufacturers. He estimated that applicants have pursued an NTAP for 40 devices versus just four for pharmaceutical products over the last 11 years.

In fact, an NTAP had been approved for only one other drug: Xigris drotrecogin alfa in 2003. Eli Lilly and Co. withdrew Xigris last year after the severe sepsis drug failed a confirmatory Phase III trial.

In 2008, Genzyme Corp. (now part of Sanofi) submitted but later withdrew an...

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