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ISSUE 1: ~DIN<; OF ~CP.L INVES=G.~CN IN ME UNWED s~2 Peruses We nx~ trials concern raised pST the niece ~ eat charges In Me ~riro~ for clinical investigation art in rei~t for patient care may mad to i~asir~ly inadequate furring of Mini r ~ r ~ (2-7, 12, 13~. I~aslitionally, furry ~ of clinical investigation in the Uhi~P~ States has been provided from several sources, including governmental and nonprofit foundation research grants, support from the pharmace~tin=1 and med;~1 device industry, and patient care charges. I his last category includes the direct support of faculty and residents for postgraduate physician training, and the Medicare I rib education adjustment which was included in rP~nition of me higher cams of care prairie in an environment where a great amount of teat am clinical research are performed. until recently, this category also included indict subsidies provided by insurance cc ~ antes and other third party payers through their tacit agreement to pay the costs inourre] by patients participating in clinical research protocols and the higher costs in teaching hospit=1s. m ere are several factors that will affect continued funding of the patient care costs associates with clinical investigation, including: l) Changes in support of graduate mP~;~1 education, both direct costs and the indireab education adjustment 2) Met containment pressures from third parties to reduce hospital admissions and lengths of stay 3) Selective contracting and c3is~nting by ~6 and Hens 4) Differentials in inpatient and outpatient support of education and rearm casts. Over many year'; heath care axe; in me United Stamp have i~asKI at a pace beyond that of general inflation. For example, Medicare hospital payments have more than Marbled every five year; since the program was initiated in 1966 (12~. The reasons for these increases nave Oxen cletalle~, c~s~, and debate in n~s studies and forums. Despite major efforts by governmental and non-governmenta1 bodies during the post six to seven years there Hal been a continued upward surge in the cost of health care. Thus, it is expecter that those who pay the medial bills for single indivi~rp~s and large grcup6 may move vigorously to cut costs by denying payments for all services where any investigational protocol is involved (2, 3, 5~. Furthermore, the third party payers have been unresponsive to . . . . . 2See Appendix B: Hanft, p. 31; Bach, p. 36; and RabRin, p. 48. 6

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arguments that it is in their long term interests to fund clinical trials and related clinical investigation. The ~ ittee conclude d that it is wholly inappropriate for third party payers to deny reimbursement for all appropriate and necessary patient care costs (not marginal costs owing to investigational intervention) that would have been incurred in any case simply begat a patient is on an investigational Prokoool. Such denial would be tantamount to an abrogation of a con~ractua1 obligation. Medicare regulations already will not pay for care of Medicare beneficiaries for investigational therapies that may be the best available treatment (13~. These policies interfere with the patient-doctor relationship and patient free choice. They also add a potential burden to the NIH An funding clinical investigation because of the absence of funding of necessary and appropriate patient care oosUs an] by limiting patient access to investigational protocols (14~. Finally, they l mit the hcspi~a1's able ity to continue to support early clinical investigation which is a significant portion of the costs of clinical investigation. . . The marginal, incremental costs above standard patient care costs attributable to the investigational protocol should be borne by the sponsoring institution -pharmaceutical company, NIH, or a foundation. The remittee also believes that third Party pavers should seek to . . . . . participate An Bunting of cl ~ con trials above and beyond reimbursing for standard patient care CONS because of the potential to Increase the efficacy and cost effectiveness of diagnosis and treatment. While the short term fiscal benefit achieved by employers, health insurance policy subscribers, and the public through the denial of Payment for services involved in clinical investigation is real, the long term negative impact face failure to support The conduct of clinical investigation may greatly exceed the short term gains. Excluding the potential direct economic consequences resulting from a reduction in human illness, it is possible that the delay of major advances in medical therapeutics may deny to the public the saving of lives, increases in societal productivity, and the improvement in the quality of life for thousands or even millions of individuals. -A Reccmmendations 1. Payment of Standard Patient Care Combs Third party payers (government and non-government) should pay the necessary and appropriate patient care costs for beneficiaries enrolled ~ approved clinical investigation protocols. This requires a clarification in current Medicare regulations involving definitions of medically rely care. State regulatory agencies should require conforming changes by all other third party payer policies. 7

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2. Payment of Patient Care Casts in Specific Disease Settings There are d;Ar~CrC for which appropriate and required care involves investigational protocols. Such disrac-" include certain types of cancer, genetic doses a, and possibly other severe, life threatening disPo=-c. In these ~~F=~-' third party payers (go v o t and non-gov o t) should pay the standard patient care casts while casts related to the investigational Lions should be borne by the sponsoring agency. 3. Payment for Clinical Trials me Committee believes that third party payers should seek to participate in funding of clinical trials above an] beyond reimbursing for standard patient care casts. This approach provides the potential to increase the efficacy and cost effectiveness of diagnosis and treatment, thereby allowing for the possibility of significant financial gain in the long run. 4. - . Increase in NIH Funding Clinical Investigation me data presented to the committee indicated that the aurx~nt being spent for clinical trials represents approx~nate~y six to seven percent of the total NUI budget (15~. Alff~a~h it was not forcible to Foamed the Overall son being sperrt on clinical irrvestigation, it was the cc~nittee's j~nt that i~as~ su` - rt for clinical imrestigation ~1d be valuable, preferably fern new sac;, but as a product of redistribution if rotary 8