Bloomberg Law
July 2, 2018, 2:01 PMUpdated: July 6, 2018, 9:20 PM

No Assurance About Insurance Under Experimental Drug Law (Corrected)

Jeannie Baumann
Jeannie Baumann

When President Donald Trump signed into law a dying patient’s right to pursue unapproved treatments without FDA oversight, he called it “a bill for the people,” adding he did it without regard for insurers and drug companies.

“I don’t care about them. I really don’t,” Trump said during the bill signing about a month ago for legislation known as “right to try” (Pub. L. 115-176).

The president may not care about insurers, but their decisions on how to handle right-to-try coverage could determine whether patients are taking on financial risks as well as health risks.

“Medicare doesn’t pay for experimental drugs,” Holley Thames Lutz, an attorney who specializes in Medicare and Medicaid reimbursement as well as clinical research issues, told Bloomberg Law. Medicare will pay for certain off-label uses of a drug the Food and Drug Administration already has cleared for the market, but “even things that are approved by the FDA, Medicare doesn’t always pay for right away.”

On right-to-try coverage, “Medicare’s gone about as far as it’s going to go, and I don’t see how it’s going to be covered,” said Lutz, who works in Dentons’ Washington office. The Centers for Medicare & Medicaid Services is the single largest payer for health care in the U.S., and their policies can drive coverage decisions across the health-care system.

What’s less clear is whether either public or private insurers will pay for any care associated with administering the experimental treatment, such as doctor’s visits or hospital stays. Medicare patients enrolled in qualifying clinical trials will be covered for any treatments they would have received anyway under standard care, but Medicare won’t pay for the investigational drug or device itself, under its clinical trials policy.

$300,000 Price Tag?

If companies like BrainStorm Cell Therapeutics Inc. are any indication, the cost of these experimental drugs could be pricey. The New York and Israel-based biotechnology company recently backed off plans to offer through right to try an unapproved drug to treat the neurogenerative disease ALS—plans that included charging as much as $300,000 for the unapproved treatment. And that’s just for the drug. Medicare has about a $1,300 deductible for a hospital stay, but that stay will cost about $10,000 without insurance, according to data from the Agency for Healthcare Research and Quality. Those costs could add to the more than 43 million U.S. households that already have problems paying off their medical debt.

All coverage decisions boil down to whether it’s reasonable and medically necessary to cover a treatment, Kate Gallin Heffernan told Bloomberg Law. In the research context, while investigational drugs are generally not covered by Medicare given their unproven efficacy, the National Coverage Determination (NCD) for Routine Costs in Clinical Trials (310.1) defines which routine care costs of qualifying clinical trials (i.e. ancillary care provided in the context of a trial) will be covered. However, drugs provided through expanded access and right to try are arguably for treatment, and not research purposes, and so the associated routine costs do not likely fall under that NCD. Heffernan, a Bloomberg Law advisory board member and research attorney with Verrill Dana LLP in Boston, helped lead a webinar last month on the impact of the right-to-try law.

If the bar for accessing a drug under right to try is lower compared to patients who use avenues that require some FDA oversight, Heffernan said, one question she’s heard raised is whether or not that would decrease an appetite for covering it. “Given the amount of publicity around the right-to-try issue, will that have a negative impact on what is already happening in the expanded access context?” Heffernan asked, referring to an existing FDA program that provides access to unapproved drugs outside of a clinical trial.

No CMS Right-to-Try Policy

While the CMS’s clinical trial policy has been around for two nearly decades, there is no such policy for drugs provided under the FDA’s expanded access program. Those coverage decisions rest in the hands of local Medicare contractors, an agency spokesperson confirmed to Bloomberg Law. Additionally, “CMS has not reviewed the right-to-try law and does not have a policy specific to the law,” the spokesperson said.

Medicare seemed to be paying for costs outside of the drug for a patient treated under a state right-to-try law, Naomi Lopez-Bauman told Bloomberg Law. She is the director of health-care policy for the Goldwater Institute, a Phoenix-based think tank that spurred the passage of right-to-try laws in 39 states as well as nationally. Her comment stemmed from a conversation she had with the wife of a patient who received treatment under a state right-to-try law.

While there is no explicit allowance to pay for right-to-try treatments, there’s no restriction against it either, Lopez-Bauman told Bloomberg Law in an email. “We should expect to see Right to Try covered in some cases.”

The clinical trials policy is unlikely to apply to right-to-try coverage decisions as these requests for coverage fall under a treatment use of investigational drugs. The FDA grants more than 99 percent of these requests under expanded access, which is sometimes called compassionate use.

Under expanded access, Heffernan said, drug companies usually provide single-use dosage of the investigational drug free of charge, and then third-party payers have covered the ancillary care that goes with it, such as the hospital stay.

The right-to-try law allows drug companies to charge for direct costs, Heffernan said, noting that has raised concerns about whether those charged will “cause third-party payers to reevaluate across the board what they’re paying for in the context of FDA expanded access as well.”

Medicare Coverage

Lutz cited the Medicare Benefit Policy Manual section that says it won’t cover items and services related to and required as a result of services that aren’t covered under Medicare (Chapter 16, Section 180). “This is true when the complication arises during the same stay that was required to get the non-covered service,” Lutz said. But if the Medicare beneficiary goes home and gets an infection or complication because of the noncovered item or service—requiring reasonable and necessary services to treat the complication—she said Medicare will pay for that.

If a Medicare beneficiary experiences a complication because of a right-to-try drug, that patient likely would only be eligible for reimbursement if the complication didn’t happen during the hospital stay when they received the unapproved drug, Lutz said.

But Medicare will pay for necessary items or services unrelated to an uncovered service during the same hospital stay “For example, a Medicare beneficiary is an inpatient for elective plastic surgery and falls and breaks his leg. Medicare would pay for the broken leg-related services” because they’re not related to the surgery, Lutz said.

Under right to try, Lutz said, it may be difficult for the provider to determine if complications arose due to the experimental drug or if they are related to the disease’s natural progression. That might make it difficult to demonstrate what services qualify for reimbursement.

(Corrects eighth paragraph to reflect that Medicare will pay for certain patient expenses in clinical trials. )

To contact the reporter on this story: Jeannie Baumann in Washington at

To contact the editor responsible for this story: Randy Kubetin at