Some See Cancer Care as Case Study for Cost Control Initiatives

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, the New York Times reports.

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 (Berenson [1], New York Times, 6/12).

In related news, the Times examined 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 (Berenson [2], New York Times, 6/12).