Have you heard about the “chemotherapy concession?”
The term refers to the scheme that enables some cancer doctors to make a boatload of money by prescribing certain chemotherapy drugs. It raises the question, “Is my doctor prescribing me the drug that’s best for me, or the one that gives him the highest profit margin?”
Well, we know the answer. . .keep reading. . .
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Unlike other specialists, oncologists who prescribe chemotherapy can profit directly from prescribing certain drugs if they administer treatments in their offices. It only works for an oncologist who has an independent practice. Those employed by hospitals can’t enrich themselves this way. In those cases it’s the hospital that’s reaping massive profits.
But the profiteers in private practice can buy the drugs at wholesale prices, then bill Medicare or private insurance for whatever they can get—and pocket the difference.
You’ve heard the expression “cutting out the middle man”? That’s exactly what the independent oncologist does. He or she is acting as your doctor and your pharmacy at the same time.
A New York Times article 1 about these de facto drug-company kickbacks features a quote from Ari Straus, the chief operating officer of Aurora Healthcare Consulting. The group focuses on helping doctors increase their profits.
Straus told the Times that in 2002 many physicians were earning upwards of $1 million per year on drug sales alone!
The General Accounting Office studied federal payments for cancer drugs in late 2001. The GAO determined that, on average, doctors got discounts as high as 86 percent on some drugs! They pay fourteen cents and charge the cancer patient a dollar.
Having observed for some years how the medical system operates, my guess is that many doctors prescribe the chemotherapy drugs that pay them the highest profits, not those that are best for the patient — and certainly not those that are a bargain for the patient.
This is sometimes justified by telling the patient the drug is brand new and represents some kind of improvement. New drugs, still under patent, are the most expensive ones. But it’s a well-known fact that few new drugs are any better than off-patent drugs that have been around for years.
The proof for the claimed “improvement” may be that cancer patients in clinical trials survived just a few more weeks than the control group that received an older, cheaper chemo drug. Most of the time, the so-called improvement is bogus, because the system permits drug companies to cook the results in a variety of ways.
A study published in the journal Health Affairs2 gives an example of the crazy markups in the case of breast cancer patients.
Researchers from the University of Michigan and Harvard University found that just increasing a doctor’s reimbursement by ONE DOLLAR resulted in the use of chemo drugs that cost $23 more!
In other words, the doctors in this study are willing to see you or your insurance company billed a much higher amount as long as they get an extra buck or two out of it.
You can be sure that many oncologists jump on the bandwagon of running an in-office pharmacy for profit. But your average thinking person probably would want to know…
Does anyone else smell a conflict of interest?
Imagine the problems the “cancer concession” creates for a doctor who’s supposed to be helping patients decide if they should undergo chemotherapy at all… or if they should continue a treatment that doesn’t appear to be working… or if they should choose an off-patent drug instead of the newest, most expensive one…
Because the profit margins vary widely, the greediest doctors focus on prescribing medications with the highest margins.
Medicare attempted to crack down on the practice in 2005 by changing the markups they would pay for the drugs.
Prior to 2005, Medicare paid a markup of 20 percent to 100 percent on many drugs. And private insurers were willing to pay even higher markups! (A 100 percent markup means half of what you’re paying for the drug goes into the doctor’s pocket, while the other half goes to the drug company.)
The 2005 Medicare reforms capped drug reimbursement at only 6 percent above the average price of the drug paid by all doctors. If successful, this would mean the doctor is passing on the drugs to you at just a little bit above his cost.
This change caused the overall amount that doctors billed Medicare for injectable drugs to fall by 6 percent—that is, from $10.6 billion in 2004 to $10.3 billion in 2005.
But many private insurers continue to pay higher markups.
Because of the Medicare cutbacks, some doctors decided to suspend office treatments in favor of sending patients to hospitals for chemotherapy.
This might sound like a minor adjustment, but the added commuting time and expense can be far more than an inconvenience for a person battling a life-threatening cancer diagnosis. Personally I’d rather get the chemo infusion in a private office — as long as the doctor isn’t price-gouging.
But at least the 6 percent Medicare markup cap has put the kybosh on the outrageous charges, right?
In a perfect world, maybe this would be true. But the reality is…
New study links chemotherapy prescriptions
with rising cancer costs!
The findings of the University of Michigan and Harvard University study were confirmed again by a 2012 study from researchers at University of California, Los Angeles.
The study, published online December 26th in the Journal of Clinical Oncology,3 confirms financial incentives continue to exist for some US oncologists in the prescribing of chemotherapy drugs.
The study was led by Jennifer Malin, MD, PhD at UCLA, who is also medical director of oncology at the managed care company WellPoint.
The authors stated that profits from the chemotherapy concession represent about 65 percent of revenue in a typical oncology practice, effectively “dwarfing the income from evaluation and management.”
The authors recommend shutting down this profit source completely.
They said one workaround solution could be to develop “specialty pharmacy programs” that work with payers to supply clinics with drugs. This would effectively eliminate the current “buy and bill” process.
But the researchers acknowledge the challenges involved in implementing such programs.
These include managing storage and administration of the drugs, as well as “concerns about waste if site-of-care laboratory testing indicates that the drug should not be given.”
Despite the challenges with eliminating the chemotherapy concession, many folks concerned about skyrocketing medical costs would welcome the idea of eliminating outrageous profits to doctors who capitalize off of the medical misery of others.
Hospitals have their own scam
to profit from the suffering of cancer patients
The government permits hospitals to engage in a practice that’s similar to the one in private oncology. What’s more, this “340B” program has been vastly expanded under Obamacare.
340B was originally meant to help about 90 hospitals to buy drugs to treat the poor. Under the program, drug companies are forced to sell the hospitals drugs at 25 to 50 percent off. As government programs have a habit of doing, the program has expanded to 1675 hospitals and has become one of the biggest boondoggles in medicine.
In the words of the Wall Street Journal (July 31, 2013), “The arrangement gives 340B-qualified hospitals a big incentive to search for patients and prescribe a lot of drugs. The costlier the drugs, the bigger the spread. So expensive cancer drugs are especially appealing.”
The article cites one hospital that purchased $54.8 million in drugs under the discount program and sold them to patients for $131.8 million for a profit of $76.9 million. The hospital’s total profits from ALL diseases and injuries was $190 million. This means cancer patients are paying a large portion of the bills for the entire health system.
This government program is such a goldmine, eligible hospitals are buying up private oncology practices as fast as they can. Just since the passage of Obamacare, hospitals have acquired 400 oncology practices, according to the Wall Street Journal article. “Acquiring a single oncologist and moving the doctor’s prescriptions under a hospital’s 340B program can generate an additional profit of $1 million for a hospital.”
The hospital conglomerates are rushing to buy up so-called “satellite pharmacies” for the same reason. They want to get their hands on the chemotherapy profits.
The overhead in a hospital is higher than in a private doctor’s office, so the same chemotherapy costs the patient something like $6,500 more. That means an additional $650 in copays for many patients, plus other expenses.
Before consenting to undergo chemotherapy in a hospital OR a private practice, you should ask yourself, “Are they doing this because it’s good for me or because it’s good for them?”
I think the answer is pretty obvious.
The suffering of cancer patients pays their bills
The conventional medical industry has no incentive to look for alternatives to chemotherapy and radiation, or to find a “cure” for cancer (as they always claim they’re trying to do.) They depend on the profits from cancer. They live off of those dying people.
A “cure’ would be a disaster for them. Just remember that when you read those hopeful news stories about some gene therapy or whatever that holds out hope for a cure. To be sure, some exciting research is going on at the genetic and molecular level, but the “cure” (if any) is always years away and involves highly exotic and speculative technology that will probably cost a fortune if it’s ever FDA approved.
One line of research they’re all excited about involves designer viruses — genetically modified microbes designed to kill a particular type of cancer cell while leaving the patient unharmed. Naturally, Big Science pours money into this sort of thing, while visions of Nobel prizes dance in the heads of the researchers. Little thought is given to the possible dangers of these man-made, Frankenstein microbes.
Meanwhile, there are promising herbs and phytonutrients that could be validated for a few hundred million dollars out of the hundreds of billions wasted on chemotherapy.
Lee Euler, Publisher