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Securing Access to Life-Saving Antimicrobial Drugs for American Seniors

Thought Leader: Seema Verma
August 6, 2019
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Securing Access to Life-Saving Antimicrobial Drugs for American Seniors

Antimicrobial resistance (AMR) represents an urgent clinical and economic crisis for the American health care system. Each year, more than 2 million Americans are infected by bacteria that are resistant to existing antibiotic drugs, resulting in thousands of deaths annually. Seniors are uniquely vulnerable to AMR due to age-related immunosuppression and greater exposure to infection (e.g., from catheters or chronic disease). Indeed, our internal analysis at CMS indicates that Medicare beneficiaries account for the majority of cases of both new diagnoses of drug-resistant infections and the resulting deaths in hospitals in the United States. Drug resistance causes Medicare beneficiaries to spend hundreds of thousands of additional days in the hospital each year, costing taxpayers billions in additional health care costs annually.

Unfortunately, as patients’ need for new antimicrobial drugs has mounted, innovation has remained adversely affected by government roadblocks. Even though a number of regulatory reforms (e.g., the Limited Population Pathway for Antibiotics) and public-private partnerships (e.g., CARB-X) have been established to spur drug development, market failures for antimicrobials continue to persist due to challenges that innovators encounter with payment. For example, the antibiotic manufacturer Achaogen filed for bankruptcy despite successfully gaining FDA approval for its drug, ZEMDRI, which received more than $200 million in funding from the U.S. government (e.g., federal development contracts, post-market incentive payments). The commercial failure of ZEMDRI, which is a novel treatment for complicated urinary tract infections, occurred in part because Medicare’s volume-based approach to payment was insufficient at capturing the full public health benefit of the antibiotic, causing taxpayer dollars to be used inefficiently and potentially leaving seniors without access to a needed new innovation.

As a steward for the health of our nation’s seniors, our agency is committed to removing regulatory restraints on innovators and modernizing payment systems to secure access to medications for Medicare beneficiaries and all Americans. We recognize the public health importance of AMR and the recent crisis in the antimicrobial drug marketplace, and have quickly mobilized to lead an interagency effort in partnership with the Biomedical Advanced Researched and Development Authority (BARDA) to reinvigorate innovation for new antimicrobials. I am proud to announce that CMS has developed a bundle of reforms to secure Medicare beneficiaries’ access to antimicrobials in the short-term and realign financial incentives to sustain innovation in the long-term.

Realigning Financial Incentives for Antibiotic Development
Our strategy is multifaceted. For immediate impact, as part of the FY 2020 Inpatient Prospective Payment System (IPPS) final rule, CMS has finalized an alternative pathway for the New Technology Add-On Payment (NTAP) for drugs designated by the Food and Drug Administration (FDA) as Qualified Infectious Disease Products (QIDPs), under which these drugs would not have to meet the substantial clinical improvement criterion. Additionally, CMS is increasing the NTAP for QIDPs from 50% to 75%. CMS implemented NTAP nearly twenty years ago as a time-limited payment mechanism to smooth the entry of new medical products into existing payment systems. However, antimicrobial drugs are uniquely disadvantaged from being considered for a NTAP because:

  1. Limitations on clinical trial design for antibiotics prevent innovators from developing the same initial level of evidence by the time of FDA approval; and
  2. Misaligned incentives limit the use of and payment for new antibiotics in hospitals.

CMS thus faces a dual challenge – reining in inappropriate prescriptions of antibiotics to slow the rate at which drug resistance develops, while simultaneously ensuring that payments for new antibiotic drugs that address AMR are sufficient to reflect the value of these medical products, particularly given the naturally low prescription volume due to the limited size of the patient population.

To address the issue of payment, CMS is developing an alternative NTAP pathway for QIDPs that does not require substantial clinical improvement and also increases payments to 75%. Limiting access to the current upper band of NTAP to only QIDP drugs reflects the agency’s awareness of the public health imperative for novel antibiotics. This both reduces barriers to accessing the incentive while ensuring that payment systems reflect the value of new innovations. With regards to the challenge of slowing the rate of resistance, we are still reviewing the rule on our proposed new requirements for infection prevention and control programs in hospitals to incorporate public feedback. CMS is wholeheartedly committed to improving patient safety and care by fostering compliance with evidence-based guidelines for antibiotic stewardship.

Modernizing Medicare Payments to Reflect Public Health Value 
Additionally within IPPS, CMS finalized a change in the severity level designation for 18 ICD-10 codes for antimicrobial drug resistance from ‘non-CC’ to ‘CC’ (which stands for complications or comorbidities). This change to CC recognizes the added clinical complexity and cost of treating patients with drug resistance, and ensures physicians are appropriately incentivized to use the correct (and sometimes, more expensive) drugs needed to manage patients with AMR. By increasing payments for inpatient cases with drug resistance, we are removing financial disincentives to antibiotic innovation and thus increasing beneficiaries’ access to these drugs.

Of course, we recognize that coding requires continuous monitoring due to the evolving nature of new technologies. Consequently, we have noted in the preamble to the FY 2020 IPPS rule that CMS will also seek further feedback about additional changes to the DRG system, such as any additional payment adjustments for antimicrobial resistance based on the relative hospital resources used in these cases, allowing us to receive feedback from stakeholders on this topic. This will help inform our thinking beyond IPPS on how to implement additional reforms to the government’s current payment methodologies and pave the road for new antimicrobial drug innovations in the long-term.

Bringing Stewardship Efforts to Scale
Beyond realigning financial incentives, the agency also recognizes the importance of strengthening efforts to prevent resistance from developing in the first place. Consequently, CMS – based on significant stakeholder feedback from academia, professional societies, non-profits, and innovators – is also exploring implementing CDC-recommended guidelines for hospital-based Antibiotic Stewardship Programs into the regulations that govern hospitals’ Conditions of Participation in Medicare. This potential policy change will help slow AMR, and improve the safety and quality of inpatient care. The final rule on our proposed new requirements for infection prevention and control programs, including antibiotic stewardship programs, in hospitals and Critical Access Hospitals is currently under development while we review and respond to public comments. We firmly believe in the importance of stewardship initiatives for enhancing patient safety, and welcome public feedback on how we can harmonize our actions on payment and our rulemaking for prevention.

The Path Forward
AMR is a public health crisis in desperate need of innovation. In partnership with the clinical community and other federal agencies, CMS is committed to removing regulatory hurdles to innovation for life-saving medicines to improve outcomes for Medicare beneficiaries and reduce costs for taxpayers. Under the leadership of the Trump Administration, we are working to slow the rate of drug resistance today, and ensure that our beneficiaries and all Americans have the drugs they need for tomorrow. We welcome further engagement from the public as we continue to lead on this critical issue for patient health and safety.

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