Cancer Drugs Face Funds Cut in a Bush Plan

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Cancer Drugs Face Funds Cut in a Bush Plan

By ROBERT PEAR

New York Times, August 6, 2003

WASHINGTON, Aug. 5 — The Bush administration will soon propose significant cuts in Medicare payments for cancer drugs, based on new data suggesting that the government pays far more than the market price for such medicines, administration officials said today.

The officials said they would also propose a modest increase in payments to doctors who give the drugs to patients in their offices. But, government documents show, the increased payments for medical services would be dwarfed by the cuts in payments to doctors for the drugs they buy.

In an interview tonight, Thomas A. Scully, administrator of the federal Centers for Medicare and Medicaid Services, said, "It is abundantly clear, from many studies and Congressional hearings, that we are significantly overpaying for outpatient drugs under Medicare."

Within two weeks, Mr. Scully said, the administration will issue proposed rules to help bring Medicare payments in line with prices charged in the market, for the limited number of drugs now covered by Medicare.

Doctors, who could lose income under the proposal, and patients' advocates said the cuts could harm cancer care. Ellen L. Stovall, president of the National Coalition for Cancer Survivorship, an advocacy group led by cancer survivors, said the proposals, "instead of expanding access to lifesaving drugs, would limit access to cancer treatments for some of the most seriously ill Medicare beneficiaries."

Congress is considering similar cuts as part of legislation to provide Medicare coverage for a wide range of outpatient prescription drugs. But without waiting for Congress to act, the Bush administration is preparing changes in rules that it has the power to put into effect on its own.

In a draft of the proposed rules, the administration says, "The Medicare program and Medicare beneficiaries often overpay for drugs."

The administration estimates that cancer doctors, known as oncologists, made $700 million in "Medicare drug profits" last year because "Medicare payments were in excess of widely available market prices."

The Bush administration gave this example: the list price of leucovorin calcium, used in treating some types of colon cancer, is $18.44. Medicare pays 95 percent of that, or $17.52. But doctors can get it for $2.77 in the market.

Medicare now pays 95 percent of the "average wholesale price" for many cancer drugs. But, the administration said, that price is "not defined in law or regulation." It is a list price, reported by drug companies to industry publications, and it is often much higher than what doctors actually pay.

Doctors typically pay 66 percent to 87 percent of the average wholesale price, the administration said.

Medicare officials cited data compiled by the General Accounting Office, an investigative arm of Congress. In 2001, the accounting office said, doctors typically paid 81 percent of the average wholesale prices listed for Rituximab, used in treating non-Hodgkin's lymphoma, and Taxol, for ovarian cancer and other tumors. In addition, it said, doctors typically paid 71 percent of the average wholesale price for granisetron, used to prevent nausea caused by cancer chemotherapy.

In a preamble to the proposed rule, the Bush administration estimates that the "Medicare drug profits" of cancer doctors doubled from 2000 to 2002, and it says they will double again, to $1.4 billion in 2004, if the current system is not changed.

One of the administration proposals closely resembles provisions of the Senate Medicare bill, estimated to save $14 billion over the next 10 years.

Medicare spends $8.2 billion a year for the outpatient drugs that it now covers. While the program generally does not pay for drugs outside hospitals, it does pay for some, including cancer drugs given to patients by injection or infusion in a doctor's office. Dr. David H. Johnson, president-elect of the American Society of Clinical Oncology, which represents cancer specialists, said the administration's proposals would "degrade the quality of cancer care."

"The government assumes all those dollars go into the pocket of the physician," Dr. Johnson said, referring to the money left over after buying the drugs. "That's not true. Most of the money is used to pay nurses, and to buy needles and intravenous tubing and other equipment." If the proposed cuts take effect, he said, doctors will cut back office employees, and some will stop providing chemotherapy in their offices.

Medicare coverage for cancer treatments is important because the chance of developing cancer increases with age. For all cancers combined, the median age at diagnosis is 68. About 60 percent of all cancers are diagnosed in people 65 or older. The administration said it did not believe that its proposals would make it harder for Medicare beneficiaries to obtain cancer treatment.

Federal officials said they were considering several options to reduce "excessive payments" for drugs now covered under Medicare. Savings to the government would total $4 billion to $19 billion over 10 years, depending on which option is chosen, the administration said.

These are the major options, as described in the proposed rules:

Medicare would pay a flat proportion, perhaps 85 percent, of the average wholesale price for a drug as listed on April 1 of this year. In subsequent years, the payment would be updated to reflect any increase in the Consumer Price Index for medical care.

Medicare contractors — the companies that review and pay claims — would be forbidden to pay more for drugs given to Medicare patients than they pay for the same drugs given to their private policyholders and subscribers "under comparable circumstances."

The federal government would do its own surveys of the pharmaceutical market, and Medicare would pay the market prices widely available to doctors.

Dr. Johnson, deputy director of the cancer center at Vanderbilt University, said: "Medicare might be spending too much on cancer drugs, but I don't think you can argue that it's spending too much on cancer care over all. Doctors should not have to charge extra fees for drugs to cover their other costs."