Federal judge halts Bush effort to restrict Medicare drug payments

WASHINGTON In a key test of the Bush Administration’s efforts to rein in Medicare drug expenses, a federal judge has blocked a White House plan to restrict payments for medicines used to treat chronic obstructive pulmonary disease.

As reported by The New York Times, Judge Henry Kennedy Jr. of Federal District Court ruled that the U.S. Centers for Medicare & Medicaid Services could not legally restrict reimbursements for COPD drugs to only “the least costly alternative.” Such restrictions are not permitted under the law that created the Medicare Part D drug benefit program, Kennedy ruled, because they give the Secretary of Health & Human Services, the parent agency of CMS, too much discretion over payments and services rendered under Medicare.

The drug at issue in the payment dispute is made by Dey, a unit of generic drug maker Mylan Inc. Kennedy’s decision is significant, because it could ease government restrictions on other higher-cost medications for Medicare beneficiaries. Administration officials expressed disappointment in the ruling, saying it would raise Medicare costs.