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The Obama administration said on Tuesday that it would test new ways to pay for prescription drugs in an effort to slow the growth of Medicare spending on medicines while encouraging doctors to choose the most effective treatments for their patients. The announcement comes as presidential candidates including Hillary Clinton, Senator Bernie Sanders and Donald J. Trump are calling for government action to protect consumers against high drug prices. Federal officials said the government spent $20 billion last year under Part B of Medicare for prescription drugs administered in doctors’ offices and hospital outpatient departments. (Pear, 3/8)

Currently, Medicare Part B pays the average sales price of the drug, plus 6 percent. Under the proposal that would start later this year, doctors and hospital outpatient centers would get the average price plus 2.5 percent, along with a flat fee of $16.80 per drug per day. (Appleby, 3/9)

The development could lead to an overhaul of reimbursements under Medicare Part B, a program that pays about $19 billion a year to providers—and is outlined in a proposed rule issued Tuesday by the Centers for Medicare and Medicaid Services, which runs the program. The initiative is part of a strategy by the Obama administration and Congressional lawmakers to tackle health-care spending that is driven in part by rising prescription-drug prices, an issue that has loomed in the presidential race and ranks high among public concerns in polls. The administration has sought information on pricing from pharmaceutical companies and has been probing ways to help consumers keep their drug costs in check. (Armour, 3/8)

Patrick Conway, chief medical officer for CMS, said in a telebriefing that the plan isn’t designed to save money. But he left little doubt that the ultimate aim is to eliminate incentives that may encourage doctors to select higher-priced medications that benefit their bottom lines but not their patients. Conway called the current system — in which doctors are paid the average sales price plus 6 percent for handling and administration costs — a “perverse incentive structure that doesn’t benefit patients or the system.” He said oncologists have told CMS they sometimes feel pressure from their health-care systems to pick more expensive drugs to bolster profits. (McGinley, 3/8)

Under the elaborate experiment being proposed by Medicare, parts of the country would operate under different payment rules for physician-administered medications. The results would then be compared, and if new approaches can maintain or improve quality while showing potential to curb costs, permanent changes could follow across the whole country. ... It's unclear how doctors and hospitals will respond. In the past, smaller oncology clinics have complained that Medicare cuts have a disproportionate impact on them. (Alonso-Zaldivar, 3/8)

Facing skyrocketing drug prices, the Obama administration is proposing potentially major changes in how Medicare pays for some medications, including high-priced specialty drugs used to treat cancer and other costly diseases. The proposed regulations, unveiled Tuesday, would initially affect a relatively small share of the nation’s nearly $500-billion drug tab. But if widely implemented, they could overhaul the way Medicare, America’s largest insurer, pays for drugs, by linking payments to the effectiveness of medications, not just their prices. (Levey, 3/8)

Ted Okon, executive director of the Community Cancer Alliance, tweeted soon after the announcement that the pilot “is the most contrived, absurd experiment on cancer care I have seen.” ... The American Society of Clinical Oncology lashed out at the Innovation Center's intent to “modify drug reimbursement based on Zip codes,” calling it “inappropriate for CMS to manipulate choice of treatment for cancer patients using heavy-handed reimbursement techniques.” ASCO added that physicians “did not create the problem of drug pricing and its solution should not be on their backs.” (Dickson, 3/8)