A few days ago the New York Times ran yet another article exploring the deep financial conflicts in oncology drug prescribing. This one described two facts. First, even though Medicare has limited the profits of oncologists who prescribe drugs, Medicare’s total cancer care expenditures keep rising because oncologists have found new treatments and procedures to bill for.
Second, the rules guiding Medicare reimbursement for cancer and drug rebates are complex, compromising the financial abilities of some oncologists—particularly those in smaller practices—to administer drugs to their patients. As a result, those patients often must receive the drugs in more costly and possibly less-friendly hospital settings.
Over the last year, the Times has been on this topic like white on rice. Last month, it ran an article on conflicts in anemia drugs, which demonstrated just how much money was available to doctors who prescribe them. A just-fired practice administrator of a six-oncologist group in the Pacific Northwest presented the Times with papers from Amgen. They showed that, over the past year, physicians in that practice had written $9 million in prescriptions for the two anemia drugs Aranesp and Epogen. Amgen returned the favor with $2.7 million in “rebates”. These numbers work out to $1.5 million/physician in prescriptions, with returns of $450,000 (30%) per physician and profits of $300,000 (20%). The Times also ran a chart showing that dosing levels in the U.S., where rebates that encourage more prescriptions are standard practice, are as much as three times higher than in other countries where the rebates aren’t permitted. (Whether outcomes are better here is not clear.) These drugs were only two of many that oncologists prescribe, and there are rebates associated with many of those others as well. Of course, oncologists also make money, though far less, for actually being doctors.
I distributed the anemia drug rebate article to my network, which includes a number of cancer professionals. One response, from a nationally known oncologist, said, “If I don’t have the rebates, my income will go down!”
I first became interested in oncology drug practices about a year ago when the Times reported on a study that had been published in Health Affairs showing that oncologists prescribing behaviors were influenced away from best practice and toward the incentives provided by their rebate arrangements. The study had been conducted by highly credible health services researchers using a large sample of Medicare claims data from 1995-1998.
While the study’s findings were interesting, they were hardly news. After all, financial conflicts permeate every area of healthcare. Far more interesting was the righteously indignant response from the Community Oncology Alliance, a professional group that represents private practice oncologists. In the opening sentence of a remarkable email distribution to its membership, Steve Coplan, the administrator of the West Clinic in Memphis, called the report “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, only community oncologists can understand or question the deep complexities inherent in the practice of cancer care. Everyone else is infused with malevolent intent.
Many oncologists will tell you that rebates cover the costs of drug administration and are necessary because 1) Medicare doesn’t pay for office administration and 2) Office administration costs far less than it would in a hospital setting. In effect, the drug companies convinced Congress to let them pay for these services, though the compensation is far more than Medicare would ever pay. This gave them significant influence over the practice patterns of the nation’s community oncologists.
Medicare could correct this situation by outlawing drug rebates to oncologists (and other physicians) while paying doctors a reasonable rate to administer the drug. Medicare and commercial plans could offset the additional cost by reducing reimbursement to the drug companies by about 20%, or the amount of the doctors’ rebates.
The recent exposure in the Times, the Wall Street Journal, and other major papers has shone a bright light on the uncleanliness of these practices, and many oncologists have complained to me that they’re feeling picked on. I’m sure the drug companies aren’t crazy about it either. The typical oncologist now makes about twice as much from drug rebates as from practice. Of course, they’re not happy at the prospect of losing any of that income. We can be certain there’s a great deal of maneuvering going on behind the scenes by pharma and the oncology lobby as Medicare reassesses its approach.
It’s a fascinating problem. Oncologists (correctly) see themselves as righteous practitioners, caring for very sick and sometimes terminal patients and families in the most distressed periods of their lives. It appears very difficult for them to confront the fact that the way the money works maybe isn’t so healthy. They argue that they’re simply following the incentives that have been set up for them, without acknowledging that their complicity compromises patient care, their own position, and the stability of the larger health system.
I have an article in the journal Community Oncology this month (which is no longer available) that calls on oncologists to look squarely at this problem, understand the damage it’s doing to their credibility and reputation, and work with the various payers to remedy it. The rebuttal article (which is also no longer available), by the prominent and dedicated Linda Bosserman MD, raises all kinds of peripheral questions involved in drug rebates that were, to me, obfuscatory and beside the point. And there lies the rub. Ultimately, she argues for the same things I do—for changes to the reimbursement mechanisms that keep clinical decision-making detached from financial consideration. But it is difficult for her to directly confront the financial conflict inherent in the current system.
As Dr. Michaeli has argued in this blog before, a new transparency is uncovering excesses in every healthcare sector. People outside the industry are shocked by what they see as egregious behaviors, and hopefully, their recognition will eventually have a cleansing impact on how healthcare is supplied, delivered, and financed in this country.
We know that half or more of healthcare cost is wasted, inappropriate, or unnecessary, largely the result of the behaviors discussed here. Until financially conflicted healthcare is addressed in oncology and elsewhere, we don’t have the remotest chance of re-establishing stability and sustainability to American healthcare.