Horse Trading on Six Protected Classes?

Section 176. That's the section of Senate Finance Committee Chairman Max Baucus' Medicare package that really caught our attention. The section, titled "Formulary Requirements with Respect to Certain Categories and Classes of Drugs," refers to the six "protected" drug classes.

One of the more controversial provisions of the Medicare Part D prescription drug benefit was the creation of six "protected" classes. Under the program, plan sponsors must cover "all or substantially all" drugs in six categories: antipsychotics, antidepressants, antiretrovirals, immunosuppressants, anticonvulsants and antineoplastics.

If you're Eli Lilly (Zyprexa) or Bristol-Myers Squibb (Abilify), for example, you don't have to be concerned about whether your drugs will be on a Part D plan formulary-they have to be. To read more on this, click here.

But the protections weren't actually written into law; the provision was enacted through subregulatory guidance, which means the Centers for Medicare & Medicaid Services can change the practice at any time.

Section 176 changes all that. Under the Baucus proposal, the guidance would be codified into law, making the provision permanent. The law could be amended but would require rulemaking-a much longer and more onerous process than under the current set-up.

How did that get into the Medicare package? After all, we heard repeatedly that anything judged to be overly controversial would be left out of the must-pass legislation, which includes the physician payment fix.

According to Congressional staffers, Section 176 was added to the bill after hearing it from patient groups. Specifically, staff were lobbied by the Access to Critical Medications Coalition, a collection of advocacy groups which includes: the AIDS Institute, American Academy of HIV Medicine, American Academy of Neurology, American Psychiatric Association, Cancer Leadership Council, Epilepsy Foundation, HIV Medicine Association, Mental Health America, National Alliance for the Mentally Ill, National Alliance of State & Territorial AIDS Directors, National Kidney Foundation, Project Inform and the TEN Project.

But there must be more to it than that. During a January 2007 Senate Finance Committee hearing on the Part D benefit, the Democrats' first on price negotiation since taking the majority in the mid-term elections, lifting some protections on the six drug classes were cited time and again by expert witnesses as the first logical steps in reducing costs of the program.

So why is Baucus doing the exact opposite and making the protections more permanent? One theory we have at The RPM Report is inclusion of Section 176 was in exchange for industry support of the Senate's (specifically Finance Committee ranking Iowa Republican Chuck Grassley) Physician Payment Sunshine Act, which requires public disclosure of marketing relationships between drug companies and doctors. To read our take on Sunshine, click here.

The argument against that theory is that the six "protected" classes provision is absent from Grassley's Republican alternative to the Baucus package. We're going to monitor the progress of Section 176 but we'd love to hear any theories or insider knowledge on how it made it into the Baucus bill. Just email us.

Baucus is huddling today with House leadership on a stripped down version of the Medicare package and says legislation will make it through by the fourth of July. Whether the provision makes it into Baucus version 2.0 will be an indicator of how hard patient groups and drug companies are lobbying for it behind the scenes.