Expensive physician-administered biologic drugs for cancer and other diseases are helping to drive the cost of Medicare higher and higher, newspaper analyses of newly released Medicare billing data show.
We note this with interest because biopharmaceutical companies that make these drugs, private cancer doctors who collect significant sums billing Medicare for them, and major PBMs that take a cut serving as middlemen are also the main players in the drive to cripple or kill the 340B program.
Earlier this week, the Centers for Medicare and Medicaid Services released data for over 880,000 health care providers who collectively received $77 billion in Medicare Part B fee-for-service payments in 2012. Much of the initial reporting has focused on the small number of doctors who account for a large share of Medicare costs. For example, The Washington Post reported that “most of the 4,000 doctors who received at least $1 million from Medicare in 2012 billed mainly for giving patients injections, infusions and other drug treatments.” The Bloomberg news service found that “cancer doctors specializing in blood work and radiation received the most compensation.”
“Of $64 billion Medicare paid to doctors in 2012, $8.6 billion was used to cover drugs, an amount that has been rising for years,” the Post said. “In 2010, [CMS] lost the ability to mandate, when two equivalent drugs are available, that physicians be paid only for the cheapest. At the same time, pharmaceutical companies have offered physicians incentives, such as discounts, to use large volumes.”
“Many of the physicians who have submitted multimillion-dollar bills to Medicare,” it continued, “blame high drug prices and say the pharmaceutical industry is taking most of the money.”
“If you want to know who makes the money, it’s the drug company and the middleman,” a Texas rheumatologist said.
Pharmaceutical Research and Manufacturers of America scoffed at the idea that drug prices play a big role in the nation’s health-care costs, telling the Post such suggestions are “off base and not supported by the data on health care spending.”
One of the drugs that came up most frequently in reporting about the Medicare billing data is Lucentis, a biologic injectable drug made by Genentech that is used to treat macular degeneration. Genentech also makes Avastin, a closely related oncology drug that when used off-label has been shown in studies to be as effective at treating the eye disease for a fraction of the cost. (For more information, see the Post’s Dec. 7, 2013 story entitled “An effective eye drug is available for $50. But many doctors choose a $2,000 alternative.”) In late 2010, The New York Times reported that a confidential document it obtained described how Genentech had “begun offering secret rebates to eye doctors as an apparent inducement to get them to use more of the company’s expensive drug Lucentis” rather than Avastin.
You might recall that Genentech, which has been leading the charge for drug manufacturer audits of 340B safety net health care providers, publicly acknowledged last August that it overcharged 340B caregivers for Lucentis, Avastin, and a big chunk of its entire product line from the middle of 2008 through the middle of 2011.