Chemotherapy Payment Reform: Medicare Is Missing the Elephant in the Room

Last May I wrote about the uproar over Medicare’s proposed changes to how it will pay doctors who inject drugs in their offices. This largely concerns chemotherapy. Currently, physicians buy the drugs and Medicare reimburses them the Average Sales Price (ASP) plus 6 percent. The proposed reform would cut the mark-up to 2.5 percent and add a flat fee of $16.80 per injection.

I did not think the reform would have a positive impact, but I also thought criticism was overblown. Well, Medicare has managed to irritate all the affected interest groups to such a degree that it is likely to toss the proposal and go back to the drawing board.

Misleading Rhetoric on Cancer Payment Reform

A few weeks ago, Medicare proposed a pilot program to test a new way to pay doctors who inject drugs. Cancer is the big kahuna, cost-wise, when it comes to injected drugs. Medicare payment policy leads to certain industry practices to profit from the status quo. When the status quo is threatened, the “preservatives” immediately form a defensive coalition to stop the change.

Although I do not endorse this precise reform, the campaign to roll it back has become irresponsible and misleading. Currently, physicians who inject drugs are paid by Medicare a margin of 6 percent on top of a reported price called the Average Sales Price (ASP). The concern is that the oncologists make more margin off an expensive drug than a less-expensive drug.

People who sell injection drugs to physicians sometimes refer to their sales technique as “selling the spread.” Physicians, especially oncologists, sometimes say they cannot earn a living off the fees Medicare pays them, so they need to earn the “spread,” too. I do not believe there is evidence “selling the spread” leads oncologists in general to prescribe inappropriately, but others do. Further, whether this reimbursement leads to artificially expensive drugs is a different issue than oncologists’ prescribing behavior.

Ten Percent of Cancer Drug Spending Wasted

A remarkable study published in the BMJ concludes that $1.8 billion of the $18 billion spent on the 20 most expensive cancer drugs in the U.S. is wasted due to cunning marketing by drug-makers. Chemotherapeutic doses are often adjusted by body weight. However, the drugs are shipped in vials containing doses appropriate to bigger people. Once opened, the drug that remains after an oncologist selects the does appropriate for a smaller or average-sized person has to be discarded.

The authors allege the drug-makers do this deliberately, to increase profits. Their proposed solution is that the Food and Drug Administration should regulate the size of vials! There is a better way.

Read more at NCPA's Health Policy Blog.

Drug Shortages Getting Worse

According to the Wall Street Journal, the shortage of critical cancer drugs is getting worse. The U.S. government’s measures to mitigate this problem have failed because it has ignored NCPA’s conclusion that shortages result from too much, not too little control over the market for these drugs.

The government keeps tightening the screws on manufacturers, and the shortages keep growing. See Devon Herrick’s testimony to the U.S. Senate in 2011 and my own study published in 2012.

Read the entire entry at NCPA's Health Policy Blog.

Paying for Mammograms: We're Thinking About it All Wrong

The third rail of American health policy is women’s health care.  The U.S. Department of Labor states that women make 80 percent of health care decisions for their families, although this appears to be derived from folklore rather than scholarly research. Nevertheless, any politician knows that the way to drive up polling numbers among women is to dial up the rhetoric on health care.

Back in 1996, Hillary Clinton, bitter after the defeat of HillaryCare, campaigned against “drive-by deliveries,” demanding that a federal law should be passed mandating that health insurers pay for mothers to stay in hospital for at least 48 hours after delivery. The campaign succeeded quickly: The Newborns’ and Mothers’ Health Protection Act passed that year, and took effect in 1998. It mandated a 48-hour stay (or 96 hours for Caesarian section). Although, doctors are free to discharge their patients earlier.

More recently, controversy arose when the Affordable Care Act was being debated, because it was being jammed through Congress just as women were struggling with a 2009 decision by the US Preventive Services Task Force to change its guidelines recommending annual mammograms. The new guidelines recommended screening starting at 50 years, not 40 (as previously recommended).

Needless to say, this upset many people. The American Cancer Society maintained its recommendation that preventive screening start at 40, as did the Mayo Clinic. Politicians took note, and made an exception in Obamacare for mammograms, such that the 2009 USPSTF revision was ignored when it came to Obamacare’s “free” preventive care.

Read the entire column at Forbes.

Breast Cancer Screening Update

ou may recall controversy circa 2009 and 2010, when the Affordable Care Act was passed, about whether women in their 40s would get “free” mammograms every year. In 2009, the US Preventive Services Task Force issued guidelines recommending annual mammograms starting at 50 years, not 40 (as previously recommended).


The USPSTF looks ready to re-issue its guideline, which means “free” mammograms for women in their 40s will not be mandated by Obamacare. Avalere Health has published a study estimating that this could “eliminate guaranteed coverage” for 17 million women.

Read the entire entry at NCPA's Health Policy Blog.

More Evidence We're Winning the War on Cancer

his blog has previously presented evidence of America’s remarkable success in the war on cancer. The factors leading to success included lifestyle changes (especially quitting smoking) as well as improved diagnosis and treatment.

New research looks only at diagnosis and treatment, and finds stunning improvements since 1990.

Read the entire column at NCPA's Health Policy Blog.

Under Obamacare, Will America Keep Winning the War on Cancer?

The American Cancer Society (ACS) has just released its annual Cancer Facts and Figures. The announcement describes how successful the war on cancer has been:

Annual statistics reporting from the American Cancer Society shows the death rate from cancer in the US has fallen 22% from its peak in 1991. This translates to more than 1.5 million deaths from cancer that were avoided.

There are a number of explanations for this success.

Read the entire article at Forbes.

Does the United States Over Diagnose Cancer?

Ezra Klein challenges the notion that patients in the United States get better cancer treatment than patients in other developed countries.

Klein goes on to report that actual death rates (in the U.S. population) have not really changed for many cancers, despite much greater detection. Further, this epidemic of over diagnosis can cause harm, because people will undergo surgery who don’t need it.

Although this argument is not trivial, I find it hard to accept.

Read the entire column at the National Center for Policy Analysis Health Policy Blog or the Independent Institute's Beacon Blog.

Screening for Cancer

Screening for Cancer, in which I address the media backlash against those who marvel at the coincidence of a government panel recommending fewer mammograms in this time of health reform (at the John Goodman Health Blog).

The Loneliness of the Long-Distance Canadian Cancer Patient

It's been a while since I've discussed my homeland, Canada, and I'm not usually one to traffic in horror stories of government-monopoly health care. But this story from Windsor, Ontario (right across the river from Detroit) is too appalling to pass up.

A 30-yr old man was diagnosed with stage IV melanoma: skin cancer that has migrated inside and invaded his chest and bowel. Although the skin cancer was diagnosed years ago, the stage IV was diagnosed late. Now, that may be because of the government monopoly's lack of access to specialists, but it may also be idiosyncratic. Even with the best access to health care, doctors can't catch everything.

In this case, what happened after the diagnosis is what's truly appalling. Because his home-province of Ontario does not have the capacity to treat this advanced cancer, the Ontario Health Insurance Plan (OHIP), which has absolute control over every Ontarian's insured health care, must contract with U.S. providers. Scheduled for treatment in Detroit, OHIP screwed up the paper-work and he could not go.

Once things were sorted out, OHIP no longer contracted with the hospital in Detroit (right across the river, as mentioned above), so he has to go to Buffalo, NY - four hours away.
Tragically, he hasn't been able to work, and his wife has just had a baby. The family relies on the charity of neighbors for the baby's clothes and other needs.

No "medical bankruptcy" under government-monopoly health care? Don't you believe it.

Treating Cancer in Oregon: When In Doubt, Let the State Decide

While health insurers pay for diagnosis, surgery, and intravenous chemotherapy for cancer patients, they balk at paying for oral anticancer pills dispensed by pharmacies, according to a New York Times story. Although the new drugs are expensive, the journalist figures that they are surely cheaper conventional alternatives. So here's the obvious question: "If the retail drugs are better and cost less than the office-based therapies, why wouldn't profit-maximizing insurers pay for them?"

One answer may be that the supposition is wrong. The new drugs may have side effects that the article never discusses. There may be benefits to having cancer patients come to a clinic or a doctor's office for treatment to ensure adherence to therapy.

Obviously impatient with such questions, the state of Oregon has come to the rescue, by mandating health benefit plan coverage for oral anticancer drugs if a plan also covers other cancer treatments.

How did the Oregon legislators decide this was a good thing to do? According to Oregon law, a sponsor proposing a new mandated benefit is supposed to provide a report on the costs, efficacy, and other effects of mandating the benefit. The purpose of the law is to ensure that the costs do not outweigh the benefits. I telephoned the sponsoring legislator's office, which (very kindly) informed me that the legislative counsel had advised that this mandate did not call for the legally required analysis.

So, we'll never know what the costs and benefits of this mandated benefit are. The pace of imposition of mandated benefits for health insurance has increased in recent years, with little critical examination by legislatures (or journalists). This legislative overreach has dramatically reduced Americans' scope of choice in health insurance.