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Medicare Holds Lottery for Access to Expensive Drugs

Donna Young

Chronically ill seniors and persons with disabilities will have a chance this year to get their expensive drugs that can be taken at home mostly paid for by the government, the Centers for Medicare and Medicaid Services (CMS) announced in June.

The 18-month demonstration program was created by Congress as a transitional benefit under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which was narrowly enacted last November.

But only 50,000, or about 10%, of Medicare beneficiaries with rheumatoid arthritis, osteoporosis, Paget's disease, secondary hyperparathyroidism, hepatitis C, cytomegalovirus retinitis, pulmonary hypertension, multiple sclerosis, or any of eight types of cancer will be selected for the transitional benefit in what some have deemed a lottery approach to health care.

Senate Minority Leader Tom Daschle (D-South Dakota) said that "450,000 other seniors who need help just as badly will have to wait two years for help" until the Medicare drug benefit takes effect in 2006.

"This is the most literal and unseemly example of how the [Bush] administration has created a health care system of winners and losers," he argued in a July 1 Houston Chronicle editorial.

But Senator Olympia Snowe (R-Maine) contended that the drug lottery "has been designed to make access as equitable as possible."

"Patients will receive assistance with drug costs on the same basis as they will under the new Medicare prescription drug benefit," she said in a June 24 statement. "This is critical for those low-income seniors with limited incomes, just as under the new prescription drug benefit, they will have little or no copayment obligation."

The transitional benefit will help Medicare beneficiaries with breast cancer pay for drugs used to treat the disease, including tamoxifen and anastrozole (see box).

Covered Indication


Rheumatoid arthritis

Adalimumab, anakinra, etanercept

Multiple sclerosis

Glatiramer acetate, interferon beta-1a, interferon beta-1b

Osteoporosis (patient must be homebound)

Calcitonin salmon (intranasal)

Pulmonary hypertension


Secondary hyperparathyroidism


Paget's disease

Alendronate, risedronate

Hepatitis C

Pegylated interferon alfa-2a, pegylated interferon alfa-2b

Cytomegalovirus retinitis


Cutaneous T-cell lymphoma


Non-small-cell lung cancer


Epithelial ovarian cancer


Chronic myelogenous lymphoma

Imatinib mesylate

Gastrointestinal stromal tumor

Imatinib mesylate

Anaplastic astrocytoma


Multiple myeloma


Breast cancer

Anastrozole, exemestane, letrozole, tamoxifen, toremifene

Other cancer therapies covered under the program include imatinib mesylate, bexarotene, and thalidomide.

Interferon beta-1a, interferon beta-1b, and glatiramer acetate are covered as drugs used to treat multiple sclerosis.

However, the drugs included in the benefit will be covered only if they are a replacement for a drug or biological normally administered in a physician's office, and the drug must be at least of equal efficacy to the covered drug for which it is a replacement.

Drugs are not eligible for coverage under the program if the drug they are replacing is not commonly provided incident to a physician service, according to CMS.

With recent improvements in drug therapy, Snowe said, "it's no longer necessary for many patients to receive therapy in a physician's office."

"Increasingly, new cancer drugs are available in an oral form," she said. "When a patient is battling cancer, unnecessary trips to receive a drug are a burden patients should be spared, especially with a life-threatening condition such as cancer. More convenient therapy makes our health care system more cost-effective as well."

Beneficiary cost sharing for drugs covered under the transitional benefit will "mirror" the standard Medicare Part D prescription drug benefit when it is implemented in 2006, according to CMS.

Beneficiaries in the program must pay an $85 deductible in 2004 and a $250 deductible in 2005.

After the annual deductible has been paid, beneficiaries must pay 25% coinsurance for the cost of each prescription until the beneficiary has received drugs totaling $2,250, which includes amounts paid out-of-pocket by the beneficiary and amounts paid by Medicare.

Once the beneficiary has received $2,250 in drugs, the person will be responsible for paying 100% of all costs of the drugdubbed as the doughnut hole in the benefituntil the beneficiary has paid an additional $2,850 for a total of $3,600 in out-of-pocket expenses.

Participants in the demonstration program will not pay the monthly premium required by Part D.

According to CMS, a Medicare beneficiary with breast cancer using tamoxifen could save $1,106 annually by participating in the program, and patients with chronic myelogenous lymphoma using imatinib mesylate will save $40,654 annually-about 90%.

Low-income beneficiariesthose with incomes between 135% and 150% of the federal poverty levelcould save "significantly" more, the agency stated.

CMS began accepting applications on July 6 and will continue to receive completed forms until September 30.

Applicants must also submit a physician certification of need to qualify for the covered drug.

Applications for the program are available on the CMS Web site at

Total funding for the project is limited by the Medicare law to $500 million.

CMS has contracted with TrailBlazer Health Enterprises, a wholly-owned subsidiary of BlueCross BlueShield of South Carolina, which will determine beneficiary eligibility for the program and process enrollment and claims.

CareMark Inc. is providing pharmacy benefit management (PBM) services for the project.

Beneficiaries in the program may fill prescriptions for the covered drugs at pharmacies that participate in CareMark's network or through the PBM's specialty pharmacy mail-order program.

CMS will consider covering additional drugs if they meet the agency's criteria and if the enrollment or funding limit for the demonstration has not been reached or is projected to be reached before the end of the demonstration, the agency stated.