WASHINGTON - The Bush administration announced yesterday that it would conduct a lottery to select 50,000 people who will receive Medicare coverage of prescription drugs in the next 18 months, before drug coverage becomes available to all Medicare beneficiaries in 2006.
The lottery is part of an unusual experiment to test the new benefit among people with cancer, rheumatoid arthritis, osteoporosis, multiple sclerosis and a few other diseases.
In authorizing the experiment, Congress provided $500 million. Forty percent of the money, or $200 million, is earmarked for oral cancer drugs that patients can take on their own, as a replacement for drugs they receive by injection or infusion in a doctor's office.
Tommy G. Thompson, secretary of health and human services, said that 500,000 to 600,000 people might be eligible to compete for the 50,000 slots.
The government, he said, will select participants at random from the pool of applicants, alternating between cancer patients and those with other serious diseases.
"Through this coverage," Thompson said, "seniors will save thousands of dollars on essential medicines that they can take at home." Moreover, he said, all applicants who meet the eligibility criteria "will have an equal chance to get into the demonstration" if they apply by Sept. 30.
The new project offers a preview of the drug benefit that will be offered in 2006 to all 41 million elderly and disabled people on Medicare.
Beneficiaries will generally have to pay the same share of drug costs in the demonstration project as in the standard Medicare drug coverage that begins in 2006. They will also face a large gap in coverage, like the "doughnut hole" in the standard Medicare drug benefit. But under both programs, co-payments will be reduced or eliminated for low-income people.
Under the experiment, Medicare will cover 26 specific drug products including tamoxifen, for breast cancer; Gleevec, for certain types of lymphoma and gastrointestinal tumors; thalidomide, for multiple myeloma; Iressa, for lung cancer; Enbrel and Humira, for rheumatoid arthritis; and Avonex and Betaseron, for multiple sclerosis.
For people with multiple sclerosis or rheumatoid arthritis, Thompson said, the new program could slash costs by 75 percent, to about $4,000 a year, from about $16,000. For a person with annual income less than $12,600 (135 percent of the poverty level), he said, the cost would be no more than $60 a year for any drug in the demonstration program.
Patients and their advocates welcomed the initiative and promised to publicize it.
"It appears that 25,000 cancer patients will benefit from this program and gain coverage for life-saving medications," said Wendy K.D. Selig, vice president of the American Cancer Society. "Coverage for oral cancer drugs was a huge priority for us."
People are ineligible for the demonstration project if they already have comprehensive drug coverage from another source like Medicaid or an employer-sponsored health plan or Tricare, the military health care program.
Sens. Olympia J. Snowe, a Maine Republican, and John D. Rockefeller IV, a West Virginia Democrat, hailed the initiative, which is modeled on legislation they introduced in 2001. "Increasingly," Snowe said, "new cancer drugs are available in an oral form," and patients battling cancer should not have to make unnecessary trips to the doctor's office to receive treatments.
The new Medicare law, which President Bush signed Dec. 8, called for the demonstration project. Rockefeller said he wished the administration had started the project in early March, as the law envisioned.
Under the demonstration program, Medicare will also cover certain drugs for ovarian cancer (Hexalen), hepatitis C (Pegasys and PEG-Intron) and a bone disorder known as Paget's disease (Fosamax).
Federal officials said the new initiative would be run by TrailBlazer Health Enterprises, a subsidiary of the Blue Cross and Blue Shield plan in South Carolina, under a federal contract for $8.7 million. The drug benefit will be administered by Caremark, one of the nation's largest pharmacy benefit managers.
In the past, some Medicare officials said they did not want to pay for unapproved uses of certain expensive cancer drugs, even though cancer specialists frequently prescribe such "off-label" uses. Selig said she was pleased to see that the demonstration program would pay for thalidomide to treat multiple myeloma, a use that she said the Food and Drug Administration had not explicitly approved.