```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
 PATIENT ACCESS TO SELF-INJECTABLE PRESCRIPTION DRUGS IN THE MEDICARE 
                                PROGRAM

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                         HEALTH AND ENVIRONMENT

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 23, 2000

                               __________

                           Serial No. 106-122

                               __________

            Printed for the use of the Committee on Commerce

                    ------------------------------  

                     U.S. GOVERNMENT PRINTING OFFICE
64-029CC                     WASHINGTON : 2000

                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Health and Environment

                  MICHAEL BILIRAKIS, Florida, Chairman

FRED UPTON, Michigan                 SHERROD BROWN, Ohio
CLIFF STEARNS, Florida               HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 PETER DEUTSCH, Florida
RICHARD BURR, North Carolina         BART STUPAK, Michigan
BRIAN P. BILBRAY, California         GENE GREEN, Texas
ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
CHARLIE NORWOOD, Georgia             THOMAS M. BARRETT, Wisconsin
TOM A. COBURN, Oklahoma              LOIS CAPPS, California
  Vice Chairman                      RALPH M. HALL, Texas
RICK LAZIO, New York                 EDOLPHUS TOWNS, New York
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
JOHN B. SHADEGG, Arizona             JOHN D. DINGELL, Michigan,
CHARLES W. ``CHIP'' PICKERING,         (Ex Officio)
Mississippi
ED BRYANT, Tennessee
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Davenport-Ennis, Nancy, founding Executive Director, Patient 
      Advocate Foundation........................................    53
    Hash, Michael, Deputy Administrator, Health Care Financing 
      Administration.............................................     8
    Lohrman, Rosalie.............................................    51
    Rybicki, Mariellen...........................................    49
    Sizemore, Julie..............................................    46
    Steinberg, Earl P............................................    42
    Story, Jane A................................................    38
Material submitted for the record by:
    Hash, Michael, Deputy Administrator, Health Care Financing 
      Administration, responses for the record...................    69

                                 (iii)

  

 PATIENT ACCESS TO SELF-INJECTABLE PRESCRIPTION DRUGS IN THE MEDICARE 
                                PROGRAM

                              ----------                              

                        THURSDAY, MARCH 23, 2000

                  House of Representatives,
                             Committee on Commerce,
                    Subcommittee on Health and Environment,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2322, Rayburn House Office Building, Hon. Michael 
Bilirakis (chairman) presiding.
    Members present: Representatives Bilirakis, Upton, Burr, 
Bilbray, Lazio, Norwood, Pickering, Bryant, Brown, Deutsch, 
Strickland, Barrett, and Capps.
    Staff present: Tom Giles, majority counsel; Robert Simison, 
legislative clerk, Bridgett Taylor, professional staff; and Amy 
Droskoski, professional staff.
    Mr. Bilirakis. Good morning.
    The hearing will now come to order.
    Today, as you know, the subcommittee is holding a hearing 
to review the Health Care Financing Administration's policy of 
coverage, or lack thereof, of self-administrable drugs under 
the Medicare program.
    Since Medicare was created, the program has covered 
physician services and supplies, and I quote, ``including drugs 
and biologicals which cannot, in accordance with the 
regulations, be self-administered.''
    The manual for carriers states that the determination of 
whether a drug or biological can be self-administered is based 
on the usual underlying method of administration. This policy 
has resulted in payment by Medicare for lifesaving drugs needed 
by patients who are incapable of self-injecting their 
medications.
    On August 13, 1997, however, HCFA issued a program 
memoranda which significantly narrowed coverage for injectable 
drugs. In response, carriers began basing their coverage 
decisions on whether the drug could possibly, be self-
administered, without regard to the unique needs of each 
patient. This action resulted in a loss of coverage for 
patients whose medications were previously covered by Medicare.
    Beneficiaries in my home State of Florida were particularly 
hard hit by this payment change. After the new policy took 
effect, Blue Cross and Blue Shield of Florida attempted to deny 
coverage for Neupogen based on the fact that it could be self-
administered, even though it is usually administered by a 
physician, in conjunction with chemotherapy.
    Congress became increasingly concerned as more and more 
claims were denied as a result of HCFA's actions. In response, 
Section 219 of the Consolidated Appropriations Act was enacted 
into law last year to prohibit the Agency from carrying out the 
program memorandum or from restricting coverage of self-
injectable drugs in any way beyond the policy effective prior 
to August 13, 1997.
    Unfortunately, and I say this, with our good friend, Mr. 
Hash, here, I don't know if he takes this personally, or not, 
but maybe in a way he should. The point is that, unfortunately, 
it took HCFA over 4 months to inform carriers that the pre-
August 1997 policy should be reinstated. By law, that 
communication should have been made last November.
    Ironically, the administration has proposed dropping 
coverage for these lifesaving drugs at the same time that 
Congress is considering ways to expand, as you know, access to 
affordable prescription drugs for all Medicare beneficiaries.
    Not surprisingly, there has been bipartisan, bicameral 
opposition to the proposed changes. Along with several of my 
colleagues, I wrote Secretary Shalala last October, to request 
information regarding the rationale for the administration's 
policy. We did not receive the courtesy of any reply until late 
yesterday evening.
    Those Members who signed the letter were trying to get 
answers for constituents who are being denied coverage for 
critical medications. However, the administration simply 
ignored the congressional request for over 5 months until this 
hearing was scheduled. Actually, I should say, that it ignored 
the congressional requests.
    In my opinion, this inaction demonstrates an utter lack of 
concern for the patients affected by these proposed changes.
    I would note that the President's budget proposal includes 
a provision to allow HCFA to move forward for the development 
of a proposed rulemaking process on injectable drugs. I am 
interested to learn why the administration believes such a rule 
is needed now, over three decades after the Medicare statute 
was enacted.
    The impact of this policy change by HCFA is not limited to 
Medicare beneficiaries. Decisions about Medicare policy often 
set precedent for policy in the private health care market and 
our Nation's entire health care system. That is why today's 
hearing is so important.
    I do want to thank all of our witnesses for appearing 
before the subcommittee to discuss this important issue, and I 
particularly appreciate the time and effort of the patients and 
patient advocates who will share their experiences with us. For 
them, the outcome of this debate will have significant personal 
consequences. I am sure we all look forward to hearing their 
testimony.
    I yield to Mr. Brown for his opening statement.
    Mr.  Brown. Thank you, Mr. Chairman.
    We have choices today about what this hearing will be 
about. We can make use of this hearing to blame HCFA. We could 
somehow try to pin blame on the administration, rather than on 
Congress, for ambiguous language written into the Social 
Security Act of 1965 regarding self-administered medicines. The 
press loves it when we point fingers.
    We could chastise HCFA for reiterating in a 1997 memorandum 
required to address the specific coverage issue an 
interpretation of the law that actually dates back to the 
1980's. It is a misplaced criticism, but that has never stopped 
us before.
    We could scold HCFA for allowing several months to pass 
before issuing a statutorily required clarification memo. I am 
not sure Congress has room to talk when it comes to creating or 
getting mired in red tape, and I'm sure HCFA has an explanation 
for the delay, but we should not let the facts get in the way 
of a good story.
    We could question HCFA's plans to issue a proposed rule on 
the meaning of the statutory term ``self-administered'', even 
though it made perfect sense for Administrator DeParle to 
recommend this step.
    Why anyone in their right minds would believe HCFA for some 
reason has it out for certain individuals who use self-
administratable prescription drugs is beyond me. Nonetheless, 
we could take all our frustrations out on the agency. It would 
not be the first time.
    Or we could get to what really matters: Should individuals 
who require a doctor's assistance to administer an otherwise 
self-injectable drug receive coverage under Medicare for that 
drug? From a policy perspective, I firmly believe Medicare 
should cover these individuals' costs, regardless of the 
reasons behind their inability to self-administer a needed 
medication.
    A major goal of this hearing should be to clarify what, if 
any, actions are necessary to ensure that any Medicare 
beneficiary who needs but cannot self-administer one of these 
drugs have the same access as those who require drugs that are 
not self-administratable.
    Speaking of equitable access, it would be irresponsible to 
assert that certain Medicare beneficiaries should receive 
coverage for certain medically necessary prescription drugs 
without mentioning that all Medicare beneficiaries should 
receive coverage for all medically necessary prescription 
drugs.
    I am sure most of you have seen the Committee on Ways and 
Means press release in which Chairman Thomas, surprisingly 
enough, takes credit for convincing the Clinton administration 
to reverse its position on access to self-injectable drugs, no 
matter that HCFA had already determined it would solicit 
comments, or that this hearing was already scheduled when 
Chairman Thomas sent his letter to HCFA.
    What I found most ironic was that Chairman Thomas chastised 
HCFA for, in his words, ``carelessly limiting seniors' 
prescription drug coverage.''
    Let us talk about ``careless.'' Careless is abiding a 
Medicare program that covers some of the prescription drugs 
required by a small subset of patients, but ignores the 
prescription drug needs of the rest of the Medicare population. 
Careless is ignoring the prescription drug issue until forced 
by politics in an election year to pay attention. Careless is 
promoting a stopgap solution to a broad-scale and growing 
problem. Careless is lashing out at HCFA for dragging its feet 
on a single policy while Congress drags its feet on an issue 
that has thrown millions of seniors into crisis.
    A third of all seniors have no drug coverage. Millions more 
are underinsured. Employers are dropping retiree coverage. 
Private health insurers are cutting back the prescription drug 
benefits.
    This is not an isolated or static problem that could be 
solved in a piecemeal fashion. It is broadbased, and it is 
getting worse. Ideally we would leave this meeting today not 
only confident that Medicare will cover injectables, which it 
should when a doctor must administer them to the patient, but 
also confident that the self-injectable issue will soon be 
moot.
    The Medicare program covers hospitalization, it covers 
doctor's visits, and it should cover prescription drugs, 
period. I expect this hearing to resolve potential problems for 
individuals who should be eligible for coverage of self-
injectable medications. I hope this hearing also takes us a 
step closer to Medicare prescription drug coverage for all 
senior citizens.
    Mr. Bilirakis. Maybe you would not know it, but we are very 
close friends.
    Mr. Brown. That is true.
    Mr. Bilirakis. I would remind the gentleman, though, that 
the problem of lack of prescription drugs for Medicare 
beneficiaries has been a longstanding problem. It is only 
recently when any Congress--certainly not during 40 years when 
the gentleman's party controlled the Congress--and he was not 
here for much of that time--had any concern for prescription 
drugs for Medicare.
    I would now yield to the gentleman from Tennessee, Mr. 
Bryant.
    Mr. Bryant. Thank you, Mr. Chairman, for your comments, and 
also for holding this hearing. I was very carefully watching 
the doors as my time came, because I am going to have to leave 
and be in and out today with other commitments. I very much am 
interested in what is said today. I think these are very good, 
very complex issues we have to deal with.
    I certainly want to hear from people who are experts by 
virtue of their experience, whether it is a life experience or 
having to go through this type of medical situation, or whether 
they are experts educationally, from HCFA and all around.
    But I was going to be brief in my remarks because I was the 
last one and we can get to the panels quicker, but we have had 
two members come in since that time, so I can take 10 or 15 
minutes, I guess, now.
    Mr. Bilirakis. Take your full 5 minutes, Mr. Bryant.
    Mr. Bryant. I am concerned about this. I do want to hear 
the testimony. I am in the process of reading the testimony of 
the witnesses. This is an important issue. It is one that--I 
might just reiterate what our chairman said, that this issue 
has been around since the beginning of Medicare. It did not 
cover drugs, and I think everybody in Washington over the years 
that this program has been in existence has had the opportunity 
to change that.
    We are now, in this Congress, attempting to I think fix a 
very valid problem there for those people, especially 35 
percent of the people, senior citizens, who do not have drug 
coverage.
    We do not want to rush to judgment, so to speak. We do not 
want to go through this process of discharge petitions and 
things just so we can get something out quickly that might not 
be right, or that we might try to embarrass somebody 
politically. We want to do it right.
    I think through hearings like this--and I realize it is a 
limited hearing, it is not going to be focused on the bigger 
problem, but I think this adds to that. I think one quick step 
from this hearing is what are we going to do about those new 
drugs that are being or have been discovered since 1997 that 
would fit into this category that are very good drugs, but 
probably are going to be quite expensive. That is going to have 
to be considered when we write our drug bill.
    I continue to hope the best in Congress; that we can keep 
politics, even though this is an election year--that we can 
keep politics out of this issue as much as possible. There is 
no Republican way, there is no Democrat way on this. I think 
there is an American way. I think there is a right way for the 
American people, particularly our senior citizens.
    Again, I am rambling on now. I am going to stop, because I 
still have hope that I can hear some of the testimony before I 
have to leave at 11 o'clock. I yield back the balance of my 
time.
    Mr. Bilirakis. Mrs. Capps?
    Mrs. Capps. Good morning, Mr. Chairman. Thank you for 
holding this hearing. I send a welcome to all of the witnesses 
testifying before us today.
    Today's hearing addresses one of the most critical needs of 
our Nation's seniors, drug coverage. I am glad we are looking 
at one aspect of this issue today. I would urge the Chairman 
that we do more. It is not a partisan issue.
    Mr. Chairman, my district has a large senior citizen 
population. Many of these seniors rely on lifesaving therapies 
like the injectable drugs in issue at today's hearing to treat 
cancer, organ transplants, kidney failure, the side effects of 
chemotherapy, and other serious conditions. Many certainly 
cannot afford to pay for these self-injectable medications, 
which can cost up to $10,000 per year. Even if they could 
afford to pay for them, many of these seniors are often so 
elderly or sick that they cannot safely administer the drugs 
themselves.
    I am glad to hear of HCFA's recent action, but I urge them 
to take action to extend that ruling permanently. I have to 
call to mind a dear friend of mine, an elderly man who was our 
church organist for many years.
    He became very ill and was in critical care in a hospital 
for a while. He was able to be discharged, and was thrilled to 
go home. Then he discovered that the injectable that he needed 
to sustain him, which could be given at home, would not be 
covered by Medicare. It was so expensive he had to return to 
the acute care facility for a period of extended time, many 
weeks, solely to get this treatment. It is not a good use of 
our resources.
    Recently I cosponsored H.R. 2892, introduced by my 
colleagues, Jay Inslee and Jennifer Dunn. This bill would 
require Medicare to cover self-injected biologics prescribed in 
lieu of a drug already covered by Part B. It would provide a 
patient with a choice between the intravenous in-office therapy 
or the self-injected therapy, depending on what is best for the 
patient.
    Because of the savings from eliminated costs associated 
with in-office administration, this bill is basically budget-
neutral. Some have even speculated that covering some self-
injected products will actually save the Medicare program 
substantial dollars. I would hope that the committee would move 
this legislation soon.
    As a nurse, I am particularly concerned that lack of access 
to drugs, to prescribed drugs, could be compromising seniors' 
health. In fact, I fear that it actually does. I believe this 
is one of the most critical issues facing our country's health 
care today.
    I happen to represent a district where Medicare HMOs have 
been pulling out because of ridiculously low reimbursement 
rates. Of course, seniors are the ones who are truly hurt by 
all of this. They are the ones that have their lives disrupted 
when an HMO drops them. They are the ones who lose their 
prescription drug coverage and are forced to pay the full price 
for their medications out of their own pocket.
    Many seniors simply cannot afford the high prices, so 
instead they take half the prescribed dose, or they just do not 
even buy these lifesaving medications because they cost too 
much.
    We all know that today's prescription drugs are literally 
miracle drugs, and we cannot imagine quality health care 
without them. So while I am glad that we are holding this 
hearing today, I am very disappointed that this Congress has 
yet to address the issue of a Medicare drug benefit in any 
meaningful way.
    Thank you, Mr. Chairman. I yield back my time.
    Mr. Bilirakis. I thank the gentlewoman.
    Mr. Upton from Michigan.
    Mr. Upton. Thank you, Mr. Chairman. I know we are going to 
have a vote on the Journal in just a few minutes, so I am going 
to put my statement into the record.
    I just want to welcome our witnesses today, particularly 
Mr. Hash, who has done, I think, a pretty remarkable job in his 
role at HCFA.
    One of the things that I intend to focus on is on the 
differences between States in reimbursing individuals, both 
under Medicare and Medicaid. I look forward to the testimony, 
and I yield back.
    [The prepared statement of Hon. Fred Upton follows:]
  Prepared Statement of Hon. Fred Upton, a Representative in Congress 
                       from the State of Michigan
    Mr. Chairman, thank you for holding today's hearing on Medicare 
patients' access to self-injectable drugs. As a fellow member of the 
Chairman's task force on prescription drug coverage, I know that we 
share a deep concern about the burden that prescription drug costs 
place on the millions of Medicare beneficiaries who do not have any 
insurance coverage for prescriptions. No senior citizen should be 
forced to forego needed medication, take less than the prescribed dose, 
or go without other necessities in order to afford life-saving 
medications. Our nation leads the world in the development of new drugs 
and medical devices that enable us to effectively treat diseases and 
conditions. But if people cannot afford to buy these drugs, their 
benefits are lost to many in our population.
    Until we can get a plan in place, it is important that we permit 
seniors who are getting a little assistance now under the Medicare 
program with their prescription needs to keep that assistance. I want 
to know what prompted the Health Care Financing Administration to issue 
a program memorandum to its Medicare carriers substantially tightening 
a long-standing policy that permitted Medicare carriers to cover some 
self-injectable drugs.
    I want to raise a related issue, too. Last year, I was contacted by 
a constituent suffering from carcinoid cancer. Her physicians at the 
Mayo Clinic prescribed a drug that can be a self-injectable. They told 
her that if she lived in Minnesota, Medicare would cover the drug, but 
that the Medicare carrier for Michigan, Wisconsin, and Illinois had 
elected not to cover it. I investigated this situation and found that 
was in fact the case and that Medicare carriers apparently have a lot 
of latitude in making these determinations.
    Michigan later decided to cover this drug, and I believe that there 
may now be a national coverage policy in place on it. But this case is 
still very troubling to me. My Michigan constituents pay the same 
premiums as beneficiaries in Minnesota and other states whose carriers 
elected to cover this drug. I can see state by state variations 'in 
coverage policies in the Medicaid program, but not in the Medicare 
program, which is fully federally financed and national in scope. I'm 
going to try to get some answers today.

    Mr. Bilirakis. I thank the gentleman.
    The opening statements of all members of the subcommittee 
are made part of the record.
    Mr. Norwood.
    Mr. Norwood. Mr. Chairman, thank you for holding the 
hearing. We do thank our witnesses. As might be a little 
unusual, I will simply submit my opening statement for the 
record this morning, and give you a break.
    [Additional statement submitted for the record follows:]
 Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
    I want to thank the Chairman of the Health and Environment 
Subcommittee, Mr. Bilirakis for convening this hearing today. The issue 
of providing Medicare beneficiaries with access to prescription drugs 
is an issue this Committee is committed to addressing.
    This is the fourth hearing this Subcommittee has conducted to focus 
on Medicare beneficiary access to prescription drugs. The Committee has 
invited the Health Care Financing Administration to testify three times 
on this topic. While I mean no disrespect to Mr. Hash, who formerly 
served on the staff of this Committee, I am disturbed that the HCFA 
Administrator, Nancy Ann Min DeParle, has been unavailable to attend 
any of the prescription drug hearings to which she has been invited. 
She is the head of HCFA, and it is her signature on the letters I have 
here explaining why Medicare will no longer cover certain life-saving 
drugs that it had previously provided coverage for.
    We can all agree that no one would design a health care benefit 
today that did not include access to prescription drugs. This is just 
one significant area where the Medicare program doesn't measure up--
particularly when compared to the health benefits we all enjoy working 
here in the Congress. I've been spending a lot of time studying this 
issue, and I agree with all my colleagues that we should do something 
to help seniors access affordable prescription drug coverage.
    As I've already said, we've had three hearings on the larger issue 
of outpatient prescription drugs and we are working on addressing that 
issue. But that is not the topic of today's hearing.
    We are here today to address the concerns of those patients who 
have had coverage for certain medications in the past, but due to a 
policy change by HCFA, no longer have that coverage. Since the Medicare 
program's inception 35 years ago, certain injectable drugs and 
biologicals have been covered when those drugs were administered by a 
physician in his or her office. Up until 1997, patients in need of 
these life-saving therapies had some comfort in knowing that, in almost 
all cases, they would have access to them. On August 13, 1997, HCFA 
effectively reversed this long-standing policy by issuing a Program 
Memorandum which caused Medicare carriers to discontinue coverage for 
these drugs and biologicals.
    Not only did Medicare beneficiaries see their coverage curtailed, 
but some private health insurers began to follow suit and started 
denying coverage as well.
    Recognizing that HCFA's Program Memorandum was resulting in a 
change in coverage policy that was having a devastating impact on 
patients in need of these drugs, Congress directed HCFA to reinstate 
the coverage policy that had existed prior to the August 13 Program 
Memorandum. Subsequently, President Clinton in his FY 2001 Budget 
request, proposed that the action taken by Congress last November and 
approved by the President be repealed.
    I was pleased that last Friday, on St. Patrick's day, HCFA finally 
complied with the law that Congress passed to ensure that people with 
Cancer, Multiple Sclerosis, AIDS and other diseases will once again 
have access to the lifesaving drugs they need.
    For as long as Medicare has been on the books it has paid for these 
drugs. For reasons unbeknownst to me and many of my colleagues, HCFA 
began restricting coverage in August of 1997. I am further baffled as 
to why it has taken the Administration four months to comply with the 
law, and restore coverage for these life saving drugs. As we will hear 
from today's brave witnesses, this policy has had a direct impact on 
patient care. I believe this is unacceptable. The American people 
deserve better. The patients we will hear from today deserve better.
    I have some specific questions for Mr. Hash today that I'd like to 
just highlight now. I'd like to know why HCFA decided to change a 33 
year old policy in favor of one that denied patients treatment that 
Medicare had previously paid for. I'd like to know why it took HCFA 
four months to comply with a law passed last November instructing them 
to return to the previous coverage policy. And I'd like to know what 
the Agency intends to do next October when current law expires. I 
welcome Mr. Hash here today, and hope he can provide this Committee 
with some answers to these questions.
    Finally, I particularly want to thank the witnesses on our second 
panel for making the trip here to the Nation's Capitol to tell us their 
stories. I welcome you and appreciate how important this issue is to 
you and your families.

    Mr. Bilirakis. It is somewhat unusual.
    Mr. Hash, if you will come forward, sir.
    Mr. Hash, as we all know, is Deputy Administrator of Health 
Care Financing Administration, based here in Washington. 
Michael, it is always great to have you here. Hopefully you can 
help us out on some of these things that concern us.
    Please proceed. We set it at 10 minutes. Obviously, do the 
best job you can.

  STATEMENT OF MICHAEL HASH, DEPUTY ADMINISTRATOR, HEALTH CARE 
                    FINANCING ADMINISTRATION

    Mr. Hash. Thank you, Mr. Chairman.
    Chairman Bilirakis, Mr. Brown, and other distinguished 
members of the subcommittee, I want to thank you for inviting 
us here today to discuss Medicare's coverage for self-
administered drugs.
    The current situation, as all of you recognize, presents a 
really compelling example of why we must modernize the Medicare 
program with an affordable, comprehensive outpatient 
prescription drug benefit.
    Medicare coverage for pharmaceuticals is now severely 
restricted outside of hospitals and nursing facilities. 
Congress has created only a limited number of exceptions 
outside of those settings in the law. One exception is for 
drugs that cannot be self-administered. The statute says 
Medicare must pay for drugs that cannot be self-administered 
when furnished as part of a physician's professional services.
    Medicare's longstanding policy for coverage under this 
exception has addressed only whether a drug can be self-
administered, not whether an individual patient can self-
administer the drug. Congress has not provided an explicit 
exception for those who cannot self-administer drugs that 
generally are self-injectable.
    The shortcomings of such a policy become clearer every day 
as we witness the new advances in drug therapies that are so 
important to patients' lives. Medicaid, and of course most 
private insurers, pay for all prescription drugs, regardless of 
whether they are self-administered. The current policy in 
Medicare is most troubling for conditions such as multiple 
sclerosis, where some patients can administer their drugs and 
others cannot. It is enough of a burden to cope with the 
effects of such a debilitating disease without having in 
addition the worry of how to pay for expensive drugs.
    Mr. Chairman, I think we all agree that the current 
limitations on Medicare coverage for self-administered drugs 
leave some beneficiaries without the medications they need. 
However, we are scheduling town hall meetings now, as directed 
by Congress, to allow all interested parties to air their 
concerns about the current situation, and to discuss available 
options, such as regulatory action to expand coverage for those 
who cannot self-administer drugs. Our first town meeting has 
been scheduled in Baltimore on May 18.
    However, regulatory action to create another narrow 
exception allowing coverage for only some beneficiaries may not 
be the best solution to this problem. This approach could 
compound the current inequities that exist in our coverage 
policy.
    Our clinicians at HCFA are concerned that such a narrow 
exception could create ethical dilemmas for compassionate 
physicians treating patients who can self-administer but who 
cannot afford the drug. This issue is in fact, as all of you 
know, a very small part of a larger problem for which patchwork 
solutions simply will not suffice.
    As many Medicare beneficiaries lack prescription drug 
benefit coverage today as senior citizens lacked hospital 
coverage when Medicare was created in 1965. The program's 
current coverage restrictions leave many beneficiaries without 
coverage they need, not just those who are unable to self-
administer drugs. We need to expand coverage to all 
beneficiaries. Patchwork solutions and limited exceptions 
cannot address a problem of this magnitude.
    All beneficiaries, regardless of their health, their 
income, need access to an affordable, comprehensive outpatient 
drug benefit, as has been proposed by the President. Mr. 
Chairman, we look forward to working with you on this critical 
issue.
    I do want to say, in response to your opening statement, 
Mr. Chairman, that we always try to be very responsive to any 
inquiry that you might make. I did write you myself, in 
response to your October letter, on November 3rd, where I 
attempted to lay out what Medicare's coverage policy was for 
self-injectable drugs, and I also indicated that we were 
working on a regulation to review the options that might be 
available for us to address this problem more adequately.
    Thank you for your invitation for us to be here. I would be 
happy to answer any questions that you or other members of the 
subcommittee may have.
    [The prepared statement of Michael Hash follows:]
 Prepared Statement of Michael Hash, Deputy Administrator, Health Care 
                        Financing Administration
    Chairman Bilirakis, Congressman Brown, distinguished Subcommittee 
members, thank you for inviting us to discuss Medicare coverage for 
self-administered drugs. The current situation provides a compelling 
example of why we must modernize Medicare with an affordable, 
comprehensive, outpatient prescription drug benefit available to all 
beneficiaries.
    Medicare coverage for pharmaceuticals is now severely restricted 
outside of hospitals and nursing facilities. Congress has created only 
a limited number of exceptions, each spelled out in the law. One 
exception is for drugs that cannot be self-administered. Section 1861 
(s)(2)(A) of the statute says Medicare may pay for drugs ``which 
cannot, as determined in accordance with regulations, be self-
administered'' when furnished ``as an incident to a physician's 
professional services, of kinds which are commonly furnished in 
physicians' offices and are commonly either rendered without charge or 
included in the physicians' bills.''
    Medicare's longstanding policy for coverage under this exception 
has addressed only whether a drug can be self -administered, not 
whether an individual patient can self-administer the drug. And 
Congress has not provided an explicit exception for those who cannot 
self-administer drugs that generally are self-administered.
    The shortcomings of such a policy become clearer every day with 
dramatic new advances in drug therapies. Medicaid and most private 
insurers pay for all prescription drugs, regardless of whether they are 
self-administered. The current policy is most troubling for conditions 
such as multiple sclerosis, where some patients sometimes can 
administer their drugs and others cannot. It is enough of a burden to 
cope with the effects of such a disease without the worry of paying for 
expensive drugs.
    We all agree that the current limitations on Medicare coverage for 
self-administered drugs leave beneficiaries without the medications 
they need. However, regulatory action to create limited exceptions 
allowing coverage for only some beneficiaries may not be the best 
solution to this problem.
    Our clinicians at HCFA are concerned that creating such a narrow 
exception to the ban on Medicare coverage for outpatient drugs could 
create an ethical dilemma for compassionate physicians when caring for 
patients who can self-administer drugs but cannot afford the drugs they 
need. This approach could compound the current inequities in coverage, 
and may also create program integrity problems.
    This issue is, in fact, a small part of a much larger problem for 
which patchwork solutions will not suffice. As many Medicare 
beneficiaries lack drug coverage today as senior citizens lacked 
hospital coverage when Medicare was created. All beneficiaries, 
regardless of health or income, need access to an affordable, 
comprehensive outpatient drug benefit, as has been proposed by the 
President.
                               BACKGROUND
    Like many specific coverage policies in Medicare's history, 
determination of whether a specific drug could be self-administered has 
been left up to the medical directors of each claims processing 
contractor. Instructions to Medicare claims processing contractors on 
this issue have been provided through the Medicare Carrier Manual and 
were updated in 1995. Those instructions state that drugs may be 
covered only if they ``are of the type that cannot be self-
administered.''
    The question of whether a drug could be ``self-administered'' was 
self-evident when Medicare was created in 1965. A pill was self-
administered, most injections except for insulin were not, so 
regulations defining ``self-administered'' were not promulgated. But 
now, dramatic advances in drug therapies have changed the medical 
landscape. Cancer drugs, for example, that had been available only as 
injections have become available in pill form.
    Congress recognized some of these changes in technology in the 
Omnibus Budget Reconciliation Act of 1993 by authorizing Medicare 
coverage for certain oral anticancer drugs that contain the same active 
ingredient as an injectable drug that would be administered by a 
physician. The law also allowed for coverage of self-administered anti-
emetic agents necessary for proper absorption of oral anticancer drugs 
covered under this provision. And it provided for coverage of clotting 
factors that hemophiliacs self-administer to control their condition.
    Congress, however, has not created exceptions in the law to 
accommodate other compelling situations. Pharmaceutical advances are 
allowing more types of patients with different types of diseases to be 
successfully taught to administer drugs they need themselves. But some 
of these new agents are for conditions, such as multiple sclerosis, 
that create an unfortunate dilemma. Many of these patients can self-
administer drugs. But others, especially those in later stages of the 
disease, are so debilitated that they cannot administer the drugs 
themselves.
    We issued a memorandum in August 1997 clarifying the guidance in 
our carrier manual to emphasize that Medicare claims processing 
contractors may cover generally self-administered drugs when a provider 
is administering the drug in order to teach a patient how to self-
administer. We did this to encourage more coverage in these situations. 
The memorandum also reiterated the long-standing policy that an 
``individual patient's mental or physical ability to administer any 
drug'' may not be taken into consideration.
    Because of continuing concern over this issue, we had planned to 
publish a proposal in the Federal Register exploring options and 
requesting public comments on ways to define ``self-administered'' 
through regulation. One option would have been to possibly expand 
coverage by taking individual patient conditions into account. 
Unfortunately, some observers misinterpreted our plans for a proposal 
in the Federal Register as an effort to further restrict coverage.
    This series of events led to inclusion of language in the 
Appropriations Act of 2000 in which Congress barred use of HCFA funds 
to carry out the transmittal of the August 1997 memo. The 
appropriations language also prohibited us from promulgating ``any 
regulation or other transmittal or policy directive that has the effect 
of imposing (or clarifying the imposition of) a restriction on the 
coverage of injectable drugs under section 1861(s)(2) of the Social 
Security Act beyond the restrictions applied before the date of such 
transmittal.''
    We therefore postponed our proposal to solicit public comments on 
options in the Federal Register to avoid the appearance that we are 
attempting to restrict coverage in violation of the appropriations 
language. We have also suspended our 1997 memorandum and, as required 
by the law, alerted our contractors that current guidance on this 
matter is limited to instructions issued to them before the 1997 
memorandum. We also are scheduling town hall meetings, as directed by 
Congress, to allow all interested parties to air concerns about the 
current situation and discuss available options. The first is set for 
May 18 in Baltimore.
    We all agree that the current situation is not acceptable. The best 
solution is to provide all beneficiaries with access to affordable and 
comprehensive coverage for outpatient prescription drugs.
Need for Comprehensive Drug Benefit
    Prescription drugs are as essential to modern medicine today as 
hospital care was when Medicare was created. Yet as many beneficiaries 
lack drug coverage today as senior citizens lacked hospital coverage 
then. Three out of five lack dependable coverage. Only half of 
beneficiaries have year-round coverage, and one third have no coverage 
at all.
    Beneficiaries without drug coverage must pay for essential 
medicines fully out of their own pockets, and are forced to pay full 
retail prices because they do not get the generous discounts offered to 
insurers and other large purchasers. The result is that many go without 
the medicines they need to keep them healthy and out of the hospital.
    This year more than half of Medicare beneficiaries will use 
prescription drugs costing $500 or more, and 38 percent will spend more 
than $1000. Each year, about 85 percent of Medicare beneficiaries fill 
at least one prescription. About half of the beneficiaries without 
coverage have incomes above 150 percent of poverty (above $17,000 for 
an elderly couple). Analysis by the National Economic Council shows 
that middle-income beneficiaries without prescription drug coverage 
purchase 20 percent fewer drugs but pay about 75 percent more out-of-
pocket than those with drug coverage.
    This situation is worse for the 10 million Medicare beneficiaries 
who live in rural areas. Nearly half of these beneficiaries have 
absolutely no drug coverage. They have less access to employer-based 
retiree health insurance because of the job structure in rural areas. 
And three-quarters of rural beneficiaries do not have access to 
Medicare+Choice plans and the drug coverage that many of these plans 
provide.
    No one would design Medicare today without including broad coverage 
for prescription drugs. The private sector now includes outpatient drug 
coverage as a standard benefit in almost all policies. Further, all 
plans in the Federal Employees Health Benefits Program are required to 
offer a prescription drug benefit. And prescription drugs are 
particularly important for seniors and disabled Americans, who often 
take several drugs to treat multiple conditions. All across the 
country, Medicare beneficiaries are suffering physical and financial 
harm because they lack substantive prescription drug coverage.
    The President has proposed a comprehensive Medicare reform plan 
that includes a voluntary, affordable, accessible, competitive, 
efficient, quality drug benefit that will be available to all 
beneficiaries. The President's plan dedicates over half of the on-
budget surplus to Medicare and extends the life of the Medicare Trust 
Fund to at least 2025. It also improves preventive benefits, enhances 
competition and use of private sector purchasing tools, and strengthens 
program management and accountability.
Key Principles
    The President has identified key principles that a Medicare drug 
benefit must meet.

 It must be a voluntary benefit accessible to all 
        beneficiaries. Since access is a problem for beneficiaries of 
        all incomes, ages, and areas, we must not limit a Medicare 
        benefit to a targeted group.
 It must be affordable to beneficiaries and the program. We 
        must provide assistance so almost all beneficiaries 
        participate. Otherwise, primarily those with high drug costs 
        would enroll and the benefit would become unaffordable. And 
        beneficiaries must have meaningful protection against excessive 
        out-of-pocket costs.
 It must be competitive and have efficient administration. 
        Beneficiaries must have bargaining power in the market place. 
        And we must integrate the benefit into Medicare but use the 
        private sector to deliver it.
 It must ensure access to needed medications and encourage 
        high-quality care. Beneficiaries must have a defined benefit 
        providing access to the medications that their physicians deem 
        to be medically necessary, and they must have the assurance of 
        minimum quality standards, including protections against 
        medication errors.
 It must be consistent with broader reform. The drug benefit 
        should be a consistent part of a larger plan to strengthen and 
        modernize Medicare.
    The President's plan meets these principles.

 Beneficiaries will have access to an optional drug benefit 
        through either traditional Medicare or Medicare managed care 
        plans. Those with retiree coverage can keep it.
 Premiums will be affordable, with extra assistance for those 
        with low-incomes.
 There will be no price controls or new bureaucracy; instead, 
        the new benefit will be offered through private pharmacy 
        benefit managers who can efficiently negotiate fair prices. All 
        qualified pharmacies will be allowed to participate.
 Beneficiaries can get all drugs prescribed by their physicians 
        from private benefit managers who meet minimum quality 
        standards.
                               CONCLUSION
    The need for an affordable, comprehensive, outpatient prescription 
drug benefit in Medicare is clear. The program's current coverage 
restrictions leave many beneficiaries without the coverage they need.
    We want to expand coverage to all beneficiaries, not further 
restrict coverage. Patchwork solutions and limited exceptions cannot 
address a problem of this magnitude. There is broad consensus that the 
Medicare program must cover prescription drugs. Mr. Chairman, the 
opportunity is before us. The time to act is now.
    We look forward to working with you further on this critical issue. 
I thank you for holding this hearing, and I am happy to answer your 
questions.

    Mr. Bilirakis. Thank you, Michael. We will try to continue 
for another few minutes.
    You made the statement, and we hear an awful lot of this, 
that legislative intent and the language in an appropriations 
bill may not be as clear as it should be.
    But the thing that frustrates me is that we do not hear 
from you to that effect. We do not hear you tell us that ``you 
were not clear enough in the way you drafted it. Therefore, 
this is what we recommend,'' or whatever the case may be. That 
is what is so really very frustrating. Of course, that was the 
intent of our October letter, and to date, we still have not 
heard anything.
    We all know that--when I say we have not heard anything, we 
have not heard anything in terms of making recommendations, 
telling us basically that it is really the fault of the 
Congress, and this is what needs to be done, or something of 
that nature.
    You refer to your town meetings. Had it been your intent to 
hold these all along? Yes, we did in fact require town 
meetings, but 4 months have gone by. Has it been your intent 
all along that you not do anything until after you have held 
your town meetings?
    Mr. Hash. No, sir. We were trying to follow the language in 
the appropriations act faithfully, Mr. Chairman. Under that 
direction, we were told to do three things. One was to suspend 
the memorandum that we issued in August 1997, as you know. The 
second was to suspend any work on a regulation that would have 
any effect in limiting the coverage of self-injectable drugs. 
The third issue was that we should--in the conference report on 
the appropriations bill, it was suggested that we should hold 
town hall meetings to make sure stakeholders had an opportunity 
to comment on these issues.
    Mr. Bilirakis. In the order in which you have stated them? 
Is that the way you interpreted them?
    Mr. Hash. Yes, sir. And also, I would like to say that in 
my letter to you of November 3, in response to your October 
letter, Mr. Chairman, I did lay out that we were working on a 
regulation to address these issues.
    We had recognized that, as all of us have, there have been 
tremendously important advancements in prescription drugs, many 
of which now can be administered in ways that do not require 
administration by a physician, and that part of our intent of 
doing a regulation was in fact to lay out alternatives and to 
get public comment, as we normally do in the rulemaking 
process, because we joined you in a concern about the 
limitations under the statute with respect to this coverage.
    Mr. Bilirakis. Mr. Brown was at least partially right, 
certainly not completely right, but we should not be up here 
throwing stones. They are throwing stones because they say we 
have to do something overall on prescription drugs, and we have 
never disagreed with that.
    As a matter of fact, I will repeat, we are the ones who are 
really working hard at that, unlike the past 40 years prior to 
when we took over--I hate to say that, because it is part of 
the statement. So we should not be throwing stones at one 
another, we should be working together on these things. I guess 
that is politics, and you do that.
    The reasons, I suppose, why the prior majority, when they 
were the majority, did not address this issue was because of 
the difficulty of it, the expenses, trying to get it right. I 
don't know. Frankly, I don't remember that there were any 
efforts being made up here during all of those years, and I 
have been here for a good bit of them.
    The AARP recently testified before this subcommittee that 
they would oppose any solution that is rushed, because they 
feel it is a very complex issue. It is something that is on a 
fast path, we feel.
    I like to think that some of the comments that I have read 
in CQ made by some of the minority leader's chief staffers are 
not true when they say they would rather see nothing done 
unless there is a complete Republican capitulation, to use 
their words. I have been carrying that around with me, but I 
changed suits this morning and I did not bring it with me. But 
I intended to read it for my friend, Mr. Brown. So I hope that 
that is a wrong interpretation on my part.
    I guess what I am saying, it is going to take a while. It 
may not take too long. Hopefully we will get it done this year. 
But in the meantime, there are some people out there hurting, 
and they are not--we are not talking about adding them to the 
Medicare program, which is what you are saying when you say 
solve the overall picture with prescription drugs.
    We are saying, do what Congress intended back in the 1997 
act and keep those people covered, because they were covered in 
the past. So it seems to me that if in fact HCFA is waiting 
until we can do something for the overall problem, we are 
really gambling with the lives of patients who depend on these 
medications. You would agree on that, wouldn't you?
    Mr. Hash. We want to do whatever we can to address this 
problem as quickly as possible. That is true, Mr. Chairman.
    I would also say, Mr. Chairman, that there have been some 
attempts during the long history of the Medicare program to 
address prescription drugs. Congress, actually, in a bipartisan 
fashion, passed something called the Catastrophic Act of 1988 
in which we included----
    Mr. Bilirakis. Don't remind us.
    Mr. Hash. I understand why you might say that, Mr. 
Chairman. It did include coverage for outpatient prescription 
drugs.
    Mr. Bilirakis. I supported it, and suffered along with so 
many others as a result of it.
    Just very quickly, Section 219 of the fiscal year 2000 
appropriations act that we have been referring to directed HCFA 
to cover injectable drugs and biologicals as it did before the 
August 1997 program memorandum.
    It is my understanding that this coverage was intended to 
apply to all drugs and biologicals that had been reimbursed 
based on the ``usual method of administration,'' and not just 
the drugs and biologicals that had been approved before August 
13, 1997.
    Has this been HCFA's practice?
    Mr. Hash. Our practice, we have had a longstanding policy 
with regard to the coverage of drugs that can be self-
administered. The August 13, 1997 memorandum to our regional 
offices was intended, Mr. Chairman, to actually modestly expand 
our historic coverage by recognizing that with the advent of 
many of these new drugs that could be self-administered, that 
we needed to encourage that by offering some limited coverage 
to individuals in physicians' offices at the time they began 
administration of this, so they could be taught how to self-
administer drugs.
    The 1997 memorandum was largely an attempt to say we were 
expanding what was otherwise our longstanding policy regarding 
self-administered drugs to allow some limited coverage in the 
case of individuals who were learning how to self-administer 
drugs under the supervision of their physician.
    Mr. Bilirakis. But in any case, never any intent to just 
limit them to--limit this coverage to those drugs approved 
prior to the August, 1997 date?
    Mr. Hash. No, no, sir, not to my knowledge.
    Mr. Bilirakis. Thank you.
    Mr. Brown.
    Mr. Brown. Mr. Chairman, I appreciate you and the majority 
working so hard on prescription drugs. We have legislation, the 
Allen bill, the Sanders bill, the Stark bill, my bill, and we 
could save you a lot of work by just adopting one of those, Mr. 
Chairman, if you would choose one.
    Mr. Hash, we have injectable drugs that are self-
administratable, we have injectable drugs that are not self-
administratable but can be given by a nontrained person, we 
have injectable drugs that are not self-administratable but can 
only be given by trained medical personnel.
    Which of these three, just so we understand again, which of 
these three does HCFA cover?
    Mr. Hash. Mr. Brown, generally speaking, Medicare does not 
cover drugs that are labeled self-injectables. There are a 
number of exceptions that are laid out in the law with respect 
to certain drugs that are self-injectable that are covered 
under Medicare relating to cancer drugs, certain renal failure 
drugs, hemophilia, clotting factors. Those are all self-
administered drugs that by statute are carved out and in fact 
covered for Medicare beneficiaries.
    As it stands now, we are trying to implement that in the 
fairest and fullest way possible, but generally speaking, the 
program has followed the label indications by the FDA about 
whether a drug is self-administratable or not.
    Mr. Brown. Does HCFA make the distinction of a patient's 
individual medical circumstances?
    Mr. Hash. We do not. We do not believe--our longstanding 
policy on this was that we reviewed the literature and the FDA 
labeling to determine whether something could be self-
administered, not the capacity of the individual patient to 
administer the drug themselves.
    Mr. Brown. Does this make sense, this incredibly complex 
way we are doing this?
    Mr. Hash. It is clearly not in the best interests, I think, 
of patients who need access to these drugs. There is no 
question about that. But we believe that the statute and our 
longstanding policy has been an exclusion for coverage in the 
Medicare benefit package of drugs that can be self-
administered. That is what the law says, and that is what we 
have been doing.
    We would like to find a way to expand coverage in this way. 
That is why we were poised to put out a regulation that 
included a number of options that would take a look at this and 
involve stakeholders in it, and of course we believe, as I said 
in my opening statement, that patchwork solutions are really 
not what is going to address this problem, that we do in fact 
need a comprehensive outpatient drug benefit.
    Mr. Brown. I appreciate that. I do want to work 
bipartisanly with the chairman. In this subcommittee we have 
been able to do this. Sometimes the full committee has fallen 
short, sometimes all of us have. I think this subcommittee has 
been able to put partisanship aside better than most because of 
the Chairman's leadership.
    I do hope that in two ways we can do something in 
conference. One is Medicare coverage, and second, a way really 
beyond the President's plan to deal with the exploding price of 
prescription drugs also, where we pay two and three times in 
this country what people in other countries pay; where 
individuals pay out of pocket twice as much as the VA pays and 
insurance companies and large hospitals pay.
    I yield back, Mr. Chairman.
    Mr. Bilirakis. I thank the gentleman. I know he sincerely 
means it when he says he wishes we would work together to 
provide access to these drugs.
    We will recess for 5 minutes for a vote and we will be 
right back.
    [Brief recess.]
    Mr. Bilirakis. Thank you for your patience. The Chair now 
recognizes the gentleman from Tennessee, Mr. Bryant.
    Mr. Bryant. Thank you, Mr. Chairman.
    Mr. Hash, in your written testimony as well as your 
statement today you indicate that current limitations on 
Medicare coverage for self-administered drugs leaves 
beneficiaries without the medications they need. You go on to 
state further that, ``The current situation is not 
acceptable.''
    But in reality, is it not true that for 30 years, HCFA had 
a policy that appropriately provided for coverage of certain 
injectable drugs, and that in fact it was not until HCFA's PM 
of August 1997 that caused this effect of denying coverage for 
those injectable drugs?
    Mr. Chairman, I ask unanimous consent to put into the 
record two letters from Senators from the other body, one from 
Senator Kennedy, which, just extracting from that, it is 
directed to the Administrator at HCFA, your boss, Ms. DeParle, 
saying ``As you know, Avonex, which is produced by Biogen, a 
leading Massachusetts biotechnology company, which was covered 
by Medicare until 1997''----
    Mr. Bilirakis. Without objection, that will be the case.
    I might add, if I may, that the letter that I initiated, 
signed along with me by 3 or 4 other members of October 18 to 
Ms. Shalala will be made part of the record, without objection.
    [The information referred to follows:]

                               United States Senate
        Committee on Health, Education, Labor, and Pensions
                                                  February 16, 2000
Nancy Ann Min DeParle
Administrator
Health Care Financing Administration
Room S14G, Hubert H. Humphrey Building
200 Independence Avenue
Washington, D.C. 20201
    Dear Ms. DeParle: I'm writing to urge the Health Care Financing 
Administration to take additional steps to make clear that Medicare 
coverage is available for Avonex, an injectable drug used to treat 
multiple sclerosis. As you know, Avonex, which is produced by Biogen, a 
leading Massachusetts biotechnology company, was covered by Medicare 
until 1997, when HCFA issued a memorandum to its regional offices on 
self-administered drugs. Avonex was determined to be self-
administerable, and coverage was stopped for all Medicare patients.
    In the wake of this decision, Congress acted last fall to restore 
the coverage. Section 219 of the ``Department of Health and Human 
Services Appropriations Act 2000'' (Public Law 106-113, Appendix D, 113 
Stat. 15001A-241; November 29, 1999) provides that HCFA may not give 
any operative effect to its August 13, 1997 memorandum on self-
administered drugs, or to any restrictions on coverage of such drugs 
imposed after the memorandum was issued.
    I understand that many carriers responsible for Medicare 
reimbursement are unaware of the action by Congress on this coverage. I 
urge you to take all appropriate steps to see that this restoration of 
Medicare coverage for Avonex is clearly communicated to those 
administering Medicare, so that access by patients to this important 
treatment is available again as soon as possible.
    With respect and appreciation,
            Sincerely,
                                                  Edward M. Kennedy
                                 ______
                                 
                               United States Senate
                                             Washington, DC
                                                   October 27, 1999
The Honorable Donna Shalala
Secretary
U.S. Department of Health and Human Services
200 Independence Avenue SW
Washington, D.C. 20201
    Dear Secretary Shalala: I am concerned about HCFA's intention to 
change the regulation regarding coverage for injectable drugs. The 
current policy that reimburses for drugs biologicals when provided 
incident to a physician's services is important for Medicare 
beneficiaries, especially those with cancer. Patients depend on us to 
ensure that they get the best cancer-care available. Restricting this 
policy at a time when the President and Congress are considering ways 
to expand drug coverage for seniors seems contradictory.
    Cancer patients rely on supportive care drugs to help treat the 
symptoms and side effects of cancer and chemotherapy. These drugs that 
include colony stimulating factors, hematopoietic growth factors and 
low molecular weight heparins are an integral part of their 
chemotherapy regimen. These drugs can help patients tolerate their 
cancer treatment and improve their quality of life. Without coverage 
for these vital drugs, Medicare cancer patients may experience more 
infections and hospitalizations. The result may be increased costs to 
the health care system.
    As I understand the situation, HCFA has covered injectable drugs 
that are given incident to a physician's services, if the drug is 
usually not self-administered. However, based on an August 1997 HCFA 
program memorandum to its regional office, some Medicare carriers are 
basing coverage decisions on whether they think some hypothetical 
patient could self-administer the drug, regardless of the standard 
method of administering a particular drug or a physician's judgment 
about the individual patient's ability to self-administer a necessary 
injection safely. The result has been narrowing coverage and, in some 
cases, denying coverage for medically necessary and clinically 
appropriate injectable drugs.
    Many or most elderly cancer patients are not capable of injecting 
themselves, and often rely on health care professionals to help them. 
It is inaccurate to think that these drugs are usually self-
administered, especially in this patient population.
    I oppose any action on HCFA's part to restrict coverage of 
injectable drugs that are usually not self-administered. These drugs 
are a vital part of our Medicare beneficiaries' cancer regimen. 
Furthermore, the rule-making process is not necessary for HCFA to 
clarify its longstanding and broadly-supported policy to reimburse for 
injectable drugs that are usually administered incident to physicians' 
services. I suggest that HCFA notify the carriers through an official 
communication that carriers should continue to reimburse for these 
products, as they have since the inception of the Medicare program. I 
appreciate your careful examination of this issue, and request a status 
of HCFA's progress on clarifying this rule with your carriers.
    With best personal regards, I am
            Sincerely,
                                                         Max Baucus
                                 ______
                                 
                      Congress of the United States
                                             Washington, DC
                                                   October 18, 1999

The Honorable Donna Shalala
Secretary
U.S. Department of Health and Human Services
200 Independence Avenue SW
Washington, D.C. 20201
    Dear Secretary Shalala: We understand that the Health Care 
Financing Administration (HCFA) is reviewing a policy that would 
effectively limit the access of Medicare beneficiaries to injectable 
drugs that are covered ``incident to a physician's service.'' We are 
writing to express our serious concern about the impact of this policy 
on patients' ability to obtain necessary medications.
    In the past, the administration of chemotherapeutic agents and 
life-saving injectable drugs in a physician's office to treat 
degenerative diseases was routinely covered by Medicare, if the drug 
was not usually self-administered by the patient. In August 1997, HCFA 
issued a memorandum to its regional offices ``to clarify program policy 
with respect to drugs that are usually self-administered, but may not 
always be self-administered.''
    It has come to our attention that under this guidance, some 
Medicare carriers are making coverage determinations based on a 
hypothetical analysis of a patient's ability to self-administer the 
drug--irrespective of the standard method of administering a particular 
drug or a physician's judgment about the individual patient's ability 
to self-administer a necessary injection safely.
    This policy could seriously limit the access of Medicare 
beneficiaries to important injectable pharmaceuticals. It is also 
likely to create confusion among beneficiaries and providers regarding 
coverage of medications administered in a physician's office.
    We would like to fully understand the rationale for this new 
policy. To that end, we are requesting your responses to the following 
questions:

1. What are HCFA's objectives with regard to coverage for injectable 
        drugs provided incident to a physician's visit? What is the 
        purpose of issuing a notice of proposed rulemaking? Is the 
        Administration attempting to restrict coverage, to limit budget 
        expenditures for currently covered products, or to limit 
        coverage of future products?
Over the past two years, HCFA's policy regarding injectable drugs 
        covered incident to a physician's visit has been interpreted in 
        different ways. What is the current HCFA policy? Are the 
        carriers aware of this policy, and are they implementing it 
        accordingly?
3. What therapeutic categories of drugs will be addressed in any 
        proposed rule? Are those categories currently covered?
4. What would be the impact of any change in policy for patient access, 
        patient quality of care, and patient financial contributions?
5. Is HCFA's intent to continue coverage for products that are 
        currently covered?
6. What other methods does HCFA have to clarify its policy without 
        disrupting beneficiary services?
    Considering the very serious nature of this issue, we respectfully 
ask that you respond to us with the requested information no later than 
October 22, 1999. Most importantly, we request that HCFA take no action 
with regard to changes in this policy, including publication of a 
proposed rule, until we have had a chance to examine all the relevant 
information and work with HCFA to address our concerns.
    Thank you for your prompt attention to this matter.
            Sincerely,
                                                Rep. Mike Bilirakis
                                                Rep. Ernie Fletcher
                                                 Rep. Deborah Pryce
                                               Rep. James Greenwood
                                                 Rep. Nancy Johnson
cc: Nancy-Ann DeParle, HCFA Administrator

    Mr. Bryant. Senator Kennedy continues, ``When HCFA issued 
this program memorandum, its regional offices at Avonex was 
determined to be self-administratable, and coverage was stopped 
for all Medicare patients.''
    The second letter is from Senator Baucus that says, and 
that is October, 1999; it says, ``Restricting this policy at a 
time when the President and Congress are considering ways to 
expand drug coverage for seniors seems contradictory.'' He has 
other things to say about that. They will be placed in the 
record.
    Don't you agree that this program memorandum of August, 
1997, has created this unacceptable problem?
    Mr. Hash. Mr. Bryant, with all due respect, I do not agree. 
I believe that the intention of the August 13, 1997 memorandum 
to our regional offices was a restatement and clarification of 
our longstanding policy, and further, that it provided in fact 
some small expansion of our coverage with respect to the 
teaching of individuals who were commencing self-injectable 
drug therapy.
    Mr. Bryant. In terms of what you believe and what actually 
happened, I think the reality is evidenced by letters from our 
chairman and the Senators' letters, that this PM had the effect 
of substantially restricting, as opposed to expanding.
    Mr. Hash. Mr. Bryant, I know that the Administrator met on 
several occasions with representatives of the company that 
manufactures Avonex, the drug that you referred to in those 
letters, and that we sought diligently to find a way as to 
whether or not it could be covered under our drug policy, 
consistent with the law and our longstanding policy.
    We were unable to do so. That is one of the experiences 
that led us to the decision to commence a rulemaking process to 
try to put out some additional options about how this might be 
handled, given the statutory limitations regarding self-
administratable drugs.
    Mr. Bryant. We appreciate that. But I think the bottom 
line, the net effect, is that the folks that were able to take 
this and be reimbursed before 1997 no longer have that, as well 
as others. I think that is what we are here about.
    The fiscal year 2000 appropriations bill prohibited HCFA 
from implementing any such policy that would have imposed new 
restrictions. I want to stress the word, we did not prevent you 
from expanding; we simply, in that bill, opposed new 
restrictions of Medicare coverage of injectable drugs.
    The report language accompanying this provision directed 
HCFA to issue a program memorandum to all carriers clarifying 
this policy. It is my understanding that you issued--the one 
you issued on March 17, which was, I guess, Friday--that you 
did finally issue one.
    Mr. Hash. Yes, sir.
    Mr. Bryant. We appreciate that.
    Again, I, like a lot of people--we can point fingers all we 
want to, but we really need to get to the bottom of this. 
Certainly, I think the cause of the problem has been back with 
this August 1997 memorandum that was issued. I suppose it is up 
to us to now correct it. I think we thought we had corrected 
it, but it is slower than we expected.
    Let me ask you one other question about I guess the broader 
scope of this on the issue I raised in my opening statement 
about the expense, the anticipated higher expenses for these 
new drugs.
    As I understand it, the President's drug benefit proposal, 
when fully phased in, would provide only $2,500 in total 
Federal drug assistance to each senior each year. Would this be 
enough to cover a year's worth of disease treatments within 
general therapies? I don't think it would, but I would like 
your opinion. If you agree with me that it would not, would 
such a proposal then represent a reduction in Medicare coverage 
of many of the lifesaving drugs on which our ailing senior 
citizens rely?
    Mr. Hash. One of the reasons that this year the President 
in his Medicare reform proposal modified the drug proposal that 
was released last summer was to include the recommendation of 
setting aside coverage for catastrophic costs above the $5,000 
cap that was in the original proposal.
    As you may know, there is a $35 billion set-aside that 
would be dedicated to providing increased coverage for 
individuals who have higher drug costs, because we, like you, 
recognize that some of these therapies, are extraordinarily 
expensive and need to be covered. That is the purpose of that 
extra provision in the President's proposal.
    Mr. Bryant. Again, as I originally stated, it would not 
have helped. In actuality, it would have probably hurt seniors 
in terms of trying to use this new medication. I know we added 
money later, and only recently have we seen language in a bill.
    Mr. Bilirakis. The gentleman's time has expired, but please 
respond to that.
    Mr. Hash. The other thing I wanted to say, Mr. Bryant, is I 
don't believe it would have harmed beneficiaries. One of the 
benefits of the President's original proposal was to make 
available to all Medicare beneficiaries the discounts that 
would be experienced as a result of relying on pharmacy benefit 
managers. That would continue, regardless of the caps on the 
coverage. It is estimated that those discounts would result in 
a 12.5 percent, on average, discount from current prices.
    So it is clear that even without the catastrophic benefit, 
there would have been some important financial benefits to 
beneficiaries from having access to discounted drug prices.
    Mr. Bryant. Thank you, Mr. Chairman.
    Mr. Bilirakis. Mrs. Capps?
    Mrs. Capps. Thank you.
    Mr. Hash, thank you for your testimony. If I could talk 
with you or if you could talk with us about the legislative 
changes or changes in general necessary to have the Medicare 
program cover self-injected drugs or biologics, does HCFA have 
the authority to do this, by your own decisions, 
administratively? What parts can you take care of and what 
parts need to be legislatively covered?
    Mr. Hash. Mrs. Capps, the reason we were moving down the 
road toward a regulation is that there are some interpretations 
of existing statutory language that might have allowed some 
expansion with respect to coverage of self-administered drugs. 
That is why we wanted to put out some options to get public 
comment on and to assess that.
    The reality, though, is the limitation is still or would 
still, even with options that might be available, be a 
piecemeal response to a much broader problem, as you recognized 
in your opening statement. That is why, of course, we are 
strongly supporting a broader outpatient prescription drug 
benefit. But we did want to explore some possibilities.
    I should also say that in thinking about options to expand 
coverage for self-administrable drugs, a host of ethical issues 
come up; for example, where to draw the lines with regard to 
capability for self-administration, not just with injectables, 
but when you consider we have such a significant population of 
beneficiaries with dementia or Alzheimer's who may not be able 
to know and follow a pill regimen, which is clearly, by 
anyone's definition, a self-administrable drug, but on the 
other hand, is that someplace that the statute would allow us 
to go?
    More importantly, as I mentioned in my opening statement, 
some of our own clinicians at HCFA are worried about the 
ethical dilemmas that would be posed for a health care 
professional who is treating a patient who clearly cannot--who 
clearly can self-administer, is capable of doing so, but cannot 
afford the drug.
    Mrs. Capps. Yes. This is exactly the real world that our 
constituents and the people who are affected by this whole 
arena--this is where they live. These are ethical decisions 
they are making every day.
    So I want to acknowledge that I commend the administration 
for entering into this world. I understand there are pitfalls. 
I guess in the same conversation, if we could discuss, then--
and I don't want you to have to declare one way or the other 
about the particular bill that I referenced--access to 
Innovation for Medicare Patients Act of 1999.
    Given, though, that it would provide coverage to 
biologicals that would be used in lieu of already covered 
products, is there some precedent for that kind of change? Is 
this the direction that legislation would be useful for your 
administration?
    Mr. Hash. Legislation would, I think, be useful. I have not 
had a chance to review your bill in detail, but I think--I know 
you are trying to address the problem of access here, and I 
think we want to work with you on that.
    I think the other part of this is, in the coverage of 
drugs, absent a more comprehensive approach, we need to be 
concerned about the payment policies. Under current law, the 
program is required to pay a set amount that is 95 percent of 
the price that virtually no one pays for drugs in this country 
today.
    So when you are thinking about crafting legislative 
solutions that involve more expansive coverage of self-
administered drugs, I would recommend that Congress consider 
the pricing strategy, a pricing strategy for such an expansion. 
Because at the present time, we have very little leverage with 
respect to purchasing at a price that is reasonable, given the 
purchasing power that Medicare would otherwise have.
    Mrs. Capps. I know I don't have much more time, but just 
finishing up, you said something about--in your forums, that 
you have had meetings with people. Have you gotten the kind of 
feedback that would give you a set of boundaries?
    Mr. Hash. Actually we have not had those meetings yet. The 
conference report on the appropriations bill requested or 
directed that we hold at least two town hall meetings, and to 
invite stakeholders to talk about a possible model for 
expanding the coverage of self-administered drugs.
    The first one is scheduled in Baltimore for May 18.
    Mr. Bilirakis. Is there a second one scheduled?
    Mr. Hash. Not yet, Mr. Chairman.
    Mr. Bilirakis. I'm sorry. Please proceed.
    Mrs. Capps. I yield back the rest of my time.
    Mr. Bilirakis. Mr. Burr, to inquire.
    Mr. Burr. Thank you, Mr. Chairman. My apologies for my 
tardiness.
    Mike, it is good to see you.
    Mr. Hash. Thank you, Mr. Burr.
    Mr. Burr. Let me go to a couple of areas, if I can. If what 
I am told is true, I am gratified to hear you say that HCFA 
never intended to reduce Medicare coverage of injectable drugs, 
but I have to tell you that I am confused. If that is the case, 
why was a provision stuck in the very last page of the 
President's budget proposal for HHS that would have repealed 
the action just taken which prohibited such a cut?
    Mr. Hash. Mr. Burr, what we typically do when we send up 
the President's budget, in response to provisions that were 
added to an annual appropriations bill, is to make 
recommendations to the Congress regarding those appropriation 
riders.
    In this case, that recommendation on the President's behalf 
recognizes that what we would like to do is to do what we were 
in the progress of doing when the appropriations rider passed. 
That is, we would like to return to the rulemaking process, 
where we were prepared to lay out a series of scenarios to get 
public comment on for possible expansions of the coverage of 
self-administered drugs.
    Mr. Burr. You said in your statement, and I will refer to 
your testimony a couple of times, you suggested HCFA cannot 
create an exception for patients who are unable to self-
administer the drugs they need because Congress has not 
provided you, HCFA, explicit authority to do so. I will refer 
to page one of your testimony, the third paragraph, the last 
sentence, ``And Congress has not provided an explicit exception 
for those who cannot self-administer drugs that generally are 
self-administered.''
    I guess you are telling us there that HCFA does not have 
policymaking authority, except when explicitly specified by 
legislation by Congress, is that right?
    Mr. Hash. No, sir. In a number of cases the law is subject 
to interpretation, and there is administrative discretion 
associated with provisions in the law.
    Mr. Burr. Okay. I am further confused, then.
    Mr. Hash. Let me give you an example of how we, I think, 
got to where we are, if I may.
    Back in 1990, I think it was OBRA 1990, the Congress passed 
in the Medicare statute a provision relating to the coverage of 
a drug that was used for women, postmenopausal women who had 
fractures related to osteoporosis. The drug, I believe, is 
called Calcetonin.
    In the statutory language that is associated with that 
coverage, Congress went to great lengths to describe the fact 
that you needed to cover these injections by taking into 
account either the mental or physical capacity of the 
individual to administer that drug.
    I think what that--the inference one takes from that is, 
but for that language in the statute, that drug would have been 
subject--as I think members knew at the time that matter was 
being considered, that drug would have been subject to the 
exclusion of the self-administered drugs.
    But the fact that Congress specifically in the statute 
said, in covering this drug for fractures by women who have 
osteoporosis, you should take into account whether the 
individual beneficiary either mentally or physically has the 
capacity to self-administer this drug----
    Mr. Burr. So only when there is a congressional reference 
to a specific area does HCFA feel that they have the authority 
to in fact propose a new rule?
    Mr. Hash. Not only, but in this case of self-administered 
drugs, the Congress--the Calcetonin is but one example. 
Congress carved out a specific exception related to oral cancer 
drugs.
    Mr. Burr. Whose interpretation of what Congress wrote are 
you referring to, Congress', HCFA's, or some third party?
    Mr. Hash. I'm sorry, I don't know if I understand this.
    Mr. Burr. The legislation, and I hate to be specific, but 
we have had those instances in the past, you and I know, where 
our interpretation or intent, our language, was interpreted in 
a totally different way. I am just trying to find out what the 
basis is.
    Is it exactly what we say?
    Mr. Hash. If the plain reading of the language of the 
statute leads to a reasonable conclusion, then I think the 
people who are executing the laws have no choice but to follow 
the plain reading of the statute.
    If the plain reading of the statute leads to some 
alternative possibilities, rational possibilities, then I think 
one turns to the legislative history, to look at the conference 
reports, to look at the committee reports, to see if there was 
amplification of the provision that was included in the 
statute.
    That is kind of the tree of logic I think that is applied 
to determine whether administration discretion resides.
    Mr. Burr. If we added report language to a bill that 
suggested the scope of where HCFA had authority to propose 
rules, you would see that as congressional intent to allow you 
to make rulemaking?
    Mr. Hash. I would definitely see anything in the committee 
report or conference report as an expression of congressional 
intent. I want to quickly add, if there is a conflict between 
the plain reading of the statute and the legislative history, 
the plain reading of the statute would be the guide we would 
follow.
    Mr. Bilirakis. Would the gentleman yield? His time has 
expired.
    Mr. Burr. I would happy to yield if the chairman would 
allow me one last follow-up question. But he can certainly go 
first.
    Mr. Bilirakis. All right. Just to follow up on your 
questioning, pre-August 1997, the policy of paying for 
injectable drugs and biologicals was based on the usual method 
of administration, which the carriers used in making their 
coverage decision until that date.
    What possessed HCFA to come up with a program memorandum in 
August 1997 in effect clearly changing that? Mr. Kennedy in his 
letter basically says stopping payment, and I'm not going to be 
that drastic, but in effect, changing the policy by adding in 
the phrase ``The individual patient's mental or physical 
ability to administer any drug is not a consideration for this 
purpose?'' .
    I'm sure we all would like to know, why HCFA would do that? 
It came out of the woodwork, did it not?
    Mr. Hash. I believe it is a reflection, Mr. Chairman--and I 
was not there in 1997, as you know--but I believe and I have 
been informed that the reason for the issuance of that 
memorandum was, as we have been talking about here this 
morning, there have been a lot of advancements in drug 
administration, including many drugs that started out as 
intravenous or intramuscular drugs that had moved into the 
arena of subcutaneous or self-administered drugs. There has 
been an evolution. Many questions were raised.
    The purpose of the memorandum to our regional offices was 
to help respond to a series of questions about the 
clarification of our policy on self-administered drugs. It was 
not intended, and I want to say this in the strongest terms, it 
was never intended to restrict coverage.
    In fact, as I have said several times this morning, it 
modestly expands coverage.
    Mr. Bilirakis. Not according to the letter signed by Mr. 
Kennedy.
    Without objection, the gentleman's time is extended for an 
additional 30 seconds.
    Mr. Burr. I appreciate the extension, Mr. Chairman. I just 
want to make sure that we are clear.
    HCFA's understanding is that if they cannot point to an 
area of legislation or report language that allows HCFA to 
propose a rule, than you don't have the authority to do it? If 
there is not legislation that leads one to see that the 
Congress wanted you to have some flexibility, wanted you to be 
involved in rulemaking, then you have none?
    Mr. Hash. No, sir, I wouldn't say that. I think each case 
has to be judged--whatever we might be talking about 
specifically needs to be judged specifically.
    Mr. Burr. Based on what?
    Mr. Hash. Generally speaking, regulations are rooted in the 
statute. Regulations are to follow the statutory provisions.
    Mr. Burr. Clearly you said there must be some tie to what 
Congress wrote that allows you the authority. If not, you don't 
have the authority?
    Mr. Hash. I think we have the authority to write 
regulations. The substance of those regulations is covered by 
what is in the law, what is in the legislative history 
surrounding it.
    Mr. Burr. My biggest concern is that we cannot have it both 
ways. We need to get an understanding.
    I would only make this statement, Mr. Chairman, that as we 
talk about comprehensive drug coverage for seniors, if we have 
this much trouble understanding self-injectables, I hope every 
member will take that into consideration as we look at HCFA as 
a component of an overall comprehensive drug plan, and 
certainly make sure that it is part of their decisionmaking 
process.
    I thank Mr. Hash. Mr. Bilirakis. Mr. Barrett?
    Mr. Barrett. Thank you, Mr. Chairman. Just to follow up on 
that in just a very generic sense, how would a comprehensive 
drug benefit change the way the current benefit works?
    Mr. Hash. I believe, at least speaking of the President's 
comprehensive drug benefit, the coverage of drugs that are now 
covered either in a hospital or a nursing facility or covered 
as incident to a physician's service, which is what is covered 
now, that coverage would remain intact.
    What the comprehensive new drug benefit would cover is all 
of the non-covered, in effect self-administered, outpatient 
drugs which are currently not covered under the Medicare 
statute.
    Mr. Barrett. Would you consider that a more equitable 
fashion to deal with this?
    Mr. Hash. Absolutely. You were not here earlier, but what I 
was trying to say earlier was that while all of us would like 
to be dealing with the problems of self-administered drugs that 
we are here to talk about this morning, it does represent sort 
of a patchwork approach to this problem.
    I think the reality for all of us is the most appropriate 
way of dealing with these problems is through a comprehensive 
outpatient drug benefit.
    Mr. Barrett. I am confused by some of the discrepancies, 
and I feel them floating around the room, too. We are talking 
about self-injected drugs, and the pharmaceutical companies 
want those covered by Medicare?
    Mr. Hash. Definitely.
    Mr. Barrett. These are the same pharmaceutical companies 
that run these Flo commercials that say we don't want 
government in our medicine cabinets?
    Mr. Hash. I think you see some inconsistencies.
    Mr. Barrett. The other concern I have with the self-
injected, would we be creating some sort of market incentive to 
create these drugs as self-injectable drugs if they are not 
already so they could be covered by Medicare?
    Mr. Hash. Yes, sir. I think your point is well taken. We 
don't want to have a public policy that influences the form in 
which drugs are manufactured. What ought to be influencing the 
form in which drugs are manufactured and made available to 
beneficiaries or to the American people ought to be on the 
basis of the form that works best for the drug itself, not on 
the question of whether it could be self-administered or 
administered through intravenous applications or not.
    That is what should not determine it. What should determine 
it is what form of administration will make the drug work most 
effectively for the patient.
    Mr. Barrett. Okay. I yield back the balance of my time, Mr. 
Chairman.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Pickering, the gentleman from Mississippi, to inquire.
    Mr. Pickering. Thank you, Mr. Chairman. I apologize for 
being late. If I go over some ground that has already been 
covered, please excuse me.
    I am concerned, just the little bit that I have heard, that 
we are losing our focus of what today is about. That is simply, 
what is the status of self-injectables and HCFA's policy toward 
that, and then consequently, is that resulting in the denial of 
such benefits to Medicare recipients?
    I would like to keep or regain our focus. We are all, on 
this committee, supportive of trying to find a way on the 
broader issue of prescription drug benefits, but that is not 
what this hearing is about. So let us keep our focus as we go 
forward.
    Let me ask Mr. Hash, the program memorandum that came out 
in 1997, as a result of that, did it create a situation where 
the private market insurers began denying coverage for drugs 
and biologicals that they covered prior to 1997?
    Mr. Hash. When you say private market insurers, do you mean 
private health plans and policies or do you mean the Medicare 
program?
    Mr. Pickering. Both. Both the Medicare carriers, as well as 
health insurers in the private market.
    Mr. Hash. In general?
    Mr. Pickering. Yes.
    Mr. Hash. I don't know about the policies of private 
insurers, so I am not prepared to answer that question. I would 
be happy to get you an answer if we have any data on that.
    With respect to the Medicare program, as I said earlier, 
the August 13, 1997, memorandum we sent to our regional offices 
was intended to clarify our longstanding policy, and it 
actually provided a slight expansion of that policy to cover 
the instruction of individuals who were commencing a program of 
self-administration of drugs.
    That is what was--and by the removal or suspension of that 
August 13 memorandum of 1997, the carriers who administer this 
program for us are to follow the carrier manual, which was last 
updated in 1995, and basically restates Medicare's longstanding 
position on the noncoverage of drugs that can be self-
administered.
    Mr. Pickering. In practical terms, does that mean that the 
practice prior to 1997 of physicians being able to prescribe 
self-injectables was discontinued at that point by your 
carriers?
    Mr. Hash. We have never had a policy of covering self-
administered drugs.
    Mr. Pickering. But the practice--let us separate policy and 
practice, pre and post. The practice before was I think 
commonly used that we would have self-injectables----
    Mr. Hash. I think the practice in reality varied quite 
widely, because carrier medical directors who actually oversee 
the application of the carrier manual instructions have some 
discretion to apply the findings in the manual to the real life 
claims that they get.
    The manual actually says that drugs that can be self-
administered in the form that they are usually provided cannot 
be covered. If the drug is generally administered by a 
physician in their office or in their clinic, and that is the 
form in which it is generally administered, then it would be 
covered under the Medicare program, and has been since the 
inception of the program.
    Mr. Pickering. Again, if I can, staying away from the 
manuals and the policy and just going back to the practice, 
pre-1997, you say the practice had disparities. In some cases 
that was followed and in some cases, maybe not?
    Mr. Hash. I believe that to be the case.
    Mr. Pickering. Post-1997, did the policy memorandum, 
programmatic memorandum, have the effect of discontinuing that 
practice altogether?
    Mr. Hash. I don't know that for a fact. I think it clearly 
has had some effects, because you and others and we are aware 
that it has had some effect. But what it was doing was 
restating the longstanding policy of Medicare.
    If carrier medical directors had not been paying attention 
to that and saw the August 13 memorandum, then presumably they 
would want to make sure that their decisions were consistent 
with the guidance that we had provided them.
    Mr. Pickering. Just for clarity, I will try to restate what 
I believe you just said. That is, after the memorandum in 1997, 
the practice discontinued?
    Mr. Hash. No, sir, I did not say that. I said it varied 
before and after.
    Mr. Pickering. So it still varies before and after?
    Mr. Hash. Yes, sir.
    Mr. Pickering. If the practice varies with your policy, 
what do you want to see? What is the practice that you want to 
see by your carriers?
    Mr. Hash. What we have been trying to do before the 
appropriations language passed last year was to engage in a 
rulemaking process to put out a series of options that we 
thought would be consonant with the statute as it exists now in 
order to explore ways of expanding coverage. That is the 
direction we were headed.
    Mr. Pickering. Mr. Hash, if we can stay away from 
memorandums and statutes and all the gobbledegook, what 
practice do you want to see by your Medicare carriers for those 
who could benefit from self-injectables?
    Mr. Bilirakis. The gentleman's time has expired, but you 
may proceed.
    Mr. Hash. The practice we would like to see is to put out a 
rule to solicit comments with regard to options we think are 
consistent with the statute. We, like you, are just as 
frustrated with the limitations of the statute, particularly 
for people who suffer from the serious diseases like multiple 
sclerosis, and who in fact cannot physically self-inject.
    There is no one who is disagreeing over the need to address 
that problem. That is something we want to do, just as much as 
you want to do it. We would like to work with you toward that 
end.
    Mr. Pickering. Mr. Chairman, can I just try one more time?
    Mr. Bilirakis. Only if there is no objection to that 
effect.
    Mr. Brown. Mr. Chairman, I won't object, but there has sort 
of been a trend in this hearing that the majority goes over 
with one or two more questions and continues this.
    Mr. Bilirakis. They have more questions.
    Mr. Brown. Perhaps they do have more questions, but I also 
understand that HCFA's administrative budget has been cut, HCFA 
does not have the power to hire and fire carriers, and I am not 
sure this is really a fair kind of approach that has been 
taken.
    I certainly don't mind Chip continuing his questions, but I 
just think if people on our side want to go over the same way--
--
    Mr. Bilirakis. Keep it short if there is no objection, 
please.
    Mr. Brown. I have no objection.
    Mr. Pickering. I just want to understand Mr. Hash's 
position and HCFA's position.
    In practice, do you want to see those capable and those who 
pre-1997 were able to self-administer these drugs, which that 
did provide, from all accounts, a benefit to people, and as we 
talk about the broader issue of prescription drugs--we are 
trying to help people as they receive treatment to have that 
option--do you now want to see self-injectables through 
Medicare practiced?
    Are you saying that you are limited and cannot do that?
    Mr. Hash. What we said is we would like to expand in this 
area to the fullest extent of the law. We believe in order to 
do that we need to publish a rule.
    Mr. Pickering. Thank you, Mr. Chairman.
    Mr. Bilirakis. It still goes back to statute. There is no 
change in the statute. The statute was in existence prior to 
August 1997. It was done a certain way. The program memorandum 
came out of the woodwork in August 1997 changing things.
    Mr. Deutsch, to inquire.
    Mr. Deutsch. Thank you, Mr. Chairman.
    Mr. Hash, Ms. Story, who is on the second panel, notes in 
her testimony that Medicare would just cover the cancer drugs 
to prevent countless inpatient hospitalizations and infection 
and would reduce morbidity and mortality for people who 
currently cannot get them.
    Does it not seem to you that this statement is true for 
coverage of all drugs? If Medicare provided a comprehensive 
drug benefit, do you not think we would do a lot more to reduce 
morbidity and mortality, promote health, prevent 
hospitalizations and make improvements in medical outcomes?
    Mr. Hash. Absolutely, Mr. Deutsch.
    Mr. Deutsch. I guess the emphasis on this side really has 
continually been that there is no question that the situation 
now is a horrendous situation, but is there anything really to 
point out the unique nature of the drugs that we are dealing 
with, these injectables, versus drugs across-the-board?
    Mr. Hash. I think anyone who cannot get access to drugs 
that are lifesaving or life enhancing is in a situation that we 
should be remedying. That is the whole point of this effort to 
get a prescription drug benefit for Medicare. Whether it is an 
injectable drug or an oral drug or an IV drug, Medicare 
beneficiaries ought to be covered for outpatient drugs or 
inpatient drugs, for that matter. Drugs are key to managing and 
improving the health of our beneficiaries.
    Mr. Deutsch. Right. I guess that is really where the 
emphasis is. I appreciate the fact that we are having this 
hearing, but I think the hearing emphasis really is about lack 
of access of prescription drugs.
    Again, in some ways we are highlighting the situation, this 
anomaly that exists today really enforces that highlight and 
makes it clearer in terms of the situation that occurs.
    Can we maybe talk a little bit about the actual dollar 
savings that either we have been able to come up with or drug 
companies can come up with in terms of savings that would occur 
if these drugs were available?
    Mr. Hash. I think there is a lot of literature on certain 
drugs and what occurs as a result of their availability in 
terms of reduced need for hospitalization, reduced need for 
other kinds of services that would be required if the person 
did not have access to the drug.
    I don't have the data right here handy, but I think drug 
companies themselves frequently, when they are introducing a 
drug to the market, have done some research about its effect on 
the utilization of other services if the drug is made 
available.
    Mr. Deutsch. Again, there are different studies I know both 
of us have seen. There is at least an argument that could be 
made with empirical data to support that in fact there is a 
positive savings in terms of providing this type of coverage?
    Mr. Hash. I believe for many drugs that is the case, Mr. 
Deutsch.
    Mr. Deutsch. I have just a follow-up regarding that 
question.
    When Medicare was instituted, can we have just both a 
ballpark and an empirical data sense--a way to quantify the 
dramatic increase prescription drugs have taken as part of the 
health care delivery system in America from when Medicare was 
instituted?
    Mr. Hash. I don't have any exact figures for you, but I 
would be happy to try to quantify the sales of drugs in 1965 
versus today.
    Obviously, we all know, without knowing what the exact 
figures are, there has been a quantum change in that, no 
question about it.
    Maybe another way of looking at it and answering your 
question is to say the failure of the Medicare program to have 
included prescription drugs in 1965 more than anything else 
suggests that it was not viewed as a significant part of the 
health care armamentarium of that period, because nobody would 
think about designing Medicare today from the ground up and 
leave out outpatient prescription drugs.
    Mr. Deutsch. Which again I think is tied into the fact of 
what percentage of out-of-pocket costs are spent today by 
Medicare beneficiaries versus 1965 for prescription drugs.
    Mr. Hash. Right. There are huge differences. In fact, even 
today, and one of your later panelists, Dr. Steinberg--I 
happened to review his testimony--he recently published an 
article in Health Affairs that shows pretty dramatically what 
the costs of drugs are for the Medicare population.
    There are other articles that have recently come out 
showing that people without drug coverage actually pay more out 
of pocket for drugs, not surprisingly, but they get fewer 
prescriptions because they are unable to afford them.
    So there is a real consequence with the absence of drug 
coverage in terms of both costs to beneficiaries and lack of 
access.
    Mr. Deutsch. I want to give you a chance to answer this 
question, because I know this has come up, as well.
    It is my understanding that the President's original 
prescription drug proposal would not have provided catastrophic 
coverage, and thus would not have provided any help for the 
people who need these expensive injectable drugs.
    But the proposal in this year's budget does include a 
catastrophic element which would help with costs of these 
drugs. Could you comment on this?
    Mr. Hash. Yes, sir. I said two things earlier. One is that 
obviously the President's proposal includes a set-aside of $35 
billion for that purpose. That is in recognition of the need to 
provide this--what we now believe would be about 10 percent of 
the Medicare population by 2009 who would need more than $5,000 
a year in drug expenditures.
    The other point I made earlier was the fact that even under 
the original proposal, when the cap was reached, Medicare 
beneficiaries would continue to enjoy the discounts that were 
made available to them through the contracting with pharmacy 
benefit managers above and beyond.
    Those savings on an average basis were estimated at about 
12.5 percent off the retail prices, which for Medicare 
beneficiaries means Medicare beneficiaries pay the very highest 
prices today for drugs of any other citizens in the United 
States.
    Mr. Bilirakis. The gentleman's time has expired.
    Mr. Bilbray, to inquire.
    Mr. Bilbray. Thank you, Mr. Chairman. I want to sort of 
just follow up on what my colleague, the gentleman from 
Florida, was taking about.
    We have had hearing after hearing about the issue on this 
challenge of the cost effectiveness of providing prescription 
drugs and different types of treatments that may not be 
available now. In Southern California we have some great 
programs. In fact, AARP has finally said that they would agree 
with co-pays and a lot of other stuff, so that is not the issue 
here.
    I am sort of just flashing back to my days of administering 
health programs for $2.8 million. I have an administrator in 
front of me that tells me that there was no intention of 
reducing services or eliminating certain medication to the 
clientele, quote-unquote.
    My question is, why was the memorandum--why was the 
restriction at not reducing those services eliminated if there 
was not some kind of intention of reducing those services?
    Mr. Hash. As I said before, Mr. Bilbray, what we were doing 
there, as I understand it, is as drugs have moved from the 
category of injectable through IV and intramuscular into 
individual self-administered drugs, subcutaneous injections and 
so forth, we have had a series of questions that have come up 
to our carrier medical directors and to the HCFA as well, and 
as a result of that, periodically what we do when we encounter 
those kinds of questions is we put out any clarifying and, if 
possible, any expanding information we can so that we can 
properly administer the benefit.
    Mr. Bilbray. Are you saying that in Mr. Deutsch's State, 
for every product that was dropped, there was a comparable 
treatment that was exactly the type of program that a physician 
could be able to choose as an alternative to that program that 
had been reduced?
    Mr. Hash. No, sir, I am not saying that.
    Mr. Bilbray. When you say that the technology moved away 
from a product, it means it moved to something.
    Mr. Hash. Yes, sir.
    Mr. Bilbray. If it moved to something, my question was, did 
it move to a comparable treatment that basically made the 
original treatment obsolete? They had a better, different 
mousetrap, but it was still catching the same mouse?
    Mr. Hash. That is possible, yes, sir.
    Mr. Bilbray. My question is, the way you are saying it is 
that it did it every time. I don't have that data that it did 
it every time.
    Mr. Hash. No, sir, I didn't mean to imply that. I misspoke.
    Mr. Bilbray. So there was an abandonment of historical 
service, then?
    Mr. Hash. No, sir.
    Mr. Bilbray. Either you covered every base with the new 
technology, or you abandoned one base, or some bases were left 
out. You cannot say I didn't cover every base, but I
    didn't--but there wasn't any uncovered bases out there. It 
is conflicting testimony.
    Mr. Hash. Let me try, if I may, to sort this out.
    Historically, the Medicare policy for the coverage of 
outpatient drugs is limited to drugs that cannot be self-
administered. Earlier on, most drugs that fell into this 
category were drugs that were administered under the 
supervision of a physician or a health care professional, 
usually intravenously or intramuscularly.
    Now these products have either evolved, or in some cases 
they are brand new products that never have been administered 
that way, that are administered through subcutaneous 
injections.
    The way we have interpreted the statute historically, all 
the way up until now, has been that if a drug in its usual form 
to the patient was capable of being self-administered, then it 
was excluded under the Medicare statute as a self-administered 
drug.
    Mr. Bilbray. Even if it had been used--even though it had 
been covered in the past?
    Mr. Hash. It could continue to be both, because in some 
cases the proper form, because of the patient's condition, 
would be to administer some drugs intravenously, even though 
there is a form of it that can be administered subcutaneously. 
The difference is the condition of the patient, where the drug 
will actually work best.
    Let me give an example.
    Mr. Bilbray. I have to stop you a second. I just cannot 
believe that an administrator at your level--the detail you are 
talking about making these calls, that making those calls in 
between a physician and their patient--I mean, the challenge is 
there, and I can imagine trying to do it at county level, but 
trying to do it at national level--do you really believe that 
that is practical?
    Mr. Hash. Those are not the decisions that I make. If it 
sounds like I am making them, then I have misspoken again.
    It's our contractors who administer the Medicare program, 
in this case, the carriers who administer Part B, there are 
medical directors who actually make the kinds of judgments that 
I was just talking about. That is why there is discretion at 
the contractor level within the guidance that we have given 
them.
    That is why in some cases if the label from the FDA 
indicates that a drug can be administered intravenously, and it 
describes a set of patient characteristics where, for that kind 
of a patient, this drug will only work effectively if it is 
administered intravenously, and for other kinds of patients 
with different diseases or different conditions the label may 
say this can be self-administered through a subcutaneous 
injection, those are the kinds of decisions that come before 
the carrier medical directors. There are 22 of them around the 
country. They make those kinds of decisions.
    Mr. Bilbray. This is a classic----
    Mr. Bilirakis. The gentleman's time has expired.
    Mr. Strickland.
    Mr. Strickland. Mr. Hash, do you think that medical policy 
should rest in the hands of the Members of the House of 
Representatives and the Members of the Senate, rather than in 
the staff at HCFA?
    Mr. Hash. I think Congress has certainly plenty of 
prerogatives to establish policies, including medical policies, 
in the context of a program like Medicare. They do sometimes. 
Other times they leave those decisions to the marketplace or in 
fact to clinicians to make those decisions.
    Mr. Strickland. In all due respect to you, my experience 
with HCFA has been that oftentimes there seem to be individuals 
there who think they know better than those of us who have been 
elected by the people. That is one of the things that troubles 
me about this agency.
    Having said that, I have a couple of questions. In your 
judgment, are there people who have very, very serious health 
conditions who still will not get the needed drugs, even after 
the August 1997 policy changes?
    I would like for you, if you could, to think of this. Are 
there examples of the kinds of illnesses or costs of drugs that 
still are not covered; for example, the so-called triple 
cocktail that is used for individuals with HIV-AIDS--isn't this 
medication very expensive, and is it not administered orally? I 
would like your response, please.
    Mr. Hash. That is my understanding, Mr. Strickland. It 
would not be covered.
    Mr. Strickland. It is very expensive, is it not?
    Mr. Hash. Yes, I understand. Maybe as high as $20,000 to 
$30,000 a year for an individual.
    Mr. Strickland. Is this drug ever covered under Medicare?
    Mr. Hash. No, sir, not in the outpatient setting.
    Mr. Strickland. My point is this: Would you not say that it 
would make more sense for us to have a policy that covers all 
prescriptions that people need, rather than to pick and choose 
among illnesses, among degrees of illnesses, among drugs, and 
among the way drugs are administered?
    Would it not make sense for us, as compassionate people, 
just to have a comprehensive prescription benefit that would 
leave no one out?
    Mr. Hash. Absolutely. I agree with that.
    Mr. Burr. Would the gentleman yield for one question?
    Mr. Strickland. I would, quickly, please. I don't have much 
time.
    Mr. Burr. At the heart of the example that Mr. Strickland 
used, in HCFA's mind, would the extension of that benefit for 
HCFA, the triple cocktail, actually be a net savings to the 
health care system because we have eliminated the 
hospitalization that that individual would have utilized if 
they had the opportunity for the prescription drug?
    Mr. Hash. I think it would. I think there is no argument.
    In fact, we have just launched a demonstration to that 
effect, to demonstrate that effect in the Medicaid program in 
the State of Maine where we are covering individuals who are 
HIV positive, not yet symptomatic, for these drugs in order to 
slow or retard the progression of the disease to show that that 
kind of early coverage for people who otherwise would not have 
been covered shows benefits in terms of cost savings.
    Mr. Burr. It is not the case in every case, but it is 
certainly something we should consider.
    Mr. Strickland. I thank my colleague for that very helpful 
observation. Thank you.
    Mr. Hash, the second question. The second panel is going to 
be talking about drugs that are very costly, in some cases. Do 
you have any knowledge of who is experiencing hardship in 
accessing these drugs? Is it just the low-income, or are people 
who are of modest income also having difficulty affording these 
expensive drugs?
    Mr. Hash. The problem of the cost of drugs for the low-
income is a very serious problem, but it is not limited to low-
income people. Over half of the people without any coverage 
under Medicare for drugs who have incomes above 150 percent of 
the poverty level--there are over half of them who do not have 
any coverage for drugs. For them the costs are very 
significant.
    Across incomes, income spectrums, the cost of drugs are 
very serious problems for Medicare beneficiaries.
    Mr. Strickland. So a program tailored only for low-income 
people would leave out a host of others who would be unable to 
afford these medications, perhaps?
    Mr. Hash. It would definitely do that.
    Mr. Strickland. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Lazio, would you like to inquire?
    Mr. Lazio. Thank you, Mr. Chairman.
    Mr. Chairman, I just note, Mr. Hash--thank you very much 
for being here, but I also want to note the bipartisan--almost 
universal concern about where HCFA is right now, and the people 
that are left behind.
    I do a lot of work, as many people do in this committee, 
with the cancer community. I know they are acutely sensitive to 
the fact that this change is expected to have a detrimental 
effect on people that desperately need self-injected 
prescriptions.
    I just want to try and follow up, if I can, for a moment, 
because I am struggling to understand exactly how this change 
came to be, as well, on where Mr. Bilbray left off.
    I am reading, and I will be happy to provide you with a 
copy, if you would like, and it is probably fair for me to do 
that.
    ``Standard policy for 35 years.'' Section 2049 says in 
part, ``Where, however, a physician injects a drug which is not 
usually self-injected, this drug is not subject to the self-
administrable drug exclusion, regardless of whether the drug 
may also be available in oral forms, since it is not self-
administrable in the form in which it was furnished to the 
patient.''
    But in a letter dated July 1 of last year from Nancy-Ann 
DeParle, and I want to quote from that, she says, ``Medicare 
covers only those Food and Drug Administration approved drugs 
that are furnished incident to a physician's services and 
cannot be administered,'' as opposed to ``not usually be self-
administered.''
    ``For example, as we discussed,'' a certain thing ``is not 
covered by the program, even when it is necessary for the 
patient to have the drug administered in a physician's office. 
This is because the drug can be self-administered''.
    I am just wondering if you can try and square for me how we 
went from a standard policy that was in existence for so long 
to this change. How you can square the discrepancy in these two 
directives?
    Mr. Hash. There is an explanation to that. I will take 
another stab at that.
    I believe that what both the letter and the carrier manual 
site for our longstanding policy are trying to say is that if 
in fact the administration of a drug by a physician is 
appropriate because there is a standard of practice, there is a 
medical protocol, that says that in order for this drug to be 
effective it needs to be administered in a form that is 
supervised by a physician or someone trained in the physician's 
office, that is what I believe that statement in the record and 
this means.
    That does not mean that if a drug also occurs in a pill 
form or in a self-injectable form, that that would disqualify 
for that given patient, because there is a medical need for the 
patient to be treated in that form in order to get the full 
benefit of the drug.
    Mr. Lazio. Isn't this letter fairly categorical, fairly 
conclusive? ``incident to a physician's services and cannot be 
self-administered?'' .
    Mr. Hash. It is categorical in that sense. Also elsewhere 
in the carrier manual it says the same thing. That letter 
actually is excerpting from another section of the same carrier 
manual language that has been in there since the beginning of 
the program.
    Mr. Lazio. Let me, if I can, Mr. Chairman, introduce into 
the record a letter dated May 23 from HHS.
    Mr. Bilirakis. Without objection.
    [The information referred to follows:]

          Department of Health & Human Services    
                   Health Care Financing Administration    
                     Office of Clinical Standards & Quality
                                                       May 23, 1998
Ms. Isabel P. Dunst
Columbia Square
555 Thirteenth St. NW
Washington, D.C. 20004
    Dear Ms. Dunst: I am writing as follow-up to your recent visit to 
discuss coverage of interferon beta-1a (trade name: Avonex) under the 
Medicare Program. Thank you for taking the time to describe the use of 
Avonex in treating relapsing forms of multiple sclerosis, and for 
bringing your perceptions of the issues involved concerning Medicare's 
coverage policy to our attention.
    We have reviewed these issues and carefully evaluated the current 
policy on self-administered drugs. Although we are cognizant of your 
concerns, and have taken these into account in our evaluation and 
reconsideration, our position remains unchanged. That is, interferon 
beta-1a has been labeled as a drug capable of self-administration by 
the Food and Drug Administration (FDA) and this is common medical 
practice. As such, it is noncovered under the Medicare program, with 
very limited exceptions. As stated in previous communications, drugs 
that are self-administered are not covered by Medicare Part B unless 
the Social Security Act (the statute that governs the Medicare program) 
specifically provides such coverage, for example, in the case of 
immunosuppressive drugs. In those circumstances when certain drugs that 
are generally self-administered may not be, coverage is at the 
discretion of the Medicare Carrier. Thus, when the patient first learns 
how to administer a drug, the carrier may determine whether it is 
medically necessary for the physician or staff to administer the drug. 
The patient's condition; i.e., the patient's mental or physical 
capacity to administer any drug, is not a consideration for coverage. 
The decision is based on the appropriate medical protocol that applies 
generally to patients that qualify for the drug in question. This 
Medicare policy reflects the statutory provision that excludes self-
administered drugs from coverage. Any modification to this policy will 
require a statutory revision.
    Thank you again for taking the time to meet with us and to explain 
your position on the coverage of Avonex. I hope this clarifies the 
Medicare policy and the process necessary to revise existing statutory 
requirements. If you have any questions, please contact Dorothy 
Colbert, 410-786-9671, of my staff.
            Sincerely,
        Grant Bagley, M.D., Director, Coverage and Analysis
                           Office of Clinical Standards and Quality
                                 ______
                                 
          Department of Health & Human Services    
                   Health Care Financing Administration    
                                          The Administrator
                                                       July 1, 1999
Mr. Michael J. Astrue
Vice President and General Counsel
Biogen
14 Cambridge Center
Cambridge, Massachusetts 02142
    Dear Mr. Astrue: Thank you for your letter concerning the Medicare 
program's coverage policy for Avonex, which is used to treat patients 
with multiple sclerosis (MS). I also wanted to say how much I 
appreciated meeting with you to discuss this important topic. Since our 
meeting, we have spent substantial time carefully considering the 
issues you raised.
    I understand that Avonex is generally not administered incident to 
a physician's services and that no Medicare benefit payment currently 
exists for these instances. And, as our discussion reflected I fully 
appreciate the toll this debilitating disease takes on its victims. It 
is enough of a burden to cope with the effects of the disease without 
the worry of paying for an expensive drug like Avonex.
    Unfortunately, we find ourselves in a dilemma. As you know, while 
the President has proposed a prescription drug benefit under Medicare, 
there currently is no benefit. Payment for drugs provided in the 
inpatient setting is included within the appropriate diagnosis related 
group. However, for outpatient drugs, by law, Medicare covers only 
those Food and Drug Administration approved drugs that are furnished 
incident to a physician's services and cannot be self-administered 
(with a few exceptions explicitly provided in the statute.
    Historically, the Health Care Financing Administration (HCFA) has 
interpreted this coverage restriction as pertaining to the 
characteristics of the drug itself and not to the capacity of the 
particular beneficiary to self-administer any drug. For example, as we 
discussed, Betaseron (another drug used to treat MS) is not covered by 
the program, even when it is necessary for the patient to have the drug 
administered in a physician's office. This is because the drug can be 
self-administered. Another example is that eye drops used in connection 
with outpatient cataract surgery are not covered by the program when 
they are administered in the outpatient hospital setting. While the 
situation you described for MS patients is very compelling, these other 
situations are troublesome as well. Therefore, we are planning to 
publish a proposal in the Federal Register that will explore several 
alternative interpretations of this statutory provision. We will be 
soliciting public comments on those alternatives and any other 
interpretations that are legally supportable. We look forward to your 
comments in response to that proposal. In the meantime, local carriers 
will be able to make payment policy decisions concerning Avonex.
    I want to again commend the Biogen company on its efforts to 
develop product that are able to ameliorate the suffering MS patients 
must endure. I wish that my response could have been more favorable.
            Sincerely,
                                      Nancy-Ann Min DeParle
                                                      Administrator

    Mr. Lazio. I just want to follow up, if I can. Mr. 
Chairman, the 2000 fiscal year appropriations bill prohibited 
HCFA from implementing any policy, as you know, that would 
impose any new restrictions on Medicare coverage on 
injectables, and report language that accompanied the statutory 
language directed HCFA to issue a program memorandum to all the 
carriers that are supposed to be taking direction from HCFA.
    I don't know how they get direction based on the 
discrepancy between these documents. But HCFA issued the 
program memorandum on March 17. In the PM HCFA notes that this 
program memorandum may be destroyed after September 30 of this 
year.
    So you have indicated to the carriers that they can 
disregard what is written in the program memorandum that was 
issued by HCFA, and I would like to know if you can give us 
some sense of what assurances you can give and therefore we can 
give to the patients that may be testifying at this hearing, 
people who are listening and looking for direction and are 
relying on this, that injectable drugs that would be covered 
today would be covered, say, after October 1 when this 
memorandum is said to no longer be in effect.
    Mr. Hash. I think the best way for me to answer that, Mr. 
Lazio, is to say that in our view, the memorandum of August 13, 
1997, did not change existing longstanding Medicare policy.
    Second, I would say that after the expiration of the 
appropriations provision that is in the law now, it would be 
our intention to return to the activity that we had underway 
before the rider passed, which was to put out a notice of 
proposed rulemaking where we lay out a number of options that 
explore how we could expand coverage of self-injectables under 
certain circumstances that would be consistent with the law.
    Mr. Bilirakis. The gentleman's time has long expired.
    Mr. Lazio. Mr. Chairman, could I just ask the witness, I 
would like to submit a couple of questions in writing, if I 
could.
    Mr. Bilirakis. I think Mr. Hash is accustomed to that.
    Mr. Hash. Yes, sir. I will be happy to.
    Mr. Bilirakis. Let me ask you very quickly. You referred to 
having read Dr. Steinberg's testimony.
    Mr. Hash. Yes, sir.
    Mr. Bilirakis. On page 4 of his testimony--and we really 
thought that one of the other panel members would have asked 
you this--in talking about the definitions he said, ``I believe 
it is not possible to develop a definition that makes sense 
from a clinical perspective, other than leaving the 
judgment''--and Mr. Lazio really went into this--''other than 
leaving the judgment regarding the best means of administering 
a drug to the patient's physician.''
    Comment?
    Mr. Hash. Yes, sir. I actually think that he is right about 
that, in the sense that this ought to be a matter that ought to 
be subject to physician judgment and application. That is why, 
under a broad prescription drug benefit, that would be what 
would be the physician's option in this case.
    Mr. Bilirakis. But you have taken away their option of 
determining where an individual patient's mental or physical 
ability to administer any drug should be a consideration for 
this purpose?
    Mr. Hash. As I said earlier, that was one of the issues 
that we wanted to address in our proposed rulemaking to get 
comment on that.
    I said, Mr. Chairman, earlier that expanding this coverage 
is fraught with lots of ethical challenges. There are issues 
about how to draw the line here, what conditions to take into 
consideration. There are clearly equity questions about people 
who fall inside the line and people who fall outside of the 
line.
    Our desire is not to have to make those kinds of decisions, 
but rather, to have a broad policy that does not force us to 
parse it in this way, and to do a sort of patchwork solution to 
what is really a comprehensive problem.
    Mr. Bilirakis. I know, you keep referring to broad Medicare 
reform. I am not belittling it, it is very significant.
    When you plan to make a change, is it not best to leave 
things be if they have been functioning all right, and then, if 
you are going to go through the process of developing a new 
regulation, let that determine when the change will be, rather 
than make the change through a program memorandum, and then 
decide to go through the process afterwards?
    In the meantime an awful lot of people out there who have 
been depending upon this service have lost it. It may turn 
out--as a result of your town meetings that were required and 
as a result of the entire process, it may turn out that you 
will go back to what it was for so many years before HCFA came 
out with its program memorandum.
    I am not really asking a question. I appreciate your 
patience, and I appreciate you being here.
    Mr. Hash. I appreciate the opportunity. I know there is 
confusion out there. I know this affects real people with very 
serious diseases and illnesses.
    I am encouraged by your willingness to continue to work 
with us and try to find a way to move forward with us; do what 
we can do now and also work for the larger solution as well.
    Mr. Bilirakis. That is right. We cannot say we want a 
comprehensive solution and let people basically suffer in the 
meantime.
    Thank you very much, sir.
    The next panel consists of Ms. Nancy Davenport-Ennis, 
Founding Executive Director of the Patient Advocate Foundation 
out of Newport News, Virginia, Ms. Rosalie Lohrman from 
Pasadena, Maryland, Ms. Mary Ellen Rybicki from Reston, 
Virginia, Ms. Julie Sizemore from Simpsonville, South Carolina, 
Dr. Earl Steinberg, Chevy Chase, Maryland, and Ms. Jane Story 
of the Cancer Center of the Carolinas in Greenville, South 
Carolina.
    Thank you, ladies and gentlemen, for being here. We are 
grateful for your patience.
    Your written statement is made part of the record. We will 
set the clock at 5 minutes, and hopefully you can keep your 
oral testimony within that period of time.
    Mr. Burr [presiding]. The Chair would also like to take 
this opportunity to recognize our distinguished colleague who 
served for over 100 years, Congressman Rose.
    The Chair would recognize Mrs. Story for the purposes of 
her opening testimony for 5 minutes, and also welcome both our 
South Carolina witnesses from our sister State to the south of 
North Carolina.
    Ms. Story.

STATEMENTS OF JANE A. STORY; EARL P. STEINBERG; JULIE SIZEMORE; 
MARIELLEN RYBICKI; ROSALIE LOHRMAN; AND NANCY DAVENPORT-ENNIS, 
    FOUNDING EXECUTIVE DIRECTOR, PATIENT ADVOCATE FOUNDATION

    Ms. Story. I would like to say that I appreciate the 
opportunity to testify today. As you mention, I am a cancer 
nurse from Greenville, South Carolina, and part of my charge as 
a nurse is to treat the human response to a disease process.
    Because my testimony today will focus on the face of the 
patients that perhaps this committee does not otherwise see, I 
would like to ask you to humor me and ask everyone in the room 
to please take out a pen and paper and jot down something for 
me. It would take just a moment.
    If you would write down ten things that are important to 
you, please. Perhaps it would be your family--it might not be 
in any particular order--perhaps some faith that you have. If 
you would jot those things down for me. You might need to leave 
blanks.
    Now if you would take a moment to look at that list, you 
might have some blanks there. You might not have gotten to ten 
yet. I would ask you to cross out four of those things that are 
most important to you in your life. Then take away another two. 
Now you may have four things that are important to you, but I 
need you to take away another two, please.
    When I did this exercise yesterday, the person that I did 
it with said, but I can't take away those things, because you 
see, what is left is maybe family, maybe God, and that is about 
it. That is what every cancer patient that we treat faces. They 
lose their health. As soon as they are diagnosed they lose 
their health. They lose their financial security. They lose 
maybe their home. They lose their job. They lose their ability 
to take care of others.
    These patients face quite a bit of loss. I see that 
devastation firsthand, and the impact on families. Then of 
course, the reason I do all of this is because I do have an 
opportunity to see the triumphs of the human spirit.
    I think, in that context, it is important to look at these 
drugs. I am specifically speaking about cancer drugs. These 
drugs, including Procrit, Leukine, Neupogen, as well as actual 
chemotherapy drugs, Interferon and Interleukin, really do 
increase the quality of life for our patients. They make it 
possible for them to do things. I know Julie Sizemore will be 
addressing that for you. They make chemo tolerable, and they 
make chemo possible. They can allow patients to have a longer 
and routine treatment without the increased discomfort that a 
patient might have.
    I would contend that these medications, even though they 
are subcu, they are not, by virtue of that fact, self-
injectable.
    Let me tell you why I believe that. The loss of coverage 
that this policy that we are talking about today would cause 
really brings up a lot of safety issues. We have patients who 
are physically frail. They have lost their dexterity. The 
chemotherapy can make their hands numb or tingle. There are 
issues of dosing, that the patient could possibly get a wrong 
dose.
    We have finally gotten to the point in this country where 
we have continually, over the last 2 years, decreased the 
number of deaths that we have had because of cancer. We expect 
to do that in the year 2000, so we are turning the corner on 
the war against cancer, mostly due to the National Cancer Act. 
We have more funding for research, so we know what the new 
drugs are. We know how they work. We have education for doctors 
and nurses that allows them to fight the war. This proposal of 
so-called self-injectable drugs and changing the coverage for 
them would threaten all that we work for and fight for.
    You may not know what those people look like, but I do, 
because I see those people every day. I see them cry, and I did 
it before I left. I cried with a patient that was going to lose 
her life. She has progressed. I would ask you not to allow the 
coverage to be lost, because those people need it.
    [The prepared statement of Jane A. Story follows:]
                  Prepared Statement of Jane A. Story
    Thank you for the opportunity to share my experiences with you. I 
am head nurse in outpatient cancer setting. In that capacity, I care 
for cancer patients and their families physically, emotionally, and 
spiritually. When cancer patients come to an outpatient setting for 
their treatments, they often find in their nurses not only capable 
caregivers but also people who are willing to talk and laugh with them; 
sometimes those around them can manage to talk or laugh because life 
isn't ``normal'' anymore. These patients see us frequently and we 
become part of their family. Fortunately, we oncology nurses are the 
``expert'' family members who have the specialized training to know 
when a patient is in trouble and needs intervention versus needing a 
compassionate ear and warm response.
    Families frequently come into the challenge of cancer treatment 
unprepared for the rigors they face. They are not sure what the 
expected results of chemotherapy are, so they don't know whether the 
symptoms and problems they see are ``normal'' for a cancer patient in 
treatment or not. Cancer nurses guide and educate the family in these 
situations. For instance, we counsel patients and families about the 
threat of plummeting blood counts and work to address that problem 
whenever it arises. When a chemotherapy patient gets exposed to an 
infection and they do not have white blood cells to fight infection, 
they are at risk for a more serious illness than you or I might get. If 
a family member is not taught to call us when the temperature goes 
above 100.5 degrees (Fahrenheit), the infection could go into the 
patient's blood stream, necessitating hospitalization, sometimes in an 
intensive care unit. If the infection goes into the blood stream 
(sepsis) and remains untreated, death is possible. Without the skilled 
teaching of an oncology nurse, the patient and family members might not 
call for a temperature under 102 degrees.
    Injectable drugs comprise an important facet of the sophisticated 
drug care that fights cancer. Several different classes exist, but the 
most frequently given drugs are those that either stimulate the bone 
marrow to make more blood cells (like Procrit, Neupogen, Leukine, and 
Neumega) or those that stimulate the immune system to fight the cancer 
(like Interferon or interleukin).
    Chemotherapy affects quickly growing cells in the body. The 
chemotherapy doesn't know which cells are normal and which are 
cancerous, so it hits all quickly growing cells, including hair cells, 
cells in the throat, intestines, and bowels, the cancer cells, and 
blood cells. The types of cells that are affected (hair, 
gastrointestinal, and blood) generally represent the major adverse 
responses to chemotherapy.
    The most important quickly growing cells to our discussion are the 
blood cells. There are three basic kinds of blood cells: white blood 
cells, which fight infections; red blood cells, which carry oxygen; and 
platelets, which clot the blood. Neupogen and Leukine increase the 
white blood cell count. If the white blood count or the mature white 
cells are too low, patients cannot get their chemotherapy since the 
chemo would further decrease the white blood count, potentially leaving 
the patient without any defense against infection.
    Without Neupogen and Leukine, patients must wait until their body 
naturally regenerates the white blood cells. During this period, 
patients can be exposed to infection. Increased hospitalization will be 
needed if a patient gets an infection or becomes septic. The cancer 
cells also have an opportunity to grow (since the chemo is not killing 
the cancer), negating the positive effects of continuing chemotherapy.
    Procrit increases the red blood cell count; a low red blood cell 
count increases the fatigue a chemo patient experiences and can cause 
increased shortness of breath. These increased side effects often 
debilitate chemo patients who are already physically and emotionally 
stressed. Procrit enables them to manage these side effects, often so 
that they can function at a more ``normal'' level. In other words, the 
Procrit allows them to cope better with their cancer treatments. One of 
our patients, for instance, is a Medicare beneficiary who lost an arm 
to cancer and is thrilled to have the strength to leave her home to do 
simple things like food shopping. If Procrit is not given, patients 
must receive transfusions of packed red blood cells in a hospital 
setting. In addition to the cost, the transfusions expose them to 
blood-borne diseases like Hepatitis-A or AIDS. The suppressed immune 
system of a cancer patient on chemotherapy will not be able to fight 
these diseases.
    Neumega increases the platelet count. Patients usually have 
decreased platelets once they have received several rounds of 
chemotherapy. Without Neumega, patients typically must receive several 
platelet transfusions, which involve being admitted to the hospital 
(thus increasing hospital costs). Also, the patient is at increased 
risk of bleeding spontaneously. Obviously, the possible results of 
spontaneous, uncontrolled bleeding are hospitalization or death. 
Generally, Neumega is used after a patient has both had their platelet 
count drop into a dangerous range and needed transfusions of platelets. 
The Neumega prevents further drops in platelets. A decreased platelet 
count will also make a patient ineligible for chemotherapy.
    Interferon and Interleukin are classes of drugs that stimulate the 
patient's own immune system to attack cancer cells. Interferon is used 
to treat melanoma, leukemia, lymphoma, Kaposi's sarcoma, and hepatitis. 
This drug can be a very effective and simple answer to these complex 
and deadly diseases. Interleukin, particularly Interleukin-2, treats 
renal cell cancer; no other chemotherapy has been found to be effective 
on this form of cancer. Without Interferon and Interleukin, the patient 
with a disease listed above faces either more extensive chemotherapy 
with less effectiveness or a much quicker death.
    If the Medicare program were to classify the injectables discussed 
above as self-injectable drugs, the implications are profound. 
Foremost, these medications cannot be safely given and monitored by the 
patient. Medicare patients with cancer are generally frail; 
chemotherapy intensifies this effect. The patients may have tremors or 
numbness and tingling in their hands due to the effects of 
chemotherapy. Cancer fatigue, one of the most prevalent and least 
treatable side effects of chemo, creates a lack of energy, making any 
activity feel impossible. Thinking about giving themselves an 
injection--an unfamiliar and complex task--will also feel impossible to 
the elderly chemo patient.
    Many Medicare patients cannot see clearly and have decreased manual 
dexterity (both partially due to advanced age, but increased by the 
effects of chemo). These drugs must be given in an exact dose via a 
needle with minute gradations. Of the six medications discussed above, 
three must be mixed with a dilutant at the time of injection. Only two 
of the medications come in individual dose vials. Thus, the possibility 
of mixing the drug improperly or getting too large or too small a dose 
is increased.
    Additionally, in South Carolina, the majority of our Medicare 
patients have little or no other source of income to pay for 
injectables. In the past as a home health nurse, I entered Medicare 
patient homes with little or no heat, minimal food, and bugs. Some 
patients barely have the resources to pay for their bills and food. The 
medications in question cost anywhere from $500 to $5,000 per 
injection; the drugs are given from once a week to once a day. For the 
typical South Carolina Medicare patient and their families, the choice 
would either be surviving (eating, a roof over their heads, etc.) or 
paying for the drug. At the Cancer Centers of the Carolinas, we work 
with our patients and families to find a way to pay for their care (25% 
of our patients are indigent). Over the seven years I have been a 
nurse, however, I have seen patients and families, already stretched to 
their limit by the physical and emotional demands of cancer, 
frantically seeking funds to pay for their own or their loved one's 
care. The treatment that Medicare makes possible for cancer should not 
be taken away. Doing so would only add to the enormous burden the 
patients and families face.
    While the physical and cost facets of administering the injection 
play a large role in my concern for Medicare coverage of these drugs, 
the possible adverse events are chilling to me as a nurse. As mentioned 
above, these drugs require exact doses and exact mixing. They also 
require trained observers (oncology nurses, with the support and 
guidance of doctors) to manage and deal with the side effects. Just as 
chemotherapy can have life-threatening effects, so can Neupogen, 
Leukine, Procrit, Neumega, Interferon, and Interleukin. For instance, 
Neupogen normally causes skeletal pain, frequently in the sternal 
(breast bone) area. This needs to be assessed by a nurse to discern 
whether the pain relates to cardiac problems or to the administration 
of the drug. Leukine can cause shortness of breath and fluid retention, 
as well as rashes and flu-like symptoms. The shortness of breath and 
fluid retention could be related to cardiac problems or the drug, and 
both might require intervention, including teaching by the nurse or the 
doctor seeing the patient and providing medications. Procrit can cause 
hypertension, nausea, vomiting, and ankle swelling. Again, an 
experienced, highly trained cancer nurse can determine whether these 
side effects are a response to another drug (like chemotherapy), 
another disease process, or the injectable drug. Neumega can cause 
fluid retention, shortness of breath, and chest pain. These serious 
side effects may need the immediate medical action that a cancer nurse 
in an office setting can secure. Interferon and interleukin both have 
serious side effects that can limit the amount of the medication that 
the patient can receive. The dose limiting factors for interferon 
include fatigue and severe weight loss, although non-dose-limiting side 
effects range from chills and fever to liver, kidney, and heart 
changes. The patient may also have their potassium level drop to an 
unsafe level, requiring oral or intravenous replacement. For 
interleukin, dose-limiting adverse effects are mental status changes 
(confusion, agitation, and disorientation); decreased platelet and red 
blood cell counts; and decreased blood pressure. Patients receiving 
medications that have dose-limiting toxicities need a trained observer 
to determine when the dose needs to be modified. An elderly patient at 
home would not be able to fulfill this role.
    Every medication listed has the possibility of an allergic reaction 
with the first dose. A patient taking the drug at home as a 
prescription might not have the medical resources available to survive 
such a situation. Office-based nurses can easily manage this task.
    All of these injectable medications require regular review of blood 
values (labs) by a nurse for several reasons. First, if the patient 
takes the drug to increase their white cells, red cells, or platelets, 
these blood levels can go too high if they are not monitored. In the 
case of the white blood cells, this will cause aches and pains. 
Platelets running too high can cause the blood to clot unnecessarily, 
perhaps causing a stroke or other adverse event. Second, a particular 
dose of a medication may not guarantee the effect that is desired. 
Procrit, intended to increase the red blood count, may increase the 
counts too much at one dose and not enough at another dose. When a 
nurse assesses the patient regularly, this issue can be managed for the 
appropriate outcome. Take our patient, Lucy W., as an example. On 
40,000 units of Procrit per week, the patient's counts went up too 
high. When the nurse reported this to the doctor, the dose was 
decreased to 20,000 units per week. Subsequently, the patient came in 
with increased weakness and shortness of breath, so the nurse requested 
blood counts be run. The results showed a drop in the counts, so the 
Procrit dose was increased to 30,000 units per week and the patient's 
counts are being maintained. This intervention could only have happened 
via the intervention of a nurse attuned to the patient's symptoms and 
knowledgeable about the meaning and implications of blood test results 
as they relate to the medication.
    In summary, making drugs used for cancer treatment self-injectable 
would undermine the war on cancer we are fighting. Out there on the 
front lines of that battle, we have the tools to provide patients with 
optimal cancer care: drugs, which can cure the cancer; supportive 
medications like these injectables, which allow patients to tolerate 
their chemotherapy at higher doses with less side effects; and cancer 
nurses, who treat the human response to the disease of cancer. Without 
any of the three, the battle will be harder and the patients could lose 
the care and medications they need. We will go backwards in time, 
losing the ground we have gained in this battle and the resources we 
have invested in that fight through the National Cancer Institute. The 
result will be increases: increases in inpatient hospital admissions 
(and the associated costs) to deal with infections that could have been 
prevented; increases in morbidity and mortality of patients who cannot 
afford the care they need without the Medicare coverage they now 
receive; and an increased sense of helplessness and hopelessness 
because patients and their families will lose the psychosocial and 
spiritual support oncology nurses provide.
    I an thankful to Chairman Bliley and all the members of this 
committee for the excellent job you have done in urging the Medicare 
program to do the right thing, at least through September 30th. 
However, I urge you to keep the problem from reoccurring in the future. 
Our patients--who have become my friends and family--and I thank you 
for your consideration as we fight the War on Cancer together.

    Mr. Burr. Thank you very much, Ms. Story, for that very 
compelling and emotional testimony.
    Dr. Steinberg, you are recognized for an opening statement.

                 STATEMENT OF EARL P. STEINBERG

    Mr. Steinberg. Thank you very much for the opportunity to 
present to you this morning.
    In the few minutes that I have available to me, I would 
like to try to make five points related to the issue before 
you. First is that outpatient prescription drugs, whether they 
are self-administered or administered by a health care 
professional, are an absolutely essential part of the high 
quality or even a minimum standard of appropriate health care 
today.
    This is particularly true with regard to treatment of 
chronic diseases. As Mr. Hash said, if the Medicare program 
were being designed today, I cannot imagine that prescription 
drugs would not be a covered benefit, any more than I could 
imagine that either surgery or radiology services would be 
excluded from coverage.
    It is not unusual for elderly individuals with common 
chronic diseases, common chronic diseases, to require between 
$5,000 and $10,000 worth of prescription medications in a given 
year. Without insurance coverage for outpatient prescription 
medications, many Medicare beneficiaries are not able to buy 
them.
    I want to point out that this is not only high cost outlier 
patients, or those who are poor who have difficulty affording 
their medications. Many of my former patients at Johns Hopkins 
who had incomes in the range of $25,000 per year did not fill 
the prescriptions that I gave them because they could not 
afford to do so.
    To the extent that Medicare beneficiaries do not have 
access to these treatments, the Medicare program fails to 
accomplish its goal of ensuring that the elderly and the 
disabled have access to necessary health care.
    Second, as has been mentioned several times today, not all 
patients are the same. They vary greatly in the severity of 
their disease as well as the types and severity of morbidities 
that they have. Consequently, the fact that one patient can 
self-administer a drug does not mean that all patients can 
self-administer the same drug.
    In fact, given the progress that has been made in the 
development of drugs and in injection devices, it would be a 
rare instance in which a physician or nurse could not train at 
least one patient to administer a drug safely.
    The third point I would like to make is that over the past 
35 years incredible progress has been made in medical science, 
computer and electronic technology, and the development of 
lightweighting and improved solid materials. As a result, 
pharmaceutical products, as well as techniques for 
administering them, are available today that likely could not 
have even been imagined 35 years ago.
    This progress has enabled patients who used to require 
prolonged hospitalization to be treated safely, more 
conveniently, and less expensively at home. In other instances, 
the availability of new routes of administration for drugs can 
result in the increased effectiveness of treatment due to 
faster or more thorough absorption.
    I believe it is a mistake to have a coverage policy that 
actively discourages rather than encourages such innovation.
    Fourth, I would like to make a point that the status quo 
with regard to coverage of self-administratable drugs 
unfortunately perturbs pharmaceutical manufacturers' behavior 
in a perverse way. Under the policy in place today, 
manufacturers sometimes are induced to formulate or reformulate 
drugs as injectables that could be better administered orally.
    A case in point is the drug Lupron, which is used to treat 
prostate cancer. Lupron was first developed in a formulation in 
which it could be self-administered by subcutaneous injection. 
As a result, it was not covered by Medicare. It was a failure 
commercially, and the manufacturer then reformulated the drug 
so that it had to be administered intermuscularly by a health 
care professional. That reformulated drug was then covered by 
Medicare and is now used commonly today.
    Finally, the current situation with regard to coverage also 
perturbs physician behavior in a perverse way. If the optimal 
drug for a patient is self-administratable but the patient 
cannot afford to buy the drug, it does no good for a physician 
to prescribe it.
    As a result, under current policy, when the best therapy 
can be administered by a patient, this physician sometimes will 
resort to prescribing an alternative, albeit suboptimal drug 
that must be administered by a health care professional.
    In summary, given the high cost of prescription drugs, 
especially among the elderly with chronic disease, many elderly 
cannot afford to buy the drugs they need. Given the central 
role of these drugs in health care today, Congress should add a 
prescription drug benefit to Medicare.
    If, however, a politically viable approach for providing 
such a benefit cannot be found, I urge you to modify the 
statutory language so as to maximize the number of Medicare 
beneficiaries who have access under existing benefits to drugs 
that are safe and effective in treatment of the diseases from 
which they suffer.
    In closing, I might just add that it seems to me that part 
of the confusion about this issue results from the fact that 
there are multiple alternative definitions being made of what 
``self-administratable'' means. On the one hand, the more 
expansive definition is based on the usual method of 
administration, whereas the more restrictive is based on a 
definition of whether the drug cannot be self-administered.
    I think this is where the heart of the issue about the 
cutback has occurred.
    Thank you very much.
    [The prepared statement of Earl P. Steinberg follows:]
                Prepared Statement of Earl P. Steinberg
    Good morning. I appreciate the opportunity to testify today 
regarding Medicare coverage of drugs that can, in some cases, be self-
administered by patients in the outpatient setting.
    My name is Dr. Earl Steinberg. I am a general internist who 
practiced internal medicine full- or part-time from 1979-1990. For the 
past 18 years, I have devoted my career to 1) evaluation of the safety, 
effectiveness and cost-effectiveness of medical technologies, including 
prescription drugs; 2)--evaluation of health care providers' actual 
patterns of practice; and 3) design and implementation of interventions 
to improve the quality and/or efficiency of care. From 1982 to 1994, I 
was on the full-time faculty of The Johns Hopkins School of Medicine 
and School of Hygiene and Public Health. I also served as Director of 
The Johns Hopkins Program for Medical Technology and Practice 
Assessment.
    From 1994 to February of this year, I was a Vice President at 
Covance Health Economics and Outcomes Services Inc., a consulting firm 
that helps to bring high quality medical innovations to market, 
evaluate their performance once they are in actual use, and improve the 
quality and efficiency of provider practice. During my tenure at 
Covance, I served as Director of its Division of Quality Assessment and 
Improvement Systems and Co-Director of its Outcomes Studies Group.
    I currently am an independent health care services consultant, and 
an Adjunct Professor of Medicine and of Health Policy and Management at 
The Johns Hopkins University. I also am a member of the Blue Cross and 
Blue Shield Association's National Medical Advisory Panel, on which I 
have served for the past 10 years. This Panel oversees what is widely 
considered to be the best and most rigorous technology assessment 
activity in this country.
    My background enables me to bring multiple, complementary 
perspectives to bear on the issue you are considering today--an issue 
that I believe has become far more complicated and vexing because of 30 
years of medical and technological progress, as well as two decades of 
changes in the Medicare payment system that provide a strong financial 
incentive to discharge patients from the hospital as early as possible.
    In the brief time I have with you this morning, I would like to 
make five points that are central to the debate over how broadly or 
narrowly the concept of ``self-administerable drugs'' should be 
construed.
    First, outpatient prescription drugs, whether they are self-
administered or administered by a health care professional, are an 
essential part of high quality, or even a minimal standard of 
appropriate, health care today. This is particularly true with regard 
to treatment of chronic diseases. If the Medicare program were being 
designed today, I cannot imagine that prescription drugs would not be a 
covered benefit, any more than I could imagine that either surgery or 
radiology services would be excluded from coverage. Last year Medicare 
beneficiaries used between $30 and $40 billion worth of outpatient 
prescription drugs, many of which have become quite expensive. It is 
not unusual for elderly individuals with common chronic diseases to 
require between $5000 and $10,000 worth of prescription medication in a 
given year. In a study of actual prescription claims generated by over 
375,000 elderly individuals that I recently conducted with 
collaborators at Merck Medco Managed Care and the Henry J. Kaiser 
Family Foundation (Steinberg EP, Gutierrez B, Momani A, Boscarino JA, 
Neuman P, and Deverka P; Beyond Survey Data: A Claims-Based Analysis of 
Drug Use and Spending by the Elderly; Health Affairs (March/April 
2000): 198-211) , we found that 5 percent of people in our sample had 
more than $4000 in prescription drug expenditures and one percent had 
$6,600 or more in such expenditures during 1998. Total annual spending 
for elderly with chronic disease was 50% to 200% higher than for 
others. As a result, one percent of elderly with cancer or common 
combinations of chronic diseases,, such as diabetes and heart disease, 
had total annual spending greater than $9,000. Without insurance 
coverage for outpatient prescription medications, many Medicare 
beneficiaries are not able to buy them. I should point out that it is 
not only high cost outlier patients, or those who are poor, who have 
difficulty affording their medications. Many of my former patients at 
Johns Hopkins who had incomes in the range of $25,000 per year did not 
fill the prescriptions I gave them because they could not afford to do 
so. To the extent that Medicare beneficiaries do not have access to 
these treatments, the Medicare program fails to accomplish its goal of 
ensuring that the elderly and disabled have access to necessary health 
care.
    Second, not all patients with a given disease are the same. 
Patients vary greatly in the severity of their disease, as well as the 
types, number and severity of the other diseases that they have. Some 
have poor vision. Some have cognitive disorders. Some are physically 
unable to perform simple tasks. Consequently, the fact that one patient 
can self-administer a drug does not mean that all patients can self-
administer the same drug. Congress recognized this fact when it 
fashioned the Medicare benefit for Coverage of Osteoporosis Drugs. This 
provision states that injectable drugs approved for use in treatment of 
a woman who has suffered a bone fracture that is related to 
postmenopausal osteoporosis are covered if ``the individual is unable 
to learn the skills needed to self-administer such drug or is otherwise 
physically or mentally incapable of self-administering such drug.'' To 
me, as a clinician, it makes little sense to apply these very relevant 
considerations ONLY to women with postmenopausal osteoporotic 
fractures.
    For many reasons it is not surprising to me that there is confusion 
and controversy surrounding interpretation of the Social Security Act's 
provision regarding coverage for drugs and biologicals which cannot be 
self-administered. There are many other potential operational 
definitions of what constitutes a self-administerable drug. For 
example, judgments regarding the self-administerability of a drug could 
be based on the usual method of administration of the drug, on the 
basis of whether any patient can self-administer the drug, or on the 
basis of whether a given patient can self-administer the drug. Given 
the progress that has been made in development of injection devices, it 
would be a rare instance in which a physician or nurse could not train 
at least one patient to administer a given drug safely. Yet another 
potential definition would be one in which a drug would be considered 
to be self-administerable if the label for the drug indicates that the 
drug can be administered by a patient without the need for medical 
supervision. While many other such definitions could be fashioned, I 
believe it is not possible to develop a definition that makes sense 
from a clinical perspective other than leaving the judgment regarding 
the best means of administering a drug to the patient's physician.
    The third point I would like to make is that over the 35 years 
since the Medicare program was enacted, incredible progress has been 
made in medical science, computer and electronic technologies, and the 
development of light-weight and improved solid materials. As a result, 
pharmaceutical products, and techniques for administering them, are 
available today that likely could not have been imagined 35 years ago. 
This progress has enabled patients who used to require prolonged 
hospitalization to be treated safely, more conveniently, and less 
expensively at home. In other instances, the availability of new routes 
of administration for drugs--for example, topically, intranasally, or 
via inhalation--can result in increased effectiveness of treatment as a 
result of faster or more thorough absorption. I believe it is a mistake 
to have a coverage policy that actively discourages, rather than 
encourages such innovation.
    Fourth, the status quo with regard to coverage of self-
administerable drugs perturbs pharmaceutical manufacturers' behavior in 
a perverse way. In circumstances in which only a small number of non-
elderly are the target patient population for a drug, the commercial 
success of a product may depend on whether Medicare covers it. 
Consequently, under the policy in place today, manufacturers are 
induced to formulate drugs as injectables that could be better 
administered orally. A case in point is the drug Lupron ,which is now 
commonly used to treat prostate cancer, a disease that occurs most 
commonly in men over the age of 65. Lupron was first developed in a 
formulation in which it could be self-administered by subcutaneous 
injection. As a result, Lupron was not covered by Medicare. In order to 
make the drug commercially viable, the manufacturer of Lupron re-
formulated the drug so that it had to be administered intramuscularly 
by a health care professional. The reformulated drug was covered by 
Medicare and now is used commonly. Many other companies have been 
forced to employ less than optimal formulations of their products in 
order for them to be covered by Medicare.
    Finally, the current situation with regard to coverage of self-
administerable drugs also perturbs physician behavior in a perverse 
way. If the optimal drug for a patient is self-administerable, but the 
patient cannot afford to buy the drug, it does no good for a physician 
to prescribe it. As a result, under current policy, when the best 
therapy can be administered by a patient, physicians often will 
prescribe an alternative, albeit sub-optimal, drug that must be 
administered by a health care professional. In some instances, such 
``second-best practice'' from a clinical perspective can also be the 
most costly practice, either because the second best drug is more 
expensive or because administration of it can require the development 
of an office infrastructure that adds to the cost of therapy.
    In summary, given the high cost of prescription drugs, especially 
among elderly individuals with chronic disease, many elderly cannot 
afford to buy the drugs they need without drug insurance. Given the 
central role prescription drugs play in health care today, Congress 
should add a prescription drug benefit to Medicare. If a politically 
viable approach for providing such a benefit cannot be found, I urge 
you to modify the statutory language so as to maximize the number of 
Medicare beneficiaries who have access to drugs that are safe and 
effective in treatment of diseases from which they suffer under 
existing benefits.

    Mr. Burr. Thank you, Dr. Steinberg. I want to apologize to 
the rest of our panel, at least for the bell. It is our intent 
to take a break here. We have a series of votes on the House 
floor. We would like to recess until 12:45. Hopefully, that is 
enough time to get our series of votes out of the way and to 
allow you each to get a bite to eat downstairs if that is 
something that you choose to do, or to get just a little break.
    The committee will reconvene at 12:45 for the rest of the 
testimony.
    [Brief recess.]
    Mr. Bilirakis. The hearing will come to order.
    Ms. Sizemore, of course, you know your written testimony is 
part of the record. Would you like to proceed?

                   STATEMENT OF JULIE SIZEMORE

    Ms. Sizemore. Yes.
    First of all, I want to thank you for letting me speak 
today: I will try it my best to say what I need to say in the 
time allotted.
    First of all, I need to show you a picture of my family. 
This is my husband and my son Jacob. My son Jacob was 15 months 
old when my husband was diagnosed with stage 4 adrenal cancer. 
Prior to June 7, 1998, David and I knew very little about 
cancer. No one in our family had had it, no close friends had 
had it, so our knowledge was very limited. After June 7, 1998, 
we would embark on a journey that would teach us more than we 
would ever want to know about this disease.
    The first of our learning experiences began with 
injections. The chemotherapy that David was given broke down 
his blood, and in order for his blood and his body to be able 
to endure chemotherapy given in a timely fashion and in a dose 
that would kill the cancer, he had to have these injectables.
    These injectables enhanced David's quality of life and 
extended his life. He lived 15 months with this disease. 
Fifteen months was 15 months longer that Jacob got to spend 
time with his father. The injectables, along with the 
chemotherapy, gave us time. Time to make memories, and time for 
David to take Jacob to the airport to watch the airplanes land 
for the first time. Time to put up a basketball goal for him. 
Time to take him to an amusement park. Time to take him out on 
the golf course for the first time. Things that we took 
pictures of and that now are my memories. Now when my son asks 
about his daddy, they are in a photo album that we pull out, 
and I will show him all the things his daddy did with him.
    You may ask yourself, at 32 years old, what do I know about 
Medicare? It has come to my awareness in the last week that if 
Medicare no longer provides funding for these injections, that 
managed care, in my case Blue Cross-Blue Shield, would follow 
suit. Then not only are the elderly citizens of our country 
affected, but anyone is with a terminal illness that needs 
these injections.
    Self-injectables are first of all dangerous. David was a 
36-year-old very strong, healthy man with a very sharp mind 
when he was diagnosed with cancer. The chemo left him sick, 
left him fatigued, left him cloudy mentally, at times. He was 
in no way in a shape to inject himself.
    He was 36. I can only imagine if he had been 40 years 
older, even if he did not have Alzheimer's at 76, even if he 
did not have dementia, just the mere fact as we age we forget 
things----
    Mr. Bilirakis. Tell me about it.
    Ms. Sizemore. He also had allergic reactions to these 
injections. For someone injecting themselves who may not have 
someone to care for them at home, to have an allergic reaction 
could be fatal.
    The injectables are expensive. I have a list that I got 
from my pharmacy of all the drugs that David received in 15 
months. These injections, if we had had to pay for them, as 
well as if an elderly citizen had to pay for them, in 15 
months' time, which he was not on these injections every day, 
it would have exceeded $40,000, which would have financially 
devastated us, and we are not poor. We are not in a poor 
income. But it would have financially devastated us.
    Shortly after David was diagnosed with cancer, his 76-year-
old father, who was a World War II veteran, was diagnosed with 
leukemia. His responsibility to my family, as I said, has 
changed at 76. He now can provide memories to my son of his 
son, of what David was like when he was a boy, a teenager, 
something that I was not around for.
    So his existence is insurmountable in my family now. The 
thought of Leo not being covered for these injectables if he 
would need them, not being paid for, having to inject himself, 
would be detrimental. He would die, just as David would have 
died without these injections, he would have died earlier.
    I want to back up, because this is real important for me to 
say. In terms of the safety involved in self-injecting, David 
had times after cis platinum where his hands were numb and he 
could not feel his fingers, let alone give himself an 
injection. Due to the high doses of morphine he received, he 
jerked. He would be lying still and he would jerk, because the 
doses of morphine were so high.
    His side effects were unpredictable. The way he would feel 
was unpredictable. It would have to be something that a 
physician would have to examine him every single day if you are 
going to say someone can give themselves an injection, because 
it was unpredictable side effects.
    I ask you to provide funding for older Americans, for 
everyone who needs these drugs, and to not let them self-inject 
out of safety. Do not put their families in a position of 
having to decide whether or not they die or live based on 
money.
    You cannot put a price on the memories that I have of my 
husband, the time that we got, that we had with those 15 
months, for him to fill out a journal for his son. You cannot 
put a price on that, and you cannot put a price on the memories 
that my father-in-law still has to share with Jacob about his 
son.
    So I ask, for my son's sake and for my father-in-law's 
sake, that you not let this pass.
    [The prepared statement of Julie Sizemore follows:]
                  Prepared Statement of Julie Sizemore
    Before June 7, 1998, my husband David and I knew very little about 
cancer. In fact, all we knew is what we heard about other families' 
experiences or what we saw on television. Frankly, cancer was not 
anything we really paid any attention to because it had never touched 
our lives.
    But then, on June 7, 1998, David and I embarked on a journey that 
would teach us more about cancer than we would have ever wanted to 
know. On that date, David was diagnosed with Stage IV adrenal cancer. 
David had a tumor the size of a grapefruit that had actually taken over 
his right adrenal gland. He also had 60-70 metastases in his lungs.
    Even though adrenal cancer is often curable, it has to be caught 
early. The problem with adrenal cancer, though, is that its symptoms 
are often masked until the cancer has metastasized into other areas of 
the body. Because of the advanced state of David's cancer, we soon 
learned that his cancer was incurable.
    David's treatment began on June 21, 1998, and it ended shortly 
before his death on September 14, 1999. At the time my husband was 
diagnosed, our son Jacob was 15 months old. When David left us, Jacob 
was 30 months old.
    I am here today to honor David and, hopefully, to bring a human 
perspective to the issue you are addressing. If what I have learned 
along my family's journey with cancer is helpful to you, then I pray 
that something good will come of the tragedy we experienced.
    Among the things I learned during the last two years is how 
important cancer therapies are. David's treatment included chemotherapy 
and injectable drugs. The drugs enabled David to tolerate his chemo and 
extended David's life. The drugs gave us more time to make memories as 
a family, and they enhanced David's quality of life, giving him more 
energy to enjoy the time he had left.
    In other words, the injections, along with the chemotherapy David 
received, bought us time. It bought time for David to take Jacob to the 
airport to watch airplanes land for the very first time. It bought time 
for David to take Jacob to a golf course and an amusement park, and to 
build him a bicycle. It bought time for Jacob to watch his daddy 
playing piano, and it bought time to establish for Jacob a favorite 
song--``Great Balls of Fire''--which he would ask David to play for 
him.
    In short, David's treatment bought him the time he needed to leave 
Jacob not when he was only 15 months old, but when he was twice that 
age.
    The treatment David received gave us the time to build memories and 
compile the pictures that Jacob and I often call on to help us through 
the days and nights without him. Those are memories of love that our 
extended time with David has given to Jacob and me. If David had only 
lived 6 months, Jacob would have missed so much. The injections and 
care David received gave him something priceless--time with his father. 
I don't know what the term ``quality of life'' means to you, but that 
is what it means to me.
    Only months after David's diagnosis, David's 75 year old father--a 
WWII veteran--was diagnosed with leukemia. I know that the thought of a 
senior with cancer is not always as heart-wrenching as a child with the 
disease. I, too, found myself at times having a silent conversation 
with the elderly patients I saw at David's cancer center. ``You've had 
your whole life to live,'' I would think. ``My husband is only 36 and 
he's dying.''
    That terrible thought left me for good, though, after David died. 
At that time, I realized that I needed his father to live not only for 
his own sake but for my son's. With his wealth of memories of his son, 
my father-in-law is a connection to David that my son needs very, very 
much.
    And so, at 76 years old, my father-in-law, Leo, has a new 
responsibility. You see, Leo needs to pass on to Jacob the memories he 
has of David as a child, a teen, and a young adult. And Leo needs to be 
there when my son is old enough to inquire about and understand who his 
father was.
    As David's battle progressed, I learned that the tremendous value 
of the treatments he received and his father continues to receive do 
not come without cost. If David's injections had not been covered by 
his insurance, his treatment would have been financially devastating to 
us. Instead, David's coverage enabled him to receive the drugs he 
needed and to live as long as was possible. The same holds true today 
for Leo and the Medicare coverage he currently receives.
    During David's battle, I also learned that these injections come 
with a great deal of risk. Although I understand that many of these 
therapies may be technically self-injectable, self-injection was out of 
the question for David as it is for so many other patients. How David 
felt was never something that could have been predicted; chemotherapy 
often left him extremely fatigued, weak, and nauseated. These side-
effects not only made life difficult for David, they made consistently 
safe self-injection impossible.
    It is because of these experiences that I approach the issue you 
are addressing today with quite a bit of fear. What David, Jacob, and I 
experienced is something that I would spare others, if only I could. It 
also makes me worry for those, like Leo, who would be impacted by the 
loss of Medicare coverage for the therapy that made such a difference 
in David's life.
    I fear for Leo and other seniors with cancer, for whom the loss of 
the Medicare coverage they receive today would be financially 
devastating. Many of these patients would not be able to afford their 
therapy. And their families would be forced to deal with the painful 
choice of having to do whatever is necessary to find the resources they 
need--or to let their loved ones die.
    I fear for those seniors for whom self-injection would mean a death 
sentence. Like many cancer patients, David had an adverse reaction to 
one of his injections. If a senior had a similar response, and was 
alone, who would help them? If they were unaware of the reaction until 
it was too late, would they be able to even pick up the phone and dial 
911? Or would they have to rely on a spouse who may also be weak or 
disabled?
    I fear for the seniors who may not be able to keep track, by 
themselves, of all that their care entails. Fortunately, David's mind 
was very sharp. But because there were so many medications to take, he 
would have forgotten which he had taken and which he had yet to take 
were it not for the care of his doctor and nurse. Chemotherapy makes 
this even more difficult, since it often causes fatigue and, for many, 
disorientation. David was only 36 when he died--what would it be like 
for people 40 years older than him to have to tackle these challenges 
alone?
    I also fear for people who, like David, are too young for Medicare. 
While cutting current Medicare coverage may not impact them directly, 
they will suffer as a result. That is because managed care plans often 
follow Medicare's lead when it comes to cutting reimbursement. We would 
not have made it without David's coverage. What would happen to all 
those patients and families whose insurers copy Medicare and drop 
coverage for the life-saving drugs they need?
    Finally, I fear for my son, Jacob.
    If my father-in-law, Leo, loses the coverage that gives him the 
care he depends upon to live, he might lose his battle with cancer too 
early to fulfill his mission. The difference of a few years in an 
elderly man's life may not seem like much to some, but they mean the 
difference between my son really knowing his father, or not.
    For Jacob's sake. For Leo's sake. For the sake of the other old and 
young cancer patients who are out there. And for the sake of my 
husband's memory. Please do not allow anyone to take away the coverage 
that lets some win their war on cancer and helps others make the most 
of the time that they have left.
    Thank you.

    Mr. Bilirakis. Thanks, Ms. Sizemore.
    Ms. Rybicki?

                 STATEMENT OF MARIELLEN RYBICKI

    Ms. Rybicki. Mr. Chairman and other members of the 
committee, my name is Mariellen Rybicki. I live in Reston, 
Virginia, and I have multiple sclerosis. On behalf of myself 
and the many others who have Medicare coverage but who cannot 
afford drug treatment, I wish to thank this committee for your 
efforts to restore Medicare coverage for MS treatment.
    As a result of last week's announcement that Medicare has 
changed its policy, I will now be able to receive the treatment 
that I have not been able to afford. From 1997 to the present, 
Medicare has not covered any drug for the treatment of multiple 
sclerosis. However, 3 years ago my Medicare carrier in Virginia 
did reimburse for a multiple sclerosis drug which is given 
intramuscularly.
    Then, in 1997, for reasons I do not understand, Medicare 
terminated coverage for this drug. Last week's announcement is 
the first good news I have had since my diagnosis.
    I was not able to utilize drug therapy during the time 
Medicare provided coverage, that is, prior to 1997. The 
intramuscular drug therapy Medicare used to reimburse for only 
became available in May 1996. Later that year, my doctor made 
me aware of the availability of drug therapy. I was already 
enrolled in Medicare Part A, but I was not enrolled in Medicare 
Part B, the part of the Medicare program that reimburses for 
the type of drugs that we are talking about today. It was not 
until 1997 that I applied to become eligible for Medicare Part 
B, and then I had to satisfy a waiting period. When I did 
become eligible for Part B, I literally had a prescription in 
my hand, and then I was told that Medicare had already changed 
its policy and had stopped coverage.
    I need to be in a course of extended drug treatment. The 
drug that will now be covered by Medicare has been shown to 
significantly retard the progression of multiple sclerosis. 
Presently, I take high doses of steroids to control my 
spasticity. However, no matter what I do to control my 
symptoms, my disease will continue to worsen without drug 
therapy.
    Multiple sclerosis is a horrible disease. It causes the 
body's immune system to attack the nerve tissue in the brain 
and spinal column, forming patches called plaques. As the 
disease progresses, it destroys the myelin coating that 
surrounds the nerves and the nerves themselves. Intact nerves 
with a myelin coating are what enable the transmission of 
messages between the brain and other parts of the body. As the 
coating and nerves are progressively destroyed, the symptoms of 
multiple sclerosis get worse.
    For some inexplicable reason, in the early stages of 
multiple sclerosis symptoms generally will come and go. Later, 
these symptoms usually become permanent. Presently, I have 
great difficulty walking. I wear a brace and use a cane because 
my foot falls when I try to put my heel on the ground. I have 
numbness in my right hand and weakness in my fingers. I also 
have difficulty swallowing. Still, without drug therapy, and 
allowing this disease to go unchecked, my symptoms will worsen.
    Many people who suffer from MS have brain atrophy. 
Cognitive skills are lost, tremors, loss of balance, and 
control of bodily function can ensue. Because of the many 
difficulties multiple sclerosis patients face on a daily basis, 
many cannot physically self-inject.
    This is especially true for the drug treatment that is 
given intramuscularly. The needle that is required for this 
injection is about one and a quarter inches, and requires some 
skill for the proper dilution of the drug. This obviously makes 
it nearly impossible to self-inject for a person who has 
tremors, loss of hand-eye coordination, weakness, and loss of 
sensation.
    Now under the policy change, people with multiple sclerosis 
will be able to get reimbursement for intramuscular injections 
when done in a doctor's office.
    I cannot overstate my appreciation for what Congress has 
done to restore drug coverage for multiple sclerosis patients. 
However, since this policy change expires in September, I am 
also concerned that this coverage for multiple sclerosis 
treatment will once again be taken away. Today I ask that 
Congress not allow this to happen.
    I would be glad to answer any questions that any of the 
members of the committee might care to ask.
    [The prepared statement of Mariellen Rybicki follows:]
                Prepared Statement of Mariellen Rybicki
    Mr. Chairman and other members of the committee, my name is 
Mariellen Rybicki. I live in Reston, Virginia and I have multiple 
sclerosis. On behalf of myself and the many others who have Medicare 
coverage but who cannot afford drug treatment, I wish to thank this 
committee for your efforts to restore Medicare coverage for MS drug 
treatment.
    As a result of last week's announcement that Medicare has changed 
its policy, I will now be able receive the treatment that I have not 
been able to afford. From 1997 to the present, Medicare has not covered 
any drug for the treatment of multiple sclerosis. However, three years 
ago my Medicare insurance carrier in Virginia did reimburse for a 
multiple sclerosis drug which is given intramuscularly. Then in 1997, 
for reasons I do not understand, Medicare terminated coverage for this 
drug. Last week's announcement is the first good news I've had since my 
diagnosis.
    I was not able to utilize drug therapy during the time that 
Medicare provided coverage (that is prior to 1997). The intramuscular 
drug therapy that Medicare used to reimburse for was only available in 
May, 1996. Later that year, my doctor made me aware of the availability 
of this drug therapy. While I was already enrolled in Medicare, Part A, 
I was not enrolled in Medicare Part B, the part of the Medicare program 
that reimburses for the type of drugs that we are taking about today. 
It was not until 1997 that I applied to become eligible for Medicare 
Part B, and then I had to satisfy a waiting period. When I did become 
eligible for Part B, I literally had my prescription in hand when I was 
told that Medicare had already changed its policy and had stopped 
coverage.
    I need to be on a course of extended drug treatment. The drug that 
will now be covered by Medicare has been shown to significantly retard 
the progression of multiple sclerosis. Presently, I take high doses of 
steroids to control my spasticity. However, no matter what I do to 
control my symptoms, my disease will continue to worsen without drug 
therapy.
    Multiple sclerosis is a horrible disease. It causes the body's 
immune system to attack the nerve tissue in the brain and spinal 
column, forming patches called plaques. As the disease progresses, it 
destroys the myelin coating that surrounds the nerves and the nerves 
themselves. Intact nerves with a myelin coating are what enables the 
transmission of messages between the brain and other parts of the body. 
As the coating and nerves are progressively destroyed, the symptoms of 
multiple sclerosis get worse.
    For some inexplicable reason, in the early stages of multiple 
sclerosis, symptoms generally will come and go. Later these symptoms 
usually become permanent. Presently, I have great difficultly walking. 
I wear a brace and use a cane because my foot falls when I try to put 
my heal on the ground. I have numbness in my right hand and weakness in 
my fingers. I also have difficulty swallowing.
    Still, without drug therapy and allowing this disease to continue 
unchecked my symptoms will worsen. Many people who suffer from MS have 
brain atrophy. Cognitive skills are lost. Tremors, loss of balance, and 
control over bodily functions can ensue.
    Because of the many difficulties multiple sclerosis patients face 
on a daily basis, they cannot physically self-inject. This is 
especially true for the drug treatment that is given intramuscularly. 
The needle that is required for this injection is about 1 and a quarter 
inches and requires some skill for the proper dilution of the drug. 
This obviously makes it is nearly impossible to self-inject for a 
person who has tremors, loss of hand-eye coordination, weakness, or 
loss of sensation. Now, under the policy change, people with multiple 
sclerosis will be able to get reimbursement for intramuscular 
injections when done in a doctor's office.
    I cannot overstate my appreciation for what Congress has done to 
restore drug coverage for multiple sclerosis patients. However, since 
this policy change expires in September, I am also concerned that this 
coverage for multiple sclerosis treatment will once again be taken 
away. Today I ask that Congress not allow this to happen.
    I would be glad to answer any questions that any of the members of 
the committee might care to ask.

    Mr. Bilirakis. Thank you very much, Mrs. Rybicki.
    Ms. Lohrman.

                  STATEMENT OF ROSALIE LOHRMAN

    Ms. Lohrman. Your Honor, Mr. Chairman, my name is Rosalie 
Lohrman. I am 61 years of age. I have renal cell cancer. I had 
to retire at age 57, not because I wanted to, but because of my 
disease. I had to take an early disability. That put me into 
the system of social security, and after 2 years of being 
disabled I was put into the Medicare system. I had good 
insurance, but I had to go into the Medicare system.
    In August 1999, my doctor, Dr. John Downs from Towson, he 
suggested that I go on Interferon and Interleukin because my 
cancer had advanced quite rapidly within a short period of 
time, so we went through with applying for it. Imagine my 
surprise when I was denied. I thought surely it must be a 
mistake. My government was not going to let me down now, after 
I had paid into the system for my whole entire working life. So 
I sent in and received a second denial. Medicare wouldn't pay 
for self-injectable drugs.
    That was the time I really started getting mad about it. I 
started knocking on every door and ringing every telephone I 
could. The National Cancer Foundation, the Kidney Foundation, 
Patient Advocates, my Congressperson, anybody and everybody I 
could, and mostly my insurance company, because I wanted them 
to know when they saw the name Rosalie Lohrman who I was. I 
didn't care whether I talked to the secretary, I didn't care 
whether I talked to the president of the association that I was 
in contact with, I just wanted somebody to hear my voice and 
say that self-injectable drugs do need to be approved for 
cancer, for Interferon and Interleukin.
    At that point I felt like a nobody, because I felt like, 
well, Medicare is just seeing me as a name and Medicare number 
2192063102. But I was somebody. I am a wife of 44 years, mother 
of three sons, 11 grandchildren, a sister, a friend, and I 
thought a good American citizen, but now the system was letting 
me down. But I continued to fight. But a lot of times people 
with cancer, they don't have the stamina to fight and knock on 
every door and ring every phone, so that is an added stress.
    Then you think, well, how am I going to fight the U.S. 
Government? If they are saying no, they are saying no. So it 
was just a lot of stress, that is all I can say. It was a lot 
of stress, but it did give me the will to keep on going.
    I guess what I am saying is I became depressed. I just was 
put under added stress that I did not need to be under at that 
point. I guess the point I want to make is when you have 
cancer, sometimes you do not have the strength or the state of 
mind to fight as hard as I did.
    Some people would have gotten their first denial and said, 
well, I can't fight City Hall. I might as well just give up 
now. But you cannot have that outlook. Therefore, I must stress 
to you the need for a permanent change in Medicare to cover 
self-injectable drugs.
    Thank you.
    [The prepared statement of Rosalie Lohrman follows:]
                 Prepared Statement of Rosalie Lohrman
    Your Honorable Mr. Chairman, my name is Rosalie Lohrman of 
Pasadena, Maryland. I'm 61 years of age, I have renal cell cancer, I 
retired at age 57 on disability due to my cancer. I worked for 30 years 
at Super Fresh. In August, Dr. John Downs prescribed interferon and 
interleukin 2--the only effective treatment for my type of cancer. 
Imagine my surprise when I got my first denial. I thought surely they 
had made a mistake. How could they deny me when I needed them? A system 
I had paid into my entire working life. I got my second denial reason 
being they would not cover self-injectable drugs. Now I was getting 
mad. Here I have advanced cancer and Medicare was denying the only hope 
for me. I felt like a nobody, just a name and a Medicare # 219263102. 
Here I am a wife for 44 years, a mother of 3 sons, a sister, a friend 
and a hard-working American citizen and paid into the system every 
week. Now they are denying me a cancer treatment because they won't 
cover self-injectable drugs. I went on to my third appeal and was 
denied, but they knew who Rosalie Lohrman was. I called and got in 
touch with anybody and everybody I could. National Kidney Foundation, 
PAF office, my congressperson, my state government, general attorney's 
office, and I called my insurance company almost every day. I didn't 
want to fall through the cracks, I wanted them to know who I was and 
what I needed. I became depressed and full of stress. Now I am not only 
fighting cancer, but I am fighting the system because Medicare won't 
cover self-injectable treatment. The point I want to make is, there 
needs to be changes to Medicare coverage. Cancer patients sometimes 
neither have the strength or the state of mind to fight as hard as I 
did, therefore, I must stress to you, there needs to be changes in 
Medicare to include coverage of self-injectable drugs.

    Mr. Bilirakis. Thank you, Ms. Lohrman.
    Ms. Nancy Davenport-Ennis. Please proceed, ma'am.

               STATEMENT OF NANCY DAVENPORT-ENNIS

    Ms. Davenport-Ennis. Thank you. I must say, Mr. Chairman 
and members of the committee, that I think without question the 
witnesses that you have heard have probably told a far more 
compelling story than I.
    I would like to share with you that I am before you today 
as a cancer survivor, as a mother-in-law of a 25-year-old son-
in-law who is a cancer survivor, as an aunt of a 34-year-old 
niece who was deceased with ovarian cancer in October of this 
year.
    I sit before you as an American who is concerned about the 
health care delivery system of this country, in an effort to 
try to do something to improve it. I sit before you also as a 
founding executive director of the Patient Advocate Foundation, 
which supplies direct patient services to patients who are 
confronting access problems and insurance and job 
discrimination and debt crisis problems.
    I also sit before you as a founding executive director of 
the National Patient Advocate Foundation, which is an 
organization that has worked really very hard and very 
deliberately to try to be able to have positive dialog with 
both parties in our Nation as we seek to effect policy reform.
    I would like to thank members of the subcommittee for their 
leadership in ensuring that the issue of Medicare reimbursement 
for injectable drugs and biologicals was addressed in the 
Department of Health and Human Services funding bill. I am also 
pleased that the Health Care Financing Administration issued a 
program memoranda on March 17 that removes, for at least this 
fiscal year, the barriers to Medicare reimbursement for 
injectable drugs.
    I would like to take this opportunity to explain the 
involvement of our organization in this issue. In 1999, the 
Patient Advocate Foundation handled 29,000 calls. Many of our 
calls came from cancer patients, but we also served individuals 
with AIDS, with other serious and life-threatening illnesses.
    It is our mission to provide case managers and attorneys to 
individuals who are having difficulty gaining access to health 
care. When individuals are diagnosed with cancer or any other 
serious illness, we feel they need to devote themselves to 
fighting their disease, and not to be distracted by fighting 
for access to the care that their physicians have recommended. 
If there is a need to address access, we feel that it is our 
role as a voluntary health agency to do that for those patients 
that contact us.
    The National Patient Advocate Foundation is an organization 
that seeks to create avenues of access through policy and 
legislative reform, that serves as a voice for those who are 
seeking access in the system. Our advocacy activities are 
informed and influenced by the information that we receive 
through the counseling and case management activities through 
the Patient Advocate Foundation.
    When we observe trends in the cases that we handle, whether 
they are a pattern of denials or an apparent shift in public or 
private insurance coverage standards, we explore the reasons 
for the apparent pattern. If appropriate, we address the 
underlying policy behind a new or revised coverage decision, 
and we seek to ensure patient's continued access to quality 
care.
    It is the work of public education that brings us to this 
committee today. In 1998 and in 1999, we observed an increased 
rate of Medicare denials for certain self-injectable drugs and 
biologicals. Individuals who had previously received Medicare 
coverage for injectable products were being denied this 
coverage.
    Our calls regarding denials came from individuals with 
cancer, carcinoid syndrome, acromegaly, and AIDS, as well as 
those who had received organ transplants and renal dialysis.
    When we investigated this matter, we discovered that it had 
been the consistent policy of Medicare to provide payment for 
injectable drugs and biologicals if they are administered in a 
physician's office, even though they may theoretically be self-
administered in some settings. The question of whether they 
should be considered self-administrable and thus not covered by 
Medicare have been resolved based on, and I quote from the 
regulation, ``the usual method of administration of the form of 
that drug or biological as furnished by the physician,'' 
according to the Medicare carriers' manual.
    Under this provision, injectable drugs had long been 
reimbursed when administered incident to physician services. 
Unfortunately, in 1999, HCFA appeared to be considering changes 
in its policy of reimbursement for injectable drugs, and a 
number of carriers had begun to deny reimbursement for 
injectable drugs.
    The result for our patients was disastrous. Medicare 
patients were left with the responsibility to pay for their own 
medications and then to self-inject them. This results in 
decreased quality of care. Injectable drugs cannot be easily 
self-administered by the elderly or disabled, as you have heard 
in earlier testimony. Our patients affirmed to us how these 
changes would adversely affect their health.
    We joined with our colleagues in the Cancer Leadership 
Council to oppose efforts by HCFA to restrict reimbursement for 
injectable drugs and biologicals. In addition, we supported 
efforts to include a provision in Public Law 106-113, the 
Department of Health and Human Services.
    We would like to express our thanks to the Congress for its 
action on this matter. Regrettably, enactment of Section 219 of 
Public Law 106-113 did not result in immediate action by HCFA 
to clarify with its carriers the policy for reimbursement of 
injectable drugs. This memorandum should temporarily eliminate 
the reimbursement difficulties that our clients have recently 
encountered.
    However, we also note that the program memoranda ``may be 
discarded after September 30, 2000.'' HCFA appears to be 
relying on the technicality that the provision related to 
injectable drugs was included in an appropriations bill to 
justify discarding the program memorandum at the end of the 
year. Although we believe the intent of Congress on this matter 
is clear, it may be necessary for Congress to revisit this 
issue before the end of the fiscal year to prevent disruption 
in services to Medicare beneficiaries.
    In closing, I would like to state we believe the current 
policy in reimbursement of injectable drugs and biologicals, 
the policy announced in the March 17 program memorandum, is the 
correct one for Medicare beneficiaries and for the program. We 
urge that HCFA clarify that this policy is a permanent one. We 
will be joined by the entire cancer community in opposing any 
policy that will limit access to injectable drugs and 
biologicals.
    Thank you for indulging me.
    [The prepared statement of Nancy Davenport-Ennis follows:]
   Prepared Statement of Nancy Davenport-Ennis, Executive Director, 
     Patient Advocate Foundation and the National Patient Advocate 
                               Foundation
    Mr. Chairman and Members of the Subcommittee, I am Nancy Davenport-
Ennis, Executive Director of the Patient Advocate Foundation and the 
National Patient Advocate Foundation. I would like to thank the members 
of the Subcommittee for their leadership in ensuring that the issue of 
Medicare reimbursement for injectable drugs and biologicals was 
addressed in the Department of Health and Human Services funding bill. 
I am also pleased that the Health Care Financing Administration (HCFA) 
issued a Program Memorandum on March 17 that removes, for at least this 
fiscal year, the barriers to Medicare reimbursement for injectable 
drugs.
    I would like to take this opportunity to explain our involvement in 
this issue. The Patient Advocate Foundation is a national non-profit 
organization that serves as an active liaison between patients and 
their insurers, employers, and/or creditors to resolve insurance, job 
discrimination, and/or debt crisis matters relative to their diagnosis. 
The Patient Advocate Foundation seeks, through case managers and 
attorneys, to assure patients access to care, maintenance of 
employment, and preservation of their financial stability.
    In 1999, the Patient Advocate Foundation handled 29,000 calls. Many 
of our calls came from cancer patients, but we also serve individuals 
with AIDS and other serious and life-threatening illnesses. It is our 
mission to provide case managers and/or attorneys to individuals who 
are having difficulty gaining access to health care. When individuals 
are diagnosed with cancer or any other serious illness, they need to 
devote themselves to fighting the disease and need not be distracted by 
fighting for access to the care recommended by their physician. If 
there is a need to address access, job discrimination, or debt crisis 
issues, we are prepared to help with those matters.
    The National Patient Advocate Foundation is an organization that 
seeks to create avenues of access through policy and legislative reform 
that serves as a voice for those who are seeking access to high quality 
health care prescribed by treating physicians. Most of our activity is 
directly related to improving access to care for individuals with 
cancer. Our advocacy activities are informed and influenced by the 
information we receive through the counseling and case management 
activities in the Patient Advocate Foundation. When we observe trends 
in the cases we handle--whether a pattern of denials or an apparent 
shift in public or private insurance coverage standards--we explore the 
reasons for the apparent pattern. If appropriate, we address the 
underlying policy behind a new or revised coverage decision and seek to 
ensure patients continued access to quality care.
    It is the work of the Patient Advocate Foundation that brings us 
here today. In 1998 and 1999, we observed an increased rate of Medicare 
denials for certain injectable drugs and biologicals. Individuals who 
had previously received Medicare coverage for injectable products were 
being denied this coverage. Our calls regarding denials came from 
individuals with cancer, carcinoid syndrome, acromegaly, and AIDS, as 
well as from those who had received organ transplants and those on 
renal dialysis.
    When we investigated this matter, we discovered that it had been 
the consistent policy of Medicare to provide payment for injectable 
drugs and biologicals if they are administered in a physician's office 
even though they may theoretically be self-administered in some 
settings. The question of whether they should be considered self-
administrable--and thus not covered by Medicare--had been resolved 
based on the ``usual method of administration of the form of that drug 
or biological as furnished by the physician,'' according to the 
Medicare Carriers Manual. Under this provision, injectable drugs had 
long been reimbursed when administered incident to physician services.
    Unfortunately, in 1999 HCFA appeared to be considering changes in 
its policy of reimbursement for injectable drugs, and a number of 
carriers had begun to deny reimbursement for injectable drugs. The 
result for our patients was disastrous. Medicare patients were left 
with the responsibility to pay for their own medications and to then 
self-inject them. This results in decreased quality of care. Injectable 
drugs cannot be easily self-administered by elderly or disabled 
Medicare patients, and feared their care and health would be adversely 
affected by a change in HCFA policy. Our patients affirmed to us how 
these changes would adversely affect their health.
    We joined with our colleagues in the Cancer Leadership Council to 
oppose efforts by HCFA to restrict reimbursement for injectable drugs 
and biologicals. In addition, we supported efforts to include a 
provision in Pub. Law No. 106-113, the Department of Health and Human 
Services Appropriations Act, to prevent HCFA from restricting coverage 
for injectable drugs.
    We would like to express our thanks to the Congress for its action 
on this matter. Regrettably, enactment of Sec. 219 of Pub. L. No. 106-
113 did not result in immediate action by HCFA to clarify with its 
carriers the policy for reimbursement of injectable drugs and 
biologicals, and we again sought the intervention of Congress on this 
issue. This Memorandum should temporarily eliminate the reimbursement 
difficulties our clients have recently encountered. However, we also 
note that the Program Memorandum ``may be discarded after September 30, 
2000.'' HCFA appears to be relying on the technicality that the 
provision related to injectable drugs was included in an appropriations 
bill to justify ``discarding'' the Program Memorandum at the end of the 
year. Although we believe the intent of Congress on this matter is 
clear, it may be necessary for Congress to revisit this issue before 
the end of the fiscal year to prevent disruption in services to 
Medicare beneficiaries.
    We believe the current policy on reimbursement of injectable drugs 
and biologicals--the policy announced in the March 17 Program 
Memorandum--is the correct one for Medicare beneficiaries and for the 
program. We urge that HCFA clarify that this policy is a permanent one. 
We will be joined by the entire cancer community in opposing any change 
in the current policy for reimbursement of injectable drugs and 
biologicals.

    Mr. Bilirakis. Thank you very much, Ms. Davenport-Ennis.
    Let me ask you, do you have an opinion as to why you think 
HCFA all of a sudden issued the program memorandum in August 
1997 changing its policy on self-administered drugs by virtue 
of adding the language ``the individual patient's mental or 
physical ability to administer any drug is not a consideration 
for this purpose''? Why?
    Virtually all of us raised that question with Mr. Hash. Was 
anybody satisfied with his response?
    Ms. Davenport-Ennis. I think in response to your question, 
Mr. Chairman, certainly we have asked Mr. Hash that question. 
We took our entire policy committee in to meet with Mr. Hash 
shortly after that policy memorandum was issued. We do not 
understand why it was issued, nor why there was that change.
    Mr. Bilirakis. What has changed, other than--well, I was 
going to say other than maybe pressure from Congress? But heck, 
back in October we sent that letter forward. What has changed 
between when they changed that policy and now all of a sudden 
on March 17 they decided to go back to that original policy?
    The head of HCFA cares about the health of people and 
reimbursements as much as anyone. Mr. Hash certainly does. We 
all do up here. We throw stones at each other, which is very 
unfortunate, but I know we all believe that we all care.
    I have been really scratching my head, wondering why in the 
world would they do this all of a sudden; just pull it out of 
the air? Then basically, in effect, they admitted their mistake 
by changing it all just last week.
    Ms. Story or Ms. Davenport-Ennis, were any of you 
contacted, or do you know of any other patient groups who may 
have been contacted prior to their having issued that August, 
1997, PM?
    Ms. Davenport-Ennis. I am not aware that any other group 
within the Cancer Leadership Council that we work with actively 
were contacted. However, I certainly could not speak with 
absolute assuredness that they were not. But I have no working 
knowledge or recollection.
    Mr. Bilirakis. Ms. Story, you have no knowledge of that?
    Ms. Story. No.
    Mr. Bilirakis. Dr. Steinberg, do you have any impression of 
that, any idea of any contact that you may have heard?
    Mr. Steinberg. No.
    Mr. Bilirakis. Mr. Hash said over and over and over again 
that--is any representative of HCFA here? Are you taking notes? 
Please. I more often than not ask that they stay over to listen 
to the other panels, and I appreciate very much HCFA having 
done that.
    Mr. Hash said that the 1997 memorandum would clarify and 
even expand, and he kept referring to expanding, expanding 
coverage. Does anybody agree with that?
    Ms. Rybicki, you of course very painfully described for us 
how your physical and mental condition would have kept you from 
self-administering the drug, and Ms. Sizemore, with a hell of a 
lot of courage and guts, certainly described how her husband 
would not have been able to do it.
    Frankly, and I say this with HCFA present and with my 
colleague to my left being here, the phrase that they have 
thrown in here regarding not taking into consideration the 
patient's mental or physical ability is what really troubles me 
I think probably more than anything else. Where did that come 
from? I just cannot imagine.
    At this point I will defer to Mr. Strickland.
    Mr. Strickland. Mr. Chairman, I detected that Ms. Lohrman 
may have wanted to say something.
    Mr. Bilirakis. I am sorry, did you? Please proceed, ma'am.
    Ms. Lohrman. What they are saying is that they do not want 
the bill passed, or the law changed to include injectable 
drugs, is that what they are saying? That you don't want it to 
where other people can get this drug?
    Ms. Rybicki. No, that is not what I am saying at all. I am 
hopefully speaking on behalf of everybody who needs to have it.
    Ms. Lohrman. I misunderstood her. I was going to say, that 
should be up to the doctor and the health care provider.
    Mr. Bilirakis. Dr. Steinberg made that clear in his written 
testimony. I missed some of his oral because I had some 
community health center people out there who wanted to see me. 
We have so much up here in our place.
    All right, back to Mr. Strickland.
    Mr. Strickland. Thank you, sir.
    I was just sitting here listening to your testimony, and a 
lot of thoughts came to my mind. A thought, I guess, that was 
most troubling to me is that we are rationing health care in 
America today. I don't think there is any question about that. 
We need to face up to that fact. We need to ask ourselves if 
that is what we want to do or want to continue to do, but we 
are rationing health care.
    There are people who need medications who cannot get them, 
cannot afford them. That is the state of affairs in America 
today.
    I was also thinking of a quote by Hubert Humphrey who said, 
you judge a society by the way it treats those in the dawn of 
life, the children; those in the twilight of life, the sick and 
the elderly; and those in the shadows of life, the disabled and 
those who are in most need. Your stories are gut-wrenching.
    I say to myself, this is America. We are a rich country, 
and we do what we choose to do with our resources. We just 
simply have not chosen to provide health care to the people in 
this country who need it.
    I strongly think we should do what we can to correct this 
problem that has been brought to us. I think that is a step 
that we can take and should take to guarantee you that in 
September you will not have to worry about your benefits being 
eliminated. But I have a question for Dr. Steinberg.
    Dr. Steinberg, we have had some people suggest that we go 
back--that HCFA go back to the old rules to cover whatever 
injectable drugs HCFA covered before 1997. I wonder, though, if 
going back to the old rules is going to resolve the controversy 
about self-injectable drugs. Is it conceivable that drugs that 
are injected by a doctor today could become for self-injection 
in the future, or even in pill form?
    Mr. Steinberg. It is more than conceivable, it is likely. I 
think the point that you are making simply highlights the fact 
that even sitting around talking about how to define ``self-
injectable,'' it is sort of a micro issue which hopefully we 
can do something with, but it is not the issue, right?
    The fact that certain drugs are self-injectable and 
therefore are not covered, you know, we are talking about 
whether this person can self-inject or that person can self-
inject. The reality is that there are hundreds of other 
medicines that are oral that may have as big an impact on 
patient's survival or quality of life. We have not even talked 
about them today.
    This is an anachronistic issue, this self-injectability. As 
I say, it is a rare drug that you could not train at least one 
patient to self-administer. So if the definition is could 
somebody do it, well, it would wipe out coverage for almost any 
injectable.
    Mr. Strickland. So what in your judgment, as a physician, 
is the best answer to this dilemma that we face? If you were 
us--if you had the power to make a decision to solve the 
problem, what would you suggest?
    Mr. Steinberg. I guess I would suggest the following; that 
if the Congress, through its legislation, has decided that, at 
least to date, drugs that are not self-injectable or drugs that 
are self-injectable will not be covered, as I indicated in my 
testimony, it is not possible for you or somebody at HCFA or 
anybody else other than the physician caring for a patient to 
make an informed judgment as to whether or not a patient can or 
cannot safely inject a drug.
    So if we have to live within the box related to self-
injectability, I would leave that decision to the physician. 
But at the same time, by the same token, I would encourage you 
to recognize that this is the micro issue, and the macro issue 
is that drugs have become an absolutely essential component of 
health care today.
    It does not make a lot of sense to have a program that is 
supposed to enable people to get necessary health care and to 
deny them access to what may be for them the most critical 
component.
    The reason I highlighted chronic disease is that the 
treatments for chronic disease tend to be medication. They are 
not surgery, they are not hospitalization. Those are treatments 
for acute disease. But Medicare is supposed to cover acute and 
chronic disease.
    So I guess if I could wave a magic wand, I would make the 
definition of ``self-administrable'' up to the physician. If 
the physician deemed it self-administrable, then it would not 
be covered under this law. But I would urge you to revise the 
law to make all drugs available.
    Mr. Strickland. Thank you, sir.
    Thank you, Mr. Chairman.
    Mr. Bilirakis. Thank you, Mr. Strickland. It bothers me 
that we--do any one of you out there doubt that the entire 
Congress of the United States wants to do and will make every 
possible, honest effort to include prescription drugs in 
Medicare?
    Mr. Burr.
    Mr. Burr. Thank you, Mr. Chairman. I am not sure exactly 
where to start. I have a ton of notes I wrote, and probably 
half of which I will get to.
    Julie, let me just say one thing, I don't know that I could 
have done what you just did. But for that I am very thankful. 
It sent me back to visions, Mr. Chairman, of the FDA Reform 
Act, the Modernization Act. People have since asked me how we 
had the passion to go 2\1/2\ years through two different 
Congresses to accomplish a bill that people said in the 
beginning could not be done, and my answer was, it was because 
of the individuals that came 1 year to lobby me about the 
sickness that they had that did not return the next year, 
because they had a sense of urgency that we never figured out 
then.
    Clearly that is the human side, sometimes we forget that 
not only do we have policy decisions to make, we have human 
faces behind the issue to remember, and an urgency that goes 
along with it that affects lives, and affects families in ways 
that many of us don't know.
    I want to highlight one thing Julie said in her comments. 
That was that there was a fear that the actions taken by HCFA, 
right or wrong, would be replicated in the private sector. That 
is a fact. There is significant history to prove that that is 
the case. I am not saying that it is always bad, but it is a 
statement that you can accept with a great degree of certainty.
    If we produce a product that is good, the private sector 
will replicate a good product. If we produce a product that is 
bad, that does not take into consideration all of the things 
that it should, because it was the Health Care Financing 
Administration, the private sector will take the opportunity to 
replicate that.
    I know there is somebody here from HCFA. I will not ask who 
they are. I hope they will carry that message back, and I hope 
they will also carry the message back that I have heard, and 
that is that regardless of how much I think of Mike Hash and 
Nancy-Ann, I think that we all agree that what we have heard so 
far does not give us a great deal of comfort that we have 
addressed the problem, whether short-term or long-term.
    I would like to be specific on a few questions, if I can.
    Dr. Steinberg, you said earlier that were we to design 
Medicare today, it would have included a drug benefit. I 
totally agree with you. I would also add a caveat to that. Were 
we to design Medicare today, it would not resemble in any way, 
shape, or form the model that we currently have.
    Would you agree with that?
    Mr. Steinberg. I have a little more difficulty responding 
to the latter part. Clearly I agree with you that drugs would 
be included. I guess in order to answer the latter part of the 
question, I would have to know a little more specifically which 
aspects----
    Mr. Burr. Let me just use the analogy that I see sort of 
behind this issue that we are here on today. Because of 
technology, we are trying to make a determination about whether 
we cover a drug that technology allows us to self-inject which 
before was something we did in a hospital or doctor's office. 
Is that a fair observation on my part?
    Mr. Steinberg. Yes. As I mentioned in my testimony, both 
oral and written, I think the current situation, whether it is 
due to the Social Security Act or whether it is due to how it 
has been interpreted, provides perverse incentives to both 
manufacturers and to physicians.
    As I tried to describe, to have a situation where a 
manufacturer reformulates a product that could be administered 
much more simply one way but it is not covered that way, have 
them reformulate it so it can be only administered 
intramuscularly by a professional and therefore be covered, 
that should not be what the effect of a law is.
    Similarly, to have a physician prescribe a second best 
product simply because they have to administer it, it is more 
expensive but it is covered, that also is a perverse incentive.
    So I guess my view is that whatever policies we have should 
be policies that encourage innovation, that also encourage I 
will say appropriate high quality health care, and some 
accountability for that. Because otherwise we could spend every 
dollar in the country, but it does not mean it would be well 
spent.
    Mr. Burr. How does the private sector delivery system adapt 
to the ever-changing availabilities in medicine, whether they 
are pharmaceuticals or devices or techniques?
    Mr. Steinberg. They do it as imperfectly as anybody else.
    Mr. Burr. But they do it without congressional legislation 
forcing it to happen. Is that right?
    Mr. Steinberg. They sure do, but they do it under different 
types of constraints. They do it under contractual constraints, 
under policy constraints.
    For the past 10 years, I have been a member of a national 
Blue Cross/Blue Shield medical advisory panel. That panel is 
the panel that makes determinations about whether or not drugs, 
devices, procedures are safe and effective.
    I can tell you that it is a laborious process. It involves 
a considerable amount of work, and many of the decisions are 
difficult, oftentimes because the requisite information that 
one needs to make those judgments is not available.
    The issue of making decisions about new technology is 
problematic everywhere, and I believe that no matter what 
system we have, we are still going to have to wrestle with 
which new technologies are appropriate to use and which are 
not.
    Mr. Bilirakis. The Chair would announce that we are now 
going into a second round, and the Chair yields to the 
gentleman from North Carolina, Mr. Burr.
    Mr. Burr. The gentleman from North Carolina would thank the 
Chair for letting him lead off this series.
    Ms. Story, let me just ask you a very simple question. Were 
there drugs and biologics that Medicare paid for in 1997 that 
after this memorandum are not reimbursable today?
    Ms. Story. Yes.
    Mr. Burr. A lot?
    Ms. Story. A good number.
    Mr. Burr. So for anybody that would stand up and say that 
nothing has changed, that is misinformed? Would that be an 
accurate statement?
    Ms. Story. Yes.
    Mr. Burr. I tried to be very selective as to how I chose 
those words.
    Mr. Chairman, I would like to enter into the record a 
letter dated February 29, 2000. It was a letter from the Health 
Care Financing Administration. It referenced the memorandum.
    I think that it is important that--are you familiar with 
that, Ms. Story? I think it was from a South Carolina--staff 
can make that available.
    Mr. Bilirakis. Without objection, that will be done.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T4029.021
    
    [GRAPHIC] [TIFF OMITTED] T4029.022
    
    Mr. Burr. What did that letter say?
    Ms. Story. Basically it said that with Interferon, 
Interferon that had been covered prior to 1997 was no longer 
being covered.
    Mr. Burr. This is the letter dated February 29, 2000?
    Ms. Story. Yes. That would be correct.
    Mr. Burr. What kind of impact does that have?
    Ms. Story. It really means, for a patient that has some 
form of cancer that requires treatment with Interferon, that 
they are not going to get it.
    Mr. Burr. Is that a common drug for the treatment of 
cancer?
    Ms. Story. Certain kinds of cancer.
    Mr. Burr. Certain types?
    Ms. Story. Yes.
    Mr. Burr. How does that letter fit with Mr. Hash's 
testimony that nothing has changed?
    Ms. Story. It doesn't, because it has. After 1997 there 
were changes, and our patients are not having drugs covered. 
They don't have access to the drug. They don't have the money 
to pay for the drugs themselves. They don't have professional 
care or expertise that they might need, should it be self-
injectable.
    Interferon can be a dangerous drug for a patient home alone 
that does not know what to look for. They have lost all that, 
in addition to all the other losses that they face.
    Mr. Burr. Mr. Chairman, I have a lot more, but I don't know 
that it necessarily would achieve any other answers than what I 
have heard so far.
    My only hope, let me say this to all of the witnesses--I 
want to personally thank them for their willingness to come 
here and share with us. It is really the intent, I won't say of 
this committee but I will say of this Congress, to figure out, 
one, how to extend drug coverage to seniors, because in fact 
those who say if we designed it today, it would be part of it, 
they are right. But I think it is also time that we try to 
figure out what the delivery system for health care for our 
seniors and for ourselves will look like in the future.
    As Julie pointed out, the actions taken by government 
entities have a significant influence on the policies of the 
private sector, of private sector entities at some point after 
that.
    I am confident that we can get this closer to perfect than 
many give us odds on doing, Mr. Chairman, like the FDA. I am 
convinced it will not be easy, but I think there are some 
people who are also convinced that we are not going to go away 
until we finish. For your leadership on that, I am thankful.
    I yield back.
    Ms. Sizemore. May I say something, please? This knowledge 
that I learned just this last week of how Medicare decisions 
can affect the private sector is not something that a lot of 
people know. I shared this with my family, I shared it with a 
man on the plane flying here, and they were blown away. They 
could not believe that that is what would happen.
    I hope you all realize that a lot of the American people do 
not know this. If they found out about this, I don't know what 
their reaction would be, but you would have, I am sure, at your 
private offices your phone lines ringing off the hook over 
this, because it would affect everyone.
    But unfortunately, most of the American people do not know 
that this could happen. They do not realize it, because they 
are busy with their lives.
    Mr. Burr. Mr. Chairman, let me just say to Julie, I hope 
she will give us a couple months before she tells the other 249 
million people, because I think we can accomplish a lot in that 
period of time.
    Mr. Bilirakis. If we truly want to, all of us, if we truly 
want to.
    Mr. Strickland.
    Mr. Strickland. Thank you, Mr. Chairman. I think I can be 
brief.
    I had an experience over the last weekend in Columbus, 
Ohio. I was eating in a senior citizens center, and an older 
gentleman told me that he had just been diagnosed about a year 
earlier with Parkinson's disease.
    He says, I take six prescriptions. One of my prescriptions 
costs over $200 a month. My wife, the only way we can make it 
is for my wife to continue to work. I asked him how old his 
wife was, and she is 78 years old.
    I listened to you talk about cancer and multiple sclerosis 
and various illnesses and diseases. I am thinking, we ought not 
to be making these kinds of choices. We ought not to be 
deciding who gets medicine and under what conditions.
    It is true that, if not all of us in the Congress, most of 
us in the Congress want a prescription drug benefit under 
Medicare, but how we do that is very important, a very 
important question that needs to be resolved.
    Dr. Steinberg, I just have a question for you that I think 
I know the answer to, but I am just wanting to get this on the 
record. You work with a lot of people, and some of the people 
you work with are poor people. Some of the people you work with 
are people with modest incomes, or even people with very 
healthy incomes.
    As a physician, knowing what you know, will a prescription 
benefit that is targeted only toward low-income people solve 
the problem that we face in this country, or even the problems 
that many people who are represented here at this table face?
    Mr. Steinberg. Absolutely not. What you say is definitely 
the case. As I mentioned, I had many patients of modest means, 
they would not be considered poor, they would be considered 
working class, in East Baltimore who simply did not fill 
medications, prescription medications, because they didn't have 
enough means to do so. So it is not limited to the poor.
    If I could, I would also like to say that, as you all 
realize, a prescription benefit is not a prescription benefit 
is not a prescription benefit.
    To just say that we will add a prescription benefit will 
not necessarily solve any problem. It depends on how that 
benefit is designed, not just who it is targeted at.
    So I would encourage you to understand that for those who 
are on chronic medications that they have to fill monthly, that 
they are, as we found in our study, spending $5,000, $10,000 a 
year. And to give $1,000 worth of coverage to someone who has a 
need for $10,000 worth of medication is like saying, we will 
give you enough to treat your diabetes, but we don't have 
enough to treat your heart failure or angina. And I am not sure 
we have accomplished a lot in that sort of circumstance.
    Mr. Strickland. I represent a district in southern Ohio, an 
Appalachian district, where the median income for a family of 
four is less than $22,000. So you see the dilemma that many of 
the people I represent face.
    I want to thank each of you for coming here. I want to 
thank our good chairman for his leadership. He is a wonderful 
person to work with, and I think all of us on this committee 
value him.
    Mr. Bilirakis. Thank you very much for that, Ted.
    Dr. Steinberg, what you are really saying is that there--
anything we do should have a stop loss attached to it. We can 
use the term ``catastrophic'', although we don't like to use 
that term, for obvious reasons.
    Is that what you are saying, basically, that there ought to 
be----
    Mr. Steinberg. I believe there is a need for the high end 
coverage. There are many ways it could be designed, but my 
point is to cap a benefit, as even many private policies 
currently do, at $1,000, it does not cut it for somebody who--
--
    Mr. Bilirakis. That is something, frankly, and I think Mr. 
Strickland knows that, we have been working awfully hard on. 
Granted, the process here being what it is, you would like to 
think that you can get all of the people, both sides of the 
aisle, together in a room and get things worked out, but 
unfortunately, that just does not work. So you sort of have to 
first convince your colleagues on your side to come up with a 
position, and then try to share.
    Mr. Strickland. Mr. Chairman, most people are not as 
cooperative as we are.
    Mr. Bilirakis. Getting back to Mr. Hash's written 
testimony, and he is not here and I hope he does not mind, I 
certainly don't mean to attack him, but it says here in the 
second page, at the top of the second paragraph, the top of 
page 2 of his written testimony, ``Our clinicians at HCFA are 
concerned that creating such a narrow exception to the ban on 
Medicare coverage for outpatient drugs could create an ethical 
dilemma for compassionate physicians when caring for patients 
who can self-administer drugs but cannot afford the drugs they 
need. This approach could compound the current inequities in 
coverage, and may also create program integrity problems.''
    I don't disagree with that. But so what, I guess is the 
question I ask. On one hand we say we want all prescription 
drugs covered. We have had a history of covering some of them.
    Are we helping the situation by taking away some of that 
coverage that has been there, in existence, for all these many 
years? I think not. We need to retain that partial coverage, 
expand upon it, and improve upon it.
    Again, I am having problems--all of us here are having 
problems trying to understand the reason for that PM back in 
August 1997.
    Ms. Davenport-Ennis, yesterday's edition of Health News 
Daily quotes a senior HCFA official about the agency's 
perspective on their report policy change. Are you familiar 
with what I am referring to?
    Ms. Davenport-Ennis. Very.
    Mr. Bilirakis. I will just go ahead and read it: ``the 
guidance had clarified that although self-administered drugs 
are not covered under Part B, a carrier may choose to provide 
reimbursement if such a drug is administered by a physician in 
order to teach the patient the correct self-injection 
procedure.''
    I guess the question is, does HCFA's view of their program 
memorandum satisfy your concerns, or this more recent program 
memorandum, if you will, satisfy your concerns, or does it 
really raise a fear that they are trying to undermine, and I 
hate to put it this way, but to undermine Medicare coverage of 
injectable therapies?
    I don't mean that as strictly as it sounds, undermine. But 
that is really what has been happening.
    Ms. Davenport-Ennis. I would like to respond with some 
specificity. I do feel that my concern at reading that today is 
that once again it appears that HCFA is saying to their 
carriers, this is still a discretionary matter, that you may 
choose to interpret this the way you feel is appropriate.
    We do not read the law that was passed as being 
discretionary. We read it as having very specific instruction 
for the carrier.
    We find over and over again with both the physicians who 
refer their patients to us and the thousands of patients with 
whom we interact that there seems to be a global plea which is, 
simply, help us understand what the rules are, whether they are 
in the private health care sector or whether they are in the 
Medicare sector.
    If you will help us understand what the rules are, then we 
will have confidence in that and we will feel reassured that if 
we follow those rules, then in fact the result will be that we 
have the coverage we think we have. We continue, since the 
memorandum of 1997, in all sincerity, to find that the 
reasonable expectations that we had as we interpreted the 
language evaporate from time to time. We find inconsistencies, 
depending upon which carrier memorandum we might be reading 
about which particular product in which particular State.
    So when we read what the Health News Daily had to say 
yesterday we found it very troubling, because I can see in my 
office the phones beginning to ring again with carriers who may 
in good faith be trying to follow the direction that perhaps 
they think is being reflected in the Health News Daily, only 
again to maybe issue another memorandum, as the one that was 
just issued in South Carolina on February 29, that was so 
troubling and that once again caused those phones to start to 
ring.
    So it is a huge concern for us. We also, in closing, must 
say that when the U.S. Congress looks at any issue that 
involves health care, and once you have had thorough hearings 
on the matter and you voted it out of committee and you voted 
it off the House floor and off the Senate floor, and it becomes 
a law of the land, within our organization, I can assure you, 
we view that law as stout. We view that law as one that 
deserves respect from every citizen, every entity that is being 
directed by that law.
    We have great concern when it comes to a sense on any part 
that it is a discretionary matter when the U.S. Congress passes 
a law.
    Mr. Bilirakis. That should tell us something.
    Mr. Steinberg. Mr. Chairman, can I comment on that?
    Mr. Bilirakis. Without objection.
    Mr. Strickland. No objection.
    Mr. Bilirakis. Please.
    Mr. Steinberg. It seems clear from listening today that the 
language in the statute, at least to a number of people, is 
ambiguous. I would just like to say that anything your 
committee can do to clarify what you think that language should 
mean would take on the effect of eliminating the problem with 
discretion or variability in interpretation.
    So I guess I would ask for all the help you can provide to 
clarify this.
    Mr. Bilirakis. And to turn it around, we need your help. We 
are an ivory tower. We have probably more physicians maybe in 
the Congress than we have ever had. But the truth of the matter 
is that we have some practical experience, but not really very 
much. Yet, we have to make these very tough decisions. We don't 
know how it is going to affect the patient out there and the 
medical provider. That is why it is so very important that we 
do get your inputs to help us out.
    Dr. Steinberg and Ms. Davenport-Ennis, particularly you 
mentioned it, over the years, and you can imagine in my 
position, I just cannot even walk by a doctor back home without 
him stopping me and complaining about this or that; and Ted 
gets that, we all do.
    But the biggest complaint that we have had is, look, I want 
to follow the law. I want to follow the law, but it is 
inconsistent. We need some clarification and some consistency 
on how to file the claims and the reimbursements.
    When my son started his medical practice--he is also an 
internist--he could not afford any of the computer systems and 
all that equipment, and he had the pegboard system which you 
are probably familiar with. Maybe most doctors start out that 
way.
    It was in January at the beginning of a new Congress, so I 
had a lot of time at home. I spent a lot of time in his office 
working with the pegboard system, and trying to understand the 
different classifications, the coding and things of that 
nature. My God, what you all go through, thanks to us.
    Well, you are really all wonderful, and the courage, of 
course, of Ms. Sizemore, Ms. Rybicki, and Ms. Lohrman, have 
shown, and of course the knowledge that Dr. Steinberg and Ms. 
Story and Ms. Davenport communicated to us is very valuable.
    I like to think that we will address prescription drugs, 
the overall picture, in time to keep what you are concerned 
about from happening. I don't know. But it takes two to tango, 
and that is a problem.
    We might do something. If we don't, we certainly ought to 
shore up this area. I know with cooperation with people like 
Mr. Strickland and so many others, we are going to do it. Thank 
you very much for being here. God bless you.
    Again, you are available for any written questions we may 
want to offer to you to respond?
    Ms. Davenport-Ennis. Yes.
    Ms. Sizemore. Yes.
    Mr. Bilirakis. The hearing is concluded.
    [Whereupon, at 2:06 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:
Responses for the Record of Michael Hash, Deputy Administrator, Health 
                     Care Financing Administration
    Question 1. According to your testimony, it was never HCFA's intent 
for the August 13, 1997 directive to reduce or limit the Medicare 
program's longstanding coverage of professionally-administered 
injectable drugs. Is that an accurate reading of your testimony?
    Answer: Yes. The August 13, 1997 memorandum was a clarification of 
the longstanding HCFA policy with respect to coverage for drugs and 
biologicals that cannot be self-administered. In fact, the memo 
emphasized that Medicare claims processing contractors may cover 
generally self-administered drugs when a provider is administering the 
drug in order to teach a patient how to self-administer. We did this to 
encourage more coverage in these situations.
    Question 2. The Committee heard testimony, however, that a number 
of professionally-administered injectable drugs which were routinely 
reimbursed prior to August 13, 1997 were denied coverage after that 
date. Can you confirm or do you deny that such has been the case?
    Answer: This is possible. Like many specific coverage policies in 
Medicare's history, determination of whether a specific drug can be 
self-administered has been left up to the medical directors of each 
claims processing contractor. Instructions to Medicare claims 
processing contractors on this issue have been provided through the 
Medicare Carrier Manual and were updated in 1995. Those instructions 
stated that drugs may be covered only if they ``are of the type that 
cannot be self-administered.'' Some carriers expressed confusion over 
this policy, which may have led to improper reimbursements. In order to 
address carrier confusion, we issued a memorandum clarifying the 
national guidance in our carrier manual on August 13, 1997.
    Question 3. From what the Committee has learned about these 
denials, the Medicare carriers involved are asserting that their 
actions to restrict Medicare are a result of the August 1997 
transmittal. How do you respond?
    Answer: Instructions to Medicare claims processing contractors on 
this issue have been provided through the Medicare Carrier Manual and 
were updated in 1995. Those instructions stated that drugs may be 
covered only if they ``are of the type that cannot be self-
administered.'' Rapid advancements in pharmacolgical and medical 
developments caused confusion in carriers' interpretation of Carrier 
Manual instructions, which may have led to improper reimbursements. The 
August 13, 1997 memorandum was a clarification of the longstanding HCFA 
policy in this area. This memorandum did not increase restrictions on 
beneficiary access to prescription drugs. It clarified for carriers the 
criteria for making drug coverage decisions as required by the Social 
Security Act.
    Many of these types of coverage decisions are left to carriers' 
discretion, and we try to ensure their decisions are consistent with 
statute. The August 1997 memorandum reminded carriers that according to 
the way the statute is written, coverage decisions should be based on 
the nature of the drug or biological in question rather than on the 
capacity of any one individual.
    Question 4. It has come to our attention that the Medicare carrier 
serving South Carolina--Palmetto Government Benefits Administrators 
(PGBA)--has informed cancer caregivers that injections of Interferon 
for cancer patients will not be covered unless the carrier is convinced 
that the injection incident to a physician's professional services is 
``medically necessary. This requirement is in direct contradiction to 
the reimbursement process that existed prior to August 1997, and 
appears to ignore the Program Memorandum issued by HCFA on March 17, 
2000. Of even greater concern to the Committee, however, is the 
statement by a senior officer at PGBA that HCFA has recommended the 
carrier adopt and maintain this course of action. What is your response 
to this set of circumstances? What will you do to correct the course of 
action adopted by PGBA, and when will the Committee be informed of 
corrective action you will take?
    Answer: Any items or services covered by Medicare by law must be 
medically necessary. Policy relating to medical necessity, as described 
in section 2049.4 of the Medicare Carriers Manual, remains unchanged, 
both before and after the August 1997 memo. Medical necessity 
determinations are made at carriers' discretion. Policy relating to the 
issue of injectable drug types is found in a separate section of the 
Medicare Carriers Manual, section 2049.2. The August 13, 1997 memo, as 
well as section 219 of the Appropriations Act, only refer to Carrier 
Manual section 2049.2, and not the section on medical necessity.
    Question 5. As you know, the vast majority of my colleagues support 
the establishment of a broad Medicare drug benefit. However, the case 
of coverage of professionally-administered injectable drugs raises an 
important issue that must be addressed as we move forward on the 
broader reform effort. The President's proposal to establish a new Part 
D optional drug benefit specifically excludes the currently covered 
outpatient prescription drugs. The current confusion regarding 
injectable drugs has raised concerns that, if the President's proposal 
were enacted into law, these drugs would not be covered under either 
Part B (due to ongoing carrier actions and the time-limited nature of 
the March 17, 2000 Program Memorandum) or under Part D (due to the 
design of the President's plan). In the meantime, there are patients 
who used to have some important injectable drugs covered by Medicare 
and now find themselves in a bureaucratic snafu which is leading to 
denials of coverage. While Congress and the Administration are 
exploring the creation of a broad Medicare drug benefit, will HCFA take 
definitive steps to resolve the problem faced by these seniors and the 
apparent confusion of the carriers?
    Answer: Under the President's proposal, prescription drugs would be 
covered either under Parts A and B or the new Part D. Those that are 
covered under A or B would retain such coverage to the extent that the 
benefit has not expired, at which point Part D would pick up the 
coverage. Those drugs that are not covered under Parts A or B would be 
covered under Part D.
    We believe that all prescription drugs would be covered and no one 
would be ``caught in the middle.'' We are holding a series of town hall 
meetings on the issue of injectable drugs. When the restrictions 
included in the FY 2000 Appropriations Act expire, we plan to publish a 
proposal in the Federal Register offering several different options for 
determining ``self-administered,'' including options which take patient 
characteristics into account. When finalized, this definition would 
serve as a basis for determining coverage under Part B versus Part D.
    Question 6. The March 17, 2000 Program Memorandum advises carriers 
to discard it after September 30, 2000. This statement suggests to many 
of us that it may be HCFA's intent to restrict Medicare program's 
longstanding coverage of professionally administered injectable 
therapies after that date. What do you think will happen to seniors and 
people with disabilities who depend upon Medicare coverage of these 
drugs after September 30, 2000? In light of the continuing action taken 
by Palmetto Government Benefits Administrators and other carriers, will 
HCFA amend the Program Memorandum to make permanent the current ban on 
the restriction of this coverage? If not, then why?
    Answer: Rather than amend the Program Memorandum, we would like to 
pursue the issuance of a proposed rule to solicit public comment on the 
definition of the term ``self-administered'' to solicit input from the 
broadest possible range of stakeholders. We attempted this previously, 
but postponed the proposal out of concern that we not appear to violate 
the appropriations language, In lieu of a broader solicitation through 
the Federal Register, and as instructed in the Appropriations Act 
conference report, we are scheduling town hall meetings to allow 
interested parties to discuss this issue and available options. The 
first meeting is set for May 18th in Baltimore. The information 
collected during these town hall meetings will provide HCFA with 
guidance in considering future steps on this topic that was in effect 
before the August 1997 memorandum.
    Question 7. Included in your final rule on Medicare's Prospective 
Payment System for Hospital Outpatient services (HCFA-1005-FC) issued 
on April 7, 2000, you state ``Drugs that can be self-administered are 
not covered under Part B of Medicare.'' Yet in section 219 of the 
Consolidated Appropriations Act of 1999, Congress directed HCFA to 
continue Medicare's coverage policy that was in effect prior to August 
13, 1997, which covers drugs usually administered incident-to a 
physician's services. Do you view your March 17 Program Memorandum 
issued to implement section 219 of the Consolidated Appropriations Act 
of 1999 as consistent with the statement in the April 7, 2000 final 
rule?
    Answer: The Prospective Payment System for Hospital Outpatient 
services final rule states ``Drugs that can be self-administered are 
not covered under Part B of Medicare (with specific exemptions for 
certain oral chemotherapeutic agents and antiemetics, blood-clotting 
factors, immunosuppressives, and erythropoietin for dialysis 
patients).'' This statement is consistent with the current Medicare 
payment policy.

                                
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