It's Still A Chemotherapy Concession

[gpawelski]

Some Oncologists Look for New Ways To Profit From Cancer Treatments, New York Times Reports

The New York Times on Tuesday examined how limits placed on profits that physicians can make on cancer drugs have left some oncologists "searching for new income," such as by "performing additional treatments that" have "the best reimbursements, whether or not the treatments" benefit the patients. Medicare until 2005 paid a markup of 20% to 100% for many cancer drugs, along with injectable treatments for arthritis and other diseases.

In 2005, Congress changed the reimbursement system to pay physicians 6% more than the average price for a given treatment. The reduction in reimbursements "did not reduce overall federal spending on cancer care," which has increased slightly in the last two years, and the difference in spending "mostly represented profit that doctors had made on the drugs," the Times reports. However, cancer doctors say the "change did nothing to reduce a larger problem in cancer treatment," according to the Times.

The decrease in payments has made it difficult for smaller practices to break even on cancer drug purchases because the practices often do not buy enough of any drug to receive rebates or discounts from drug manufacturers. Some oncologists have attempted to increase profits by "performing chemotherapy more often or installing multimillion-dollar imaging machines where they profit when their patients receive diagnostic scans" and by "putting new pressure on cancer patients to make out-of-pocket drug copayments," according to the Times.

The situation "offers a vivid example of how difficult it may be to rein in the nation's runaway health care spending without fundamentally changing the way doctors are paid," the Times reports. Robert Geller, a former oncologist and senior medical director at Alexion Pharmaceuticals, said oncologists likely will continue to find ways to profit from Medicare as long as they are paid by procedure and not for time spent with patients.

http://www.nytimes.com/2007/06/12/business/12cancerpay.html?_r=1&oref=slogin

Drug Makers Encourage Profits

In related news, the Times examines how before the change to Medicare reimbursements for cancer treatments, pharmaceutical companies "sometimes calculated to the penny the profits that doctors could make from their drugs" and sales representatives from the companies "shared those profit estimates with doctors and their staffs," according to industry documents that have become public in a federal civil lawsuit against drug makers. The lawsuit, filed by cancer patients and health insurers, alleges that marketing practices of drug companies caused them to be overcharged for oncology medicines because list prices for the drugs were higher than the actual cost of the drugs for physicians.

http://www.nytimes.com/2007/06/12/business/12cancerside.html

[gpawelski]

The shift, more than 20 years ago, from the institution-based, inpatient setting to community-based, ambulatory sites for treating the majority of the nation's cancer patients has prompted in large part additional costs to the government and Medicare beneficiaries. The Chemotherapy Concession gave oncologists the financial incentive to select certain forms of chemotherapy over others because they receive higher reimbursement.

This was first brought to attention at a Medicare Advisory Panel meeting in 1999 in Baltimore. There was a gastroenterologist in attendance who complained that Medicare had cut his reimbursement for colonoscopies from $400 to $108 and how all the doctors in his large, multi-specialty internal medicine group were hurting, save for two medical oncologists, whom he said were making a killing running their in-office retail pharmacies.

Typically, doctors give patients prescriptions for drugs that are then filled at pharmacies. But medical oncologists bought chemotherapy drugs themselves, often at prices discounted by drug manufacturers trying to sell more of their products and then administered them intravenously to patients in their offices.

Not only do the medical oncologists have complete logistical, administrative, marketing and financial control of the process, they also control the knowledge of the process. The result is that the medical oncologist selects the product, selects the vendor, decides the markup, conceals details of the transaction to the degree they wish, and delivers the product on their own terms including time, place and modality.

A joint Michigan/Harvard study authored by Drs. Joseph Newhouse and Craig C. Earle, entitled, "Does reimbursement influence chemotherapy treatment for cancer patients," confirmed that before the new Medicare reform, medical oncologists chose cancer chemotherapy based on how much money the chemotherapy earned the medical oncologist. A survey by Dr. Neil Love, "Patterns of Care," showed results that the Medicare reforms still were not working. It was still an impossible conflict of interest.

A patient wants a physician's decision to be based on experience, clinical information, new basic science insights and the like, not on how much money the doctor gets to keep. A patient should know if there are any financial incentives at work in determining what cancer drugs are being prescribed.

It's not that all medical oncologists are bad people. It's just that the system is rotten and still an impossible conflict of interest. Some oncologists prescribe chemotherapy drugs with equal efficacies and toxicities. I would imagine that some are influenced by the whole state of affairs, possibly without even entirely admitting it. There are so many ways for humans to rationalize their behavior.

There is some innate goodness of people who go into oncology. At the time when most oncologists practicing today made the decision to become oncologists, there was no Chemotherapy Concession. Most of them probably had a personal life experience which created the calling to do battle against the great crab. At the time when people make their most important decisions in life, they are in the most idealitstic period of their lives.

The government wasn't reducing payment for cancer care under the new Medicare bill. They were simply reducing overpayment for chemotherapy drugs, and paying cancer specialists the same as other physicians. The government can't afford to overpay for drugs, in an era where all these new drugs are being introduced, which are fantastically expensive.

Although the new Medicare bill tried to curtail the Chemotherapy Concession, private insurers still go along with it. What needs to be done is to remove the profit incentive from the choice of drug treatments. Medical oncologists should be taken out of the retail pharmacy business and let them be doctors again.

[gpawelski]

"results are egregious....The most severe culprit being Bristol-Meyers Squibb with an 1131% markup on its drug Vepesid. Other companies mark ups range from 28% to almost 700%."


3 Drug Makers Are Convicted in Reimbursement Overcharges

By BLOOMBERG NEWS

A federal judge ruled yesterday that AstraZeneca, Bristol-Myers Squibb and Schering-Plough must pay damages for overcharging on certain drugs paid for by Medicare, pension funds, insurers and patients.

Judge Patti B. Saris of United States District Court in Boston found the companies liable in a nationwide class-action lawsuit over drugs administered by doctors. She dismissed claims against Johnson & Johnson while giving plaintiffs’ lawyers until Aug. 1 to provide calculations of damages for the other companies.

The plaintiffs argued that the drug makers had sold medications to doctors at steep discounts to the “average ********* price” that Medicare and pension funds paid, while secretly encouraging them to claim full reimbursement from insurers. The plaintiffs are seeking hundreds of millions of dollars in damages.

In a 183-page opinion, Judge Saris wrote: “The Medicare statute itself created a perverse incentive by pegging the nationwide reimbursement for billions of drug transactions a year to a price reported by the pharmaceutical industry, thus putting the proverbial pharmaceutical fox in charge of the reimbursement chicken coop. The different pharmaceutical companies unfairly took advantage of the system by setting sky-high prices with no relation to the marketplace.”

The judge found that AstraZeneca, which is based in London, acted “unfairly and deceptively” by causing the publication of false and inflated average ********* prices for its prostate cancer drug Zoladex, which exceeded doctors’ acquisition costs by as much as 169 percent.

Bristol-Myers, of New York, caused the publication of false and inflated average ********* prices for five drugs, including Taxol, which had spreads as high as 500 percent. Warrick, a subsidiary of Schering-Plough, which is based in Kenilworth, N.J., inflated average ********* prices for its generic drug albuterol sulfate in a range of 100 percent to 800 percent, the judge said.

A spokeswoman for AstraZeneca, Laura King, said that her company “has competed responsibly with respect to pricing and marketing of drugs, and we have acted at all times in accordance with the law.”

A Bristol-Myers spokeswoman, Laura Hortas, said the company believes that it “is not responsible for the average ********* price reimbursement benchmark used by private insurers and Medicare, and that its own pricing, sales and marketing practices were fair and reasonable.”

The company plans to appeal a damages award, Ms. Hortas said.

http://www.nytimes.com/2007/06/22/business/22Drug.html

[gpawelski]

The Health Affairs article (1), given play in The New York Times (2), showed that the prescribing behaviors of oncologists caring for Medicare patients between 1995 and 1998 were influenced by the lucrative economics and their drug retailing arrangements. The study's investigative team was comprised of prominent researchers, including a Dana-Farber oncologist. When interviewed, the investigators were emphatic that the study found strong links between oncologists' financial interests and their clinical decisions.

And while the Harvard/Michigan study published in Health Affairs showed results before the new Medicare reform, the Patterns of Care study showed results that the Medicare reforms are still not working (3).

Few healthcare professionals outside the oncology community were surprised. It is common knowledge that most oncologists integrate drug revenues into their practices to bolster their incomes.

The apparent importance of the findings notwithstanding, the Community Oncology ******** (COA) flatly rejected the news (4). COA released an e-mail bulletin, "The Remarkable Story of Community Oncology," just after the articles broke. The opening sentence called the study's findings "incredibly outrageous and unsubstantiated" and "an unbelievable rehash." Sentence two referred to "incomprehensible statements by government bureaucrats, so-called oncology advocates, well-paid consultants, non-practicing physicians, payers, and specialty pharmacies." In other words, COA cast aside the study, presumably because critics cannot appreciate oncology's complexities and because they are almost certainly misguided or harbor malevolent intent.

Not Acceptable

There are many reasons why this kind of reaction is unacceptable, but the most obvious is that there appears to be a real problem here. The study's investigators are reputable, the journal is credible, and the findings are damning. True, the data were as much as a decade old and from Medicare patients only, but the practice in question - oncologists' prescribing decisions being altered to optimize drug revenues - is still widespread. There is little reason to believe that another analysis with updated data would obtain a different result.

But COA protested too much. It refused to admit that the practice represents a potential conflict. It claimed that community oncologists provide the "highest quality care" but failed to offer data in support of that statement. Ultimately, it avoided the issue entirely, deflecting attention to other, more praiseworthy aspects of oncology practice. And it ridiculed the credibility of the professionals who broached the issue.

To the non-oncologist, such a dismissive response is viewed as self-serving and protectionist. It demeans oncologists' important work and confirms critics' suspicions that an unsavory but hidden practice is ongoing. But worse, it suggests a higher regard for financially rewarding drug arrangements that for patient quality of care. An appropriate response might have soberly acknowledged the findings. It would have then refuted those findings with other data, or committed to addressing the issue.

Getting Serious

There are serious issues that demand serious responses. The American health system is rapidly approaching ********* collapse due to exploding costs, in large measure because a lack of transparency has created a culture of opportunism and waste exploited by groups throughout the continuum of supply, care, and finance. The Health Affairs article suggest that community oncology is squarely part of the problem.

In the interests of transparency and the reputations of its practitioners, community oncologists should immediately develop a response to the concerns raised by the article. You should release data on:

- the prevalence of the practice of oncologists profiting from the drugs they prescribe;

- the markups involved, and how those revenues translate to income;

- oncologists' adherence rates to evidence-based chemotherapy guidelines; and

- differences in the practice patterns of oncologists who do and do not financially benefit from the drugs they prescribe.

You should follow this information with proposed guidelines to resolve potential conflicts between clinical practice and financial incentives.

Providing Leadership

More than any group, physicians lay claim to a higher purpose and so must also provide the leadership that can help reestablish trust in our doctors and a more effective healthcare system. Community oncologists can and should provide that leadership.

You could advocate for and implement pricing transparency in oncology drug treatment. As Jerry Reeves, MD, urged in a recent interview (5), the charges to patients and other payers should be transparent and open, not hidden. And conflicts of interest should be avoided.

Of course, oncologists should be paid fairly for the services they provide. Continuing to work with Medicare and private payers, you should aim to transition practices away from indirect drug revenues and replace those with higher direct fees for professional services.

As Dawn Holcomb (6) and Linda Bosserman (7) argued last year in this journal, you could lead an effort to develop data on clinical outcomes and cost that can drive future practice and policy change. You could accelerate positive change within your profession by encouraging incentives for patients to choose doctors who have demonstrated care that is safer, more effective, and more efficient.

Anything less will be merely protecting the interests of oncologists over the interests of patients.

References

(1) Jacobson M, O'Malley AJ, Earle CC, Pakes J, Gaccione P, Newhouse JP. Does reimbursement influence chemotherapy treatment for cancer patients? Health Affairs 2005;25:437-443.

(2) Abelson R. Pay method said to sway drug choices of oncologists. The New Your Times March 16, 2006.

(3) Patterns of Care, Volume 2, Issue 1, 2005

(4) Community Oncology ********. The remarkable story of community oncology [news-letter].March 16, 2006.

(5) Klepper B. The new focus on accountability [interview with Jerry Reeves, MD]. Commun Oncol 2006;3:241-243.

(6) Holcomb DG. Is oncology compatible with specialty pharmacy? Commun Oncol 2005;2:173-181.

(7) Bosserman L. Specialty pharmacy and MVI:ill-advised systems, wasteful, and harmful [editor's note]. Commun Oncol 2005;2:178-180.

Community Oncology Vol 3/Num 7: Having Your Say July 2006

Center for Practical Health Reform