September 19, 2019
3 min read

CMS changes include ‘first pull incentives’ for antimicrobial development

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Corneilus (Neil) J. Clancy, MD
Cornelius (Neil) J. Clancy

CMS recently issued a final rule that will change the way hospitals will get reimbursed for new antimicrobial therapies, potentially removing some barriers to their use.

The changes, which were made to the Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System for the 2020 scal year, will take effect Oct. 1. CMS acknowledged that new antimicrobial therapies are currently in short supply — a problem that experts argue could cause dangerous setbacks for modern medicine. CMS explained that drug-resistant infections are a public health crisis that affects more than 2 million Americans and result in thousands of deaths annually, with most new diagnoses and fatalities attributed to Medicare beneciaries.

“The upcoming CMS changes to hospital antibiotic reimbursement are a significant step in the right direction, and they may have an impact on the market,” Larry Edwards, CEO of Tetraphase Pharmaceuticals, told Infectious Disease News. “They should help level the playing field so that clinicians can choose the most appropriate antibiotics for their hospitalized patients without fear of jeopardizing the hospital's finances.”

To encourage the development and use of antimicrobials that could target these resistant infections, CMS has created an alternative new technology add-on payment (NTAP) pathway, which would no longer require new antimicrobial drugs to meet the “substantial clinical improvement” criteria. This new pathway would increase the NTAP from 50% to 65% and would additionally increase the add-on payments to 75% for certain antimicrobials designated by the FDA as a Qualified Infectious Disease Product (QIDP). CMS explained that modernizing the evidence requirement and payment level will support innovation and improve outcomes for patients.

“This increase in the NTAP rates will better support physicians in their struggle to treat resistant infections within a financially constrained hospital system,” Michael Dunne, MD, chief scientific officer at Iterum Therapeutics, and a vice-chair of the Antimicrobials Working Group, told Infectious Disease News. He added that the new NTAP pathway is a welcome step toward removing barriers to reimbursement of new antibiotics.

“While we are encouraged by this first step, we look forward to working closely with members of Congress who are trying to stabilize the market for antimicrobials and encourage the significant additional investments required to bring these drugs to patients.”

Paul Schaper, MPH, executive director of policy and government relations at Merck, added that the policy changes are an important first step to addressing the reimbursement barriers to appropriate use of novel antibiotics and highlight CMS’s commitment to addressing antimicrobial resistance. However, he referenced an article in the Health Affairs blog which noted that the Inpatient Prospective Payment System Rule will only impact a small number of antibiotics for a limited duration and will not address the fundamental access and innovation challenges for novel antibiotics.


“Broader reimbursement reforms — either by CMS or through legislation — are urgently needed to enable appropriate patient access to novel antibiotics and support efforts to secure long-term industry investments in antibiotic [research and development],” he explained.

Cornelius (Neil) J. Clancy, MD, associate professor of medicine and director of the XDR pathogen lab and mycology program at the University of Pittsburgh and chief of the infectious diseases section in the VA Pittsburgh Healthcare System, referred to the FY 2020 Final Rule as the “first pull incentives” for antimicrobial development in the U.S. and noted they are an important step forward for the field. He agrees, however, that legislation is needed.

“As welcome as the reforms brought by the CMS FY 2020 Final Rule are, sustainable antibiotic development also requires passage of bipartisan legislation currently under consideration by Congress,” he told Infectious Disease News. “The DISARM Act would codify and extend reforms to [Diagnosis-Related Group] classifications and increase reimbursement for use of new antibiotics that carry a Qualified Infectious Diseases Product designation. I encourage those interested in the future of antibiotic development to review this legislation, engage in advocacy with their Congressional representatives, and educate other health care providers and local communities on the importance of doing everything we can to combat antibiotic-resistant infections before it's too late.”

Other changes announced will address increasing the wage index for certain low-wage index hospitals, including many rural hospitals; ensuring Medicare beneciaries will have access to a world-class health care system by unleashing medical innovation, removing barriers to competition; and modernizing payment policies for medical devices that meet the FDA’s Breakthrough Devices designation for expedited FDA approval or clearance. – by Caitlyn Stulpin

Disclosures: Clancy reports no relevant financial disclosures. Dunne is employed by and owns stock in Interim Therapeutics Plc. Edwards is employed by Tetraphase Pharmaceuticals. Schaper is an employee of Merck.