[Ip-health] Wall Street Journal: Pricey Drugs Put Squeeze on Doctors

[Thiru Balasubramaniam]

http://online.wsj.com/article/SB121548254807634713.html?mod=world_news_featured_articles

Pricey Drugs Put Squeeze on Doctors
By MARILYN CHASE
July 8, 2008; Page A1


SAN FRANCISCO -- Long a burden for patients, hyperexpensive cancer
drugs are causing economic havoc for another constituency in U.S.
health care: doctors.

American doctors rarely used to let costs factor into their treatment
decisions. But rising prices -- some cancer drugs now cost more than
$100,000 a year -- are dramatically changing that ethos in the field
of oncology. Money issues are now disrupting relationships with
patients, causing doctors to go into debt and threatening to interfere
with treatment options.
Dr. Stephen Hufford talks about the pricing pressures oncologists face
in dealing cancer care. WSJ's Marilyn Chase reports. (July 7)

Unlike most physicians, who write patients prescriptions that they can
fill at a pharmacy, oncologists must buy many drugs upfront because
they're delivered intravenously in the office. As a result, doctors
are on the hook until patients or insurers pay the bill. Reimbursement
delays and denials are now more common as insurers clamp down on
claims. Some patients can't afford high co-payments.

"Twenty years ago, when I was in training, nobody really dealt with
economics," says Stephen Hufford, an oncologist in San Francisco. The
prevailing thinking, he says, was: "Cost should never be an issue in
someone's care."

That approach increasingly looks untenable. In February, after delays
in payments from insurers, Dr. Hufford was working to pay off several
hundred thousand dollars of past-due bills to his drug distributor.
When he ordered $20,000 of chemotherapy for three patients he was to
see the next day, he says the distributor refused to deliver the drugs
unless he paid in advance and reduced his outstanding balance by
another $20,000. He didn't have $40,000 in his bank account.

"I started pleading," Dr. Hufford recalls. He says he tried to appeal
to the distributor's representative on the phone, arguing that his
patients could be her mother or sister. The company relented. Dr.
Hufford declines to identify the drug distributor because he still has
regular dealings with it.

Driving the problem is a new generation of drugs -- including Avastin
from Genentech Inc. and Erbitux from ImClone Systems Inc. -- that are
transforming cancer care, providing oncologists with the first new
options in decades for desperately ill patients. But several months of
treatment on these drugs can equal the down payment on a home or a
child's college tuition.
[Stephen Hufford]

The average wholesale cost for a course of Avastin to treat one type
of lung cancer, for example, is $56,000, according to Genentech. It
can take 90 days to be reimbursed by Medicare or private insurance
plans and even longer for patients to hand over their co-pays.
Assuming insurance does cover a course of Avastin, a 20% co-pay comes
to $11,200.

Oncologists say this is forcing them into new and nerve-racking
territory: weighing costs alongside a drug's potential effectiveness.

It's "one of the toughest issues in oncology," says Arthur Caplan,
bioethics professor at the University of Pennsylvania, especially when
the price of one drug can mean emptying out "family assets for the
possibility of a few more months of life."

Drug companies say they must charge premium prices to recoup the
roughly $1 billion they say it costs on average to bring a cancer drug
to market. They also say they provide millions of dollars of free and
discounted drugs and co-payment assistance to the poor and underinsured.

In a survey of 167 cancer doctors reported last year in the Journal of
Clinical Oncology, 42% said they regularly raised the issue of costs
when discussing treatment options with patients. The study, conducted
by Deborah Schrag, an oncologist at the Dana Farber Cancer Institute
in Boston, found that 23% of oncologists said costs influence their
treatment decisions, and 16% said they omit discussion of very
expensive treatments when they know the cost will place great strain
on patients' resources.
[chart]

Based partly on these results, the American Society of Clinical
Oncology named a task force to develop a guide to help doctors discuss
costs with patients. The task force is expected to issue a report this
fall. Neal Meropol, an oncologist at the Fox Chase Cancer Center in
Philadelphia who is working on the guide, says one concern is making
sure poor patients don't feel that they're being pressured to take
cheaper or less effective treatments.

Many health-policy experts say it's high time for American doctors to
start considering costs when assessing treatment options. In 2007, the
cost of cancer care alone reached an estimated $89 billion in the
U.S., up from $72 billion in 2004, according to the American Cancer
Society using data from the National Institutes of Health.

In some state-run health-care systems in Europe, governments have long
played the role of adjudicator, refusing to pay for certain drugs if
they feel they're too expensive compared with the benefits they offer.
In Britain, an independent agency reviews the cost and benefit of new
treatments before recommending that the country's national health
service pay for them.

Going Into Debt

But in the U.S., patients are more likely to expect the latest
treatments regardless of cost, and government plays a smaller role in
determining whether a drug's clinical benefits are worth the price.
Some U.S. doctors worry that confronting costs in the examining room
could backfire, causing them to lose business if patients resent the
dollars-and-cents discussion. Others worry about liability risks if
they push a low-cost treatment option that later fails.

A sign in the waiting room of Dr. Hufford's San Francisco office
reads: "Attention patients!!! Co-payments must be paid at the time of
the doctor's visit." Even so, some patients don't have the money, and
can quickly fall $10,000 or $20,000 behind, the weight of the debt
exacerbating the toll of their illness. "They'll offer to pay $100 a
month," Dr. Hufford says. "They get mad at us."

John P. Whitecar Jr., an oncologist in Columbus, Miss., says 89% of
his cancer patients are on government insurance. He has watched his
income plunge 75% in the past three years because of rising treatment
costs and declining reimbursements. He says he's borrowed money to
keep his office afloat, and trimmed staff through attrition. Recently,
he began sending patients whose health plans reimburse him less than
his costs across the street to the local hospital for their
chemotherapy infusions.
[William Dexter]

One such patient is William Dexter, a retired Air Force sergeant and
mail carrier. He had been coming to Dr. Whitecar's office for monthly
intravenous immune globulin infusions to bolster his immune system
after a bone-marrow transplant, radiation, and chemotherapy and other
drugs for non-Hodgkin's lymphoma, a cancer of the lymph system.

The infusions can leave patients drained and shivering, with low blood
pressure. Mr. Dexter liked getting them in Dr. Whitecar's office,
where nurses comforted him with coffee, blankets, and chats about his
dogs and military history.

But with the gap between Mr. Dexter's Medicare policy and Dr.
Whitecar's expenses, the practice was losing about $500 on each
infusion. Now, instead of one monthly doctor visit, Mr. Dexter makes
two 90-minute round trips: one to the doctor for a checkup and to open
the IV port in his chest, and another to the hospital, where the four-
hour infusion involves more delays and less comfort. "It's an
inconvenience, but the alternative is death," says the 67-year-old Mr.
Dexter. "I knew [Dr. Whitecar] had to do it to stay in business."

Dr. Whitecar, an oncologist for 34 of his 68 years, says he's
"frustrated and angered" by the need to dislocate his patients, but he
says he doesn't have any choice. He says his practice is now solvent
after being as much as $2 million in debt to his drug supplier.

Shrinking Margins

Until recently, prescribing chemotherapy to patients was a rich source
of doctors' revenue. Through the 1990s, oncologists profited from
liberal markups of up to 100% on some staple chemotherapy drugs.
Pricier cancer drugs created through biotechnology offered slimmer
margins of 10% to 15%. Still, oncology remained lucrative thanks to
"big bucks" in cancer drugs, says oncologist Thomas Marsland of
Florida Oncology Associates, a practice in Jacksonville. "We became
retail pharmacists."

The exorbitant markups drew congressional scrutiny and sharp cutbacks
with the passage of the Medicare Modernization Act in 2003. In 2005,
Medicare limited doctors to a 6% markup on intravenous drugs, which
account for a large share of new cancer drugs. Private insurers
followed. Margins shrank. Payments from patients were less reliable,
too, as many struggled to cover co-payments.

One result: After almost a decade of rising salaries, oncologists'
median income was roughly flat in 2006 and 2007, at about $360,000,
according to the Medical Group Management Association, a professional
society of physician-practice managers based in Denver. In its survey
of 17 specialist fields, the group found that oncology was one of only
two fields where income was flat in 2007; the average growth for all
fields was about 3%. Anesthesiologists' incomes rose 9.5%, noninvasive
cardiologists' incomes rose 11.7%, and urologists' incomes rose 8.5%
in 2007.

"Before, there was so much fat in the system, it didn't matter if we
never saw the co-pay," says Dr. Marsland of Florida Oncology
Associates. Now, he says, margins have shrunk so much that he can't
afford to let patients off the hook. He is trying to offset falling
revenues by diversifying into medical-imaging services, for which
reimbursement rates have not been cut as drastically.

While drug companies stress their financial aid programs for needy
patients, oncologists say navigating these programs can take weeks of
paperwork and phone calls. Wayne Keiser of the Redwood Regional
Medical Group of Santa Rosa, Calif., says his practice hired three
dedicated "financial counselors" whose job is to handle the
bureaucratic process and paperwork needed to obtain free or discounted
cancer drugs.

Dr. Keiser says he recently treated a woman with lung cancer who
needed a $3,300-a-month drug called Tarceva, but who couldn't afford
her co-payment. One of his financial counselors helped get her access
to Genentech's patient-assistance program. "You might say, 'That's
great.' But there is a bureaucracy," says Dr. Keiser, adding that
navigating the system requires skilled staff time.

Genentech says its patient assistance programs have supplied $1
billion in free drugs since 1985. "We don't want cost to be a barrier
to treatment," says Alexander Hardy, senior director of patient
assistance. He says the company has streamlined the program, paring
paperwork down to one form each for doctor and patient to fill out.

At Georgia Cancer Specialists, one of the largest private cancer
practices in the Southeast with 29 offices, oncologist Bruce Feinberg
says inadequate reimbursements -- exacerbated by the cost of drugs --
are starting to come out of doctors' incomes. In addition, the
practice has taken several steps to trim operations, including closing
two unprofitable offices and adhering strictly to 10-minute time
limits on regular follow-up office visits.

"We see more cases of practices in debt," says Ted Okon, executive
director of the Community Oncology Alliance, a nonprofit advocacy
group for oncologists in private practice. He says high prices and low
reimbursements hit hardest at private oncology practices, where about
84% of cancer patients get their care.

$4,428 Every Three Weeks

At a chain of private cancer clinics called BreastLink near Los
Angeles, John Link and his colleagues treat many women whose breast
cancer has metastasized, or spread, rendering it incurable. The best
that currently available treatments can do as a rule in such cases is
slow the cancer's advance, prolonging life.

Dr. Link favors a regimen that combines Avastin with a chemotherapy
drug from Abraxis Bioscience Inc. called Abraxane, a newer version of
the approved drug Taxol. Abraxane costs an average of $4,428 per
treatment every three weeks, or $17,712 for four cycles, says an
Abraxis spokesman. Studies compare it favorably with the older drug,
but the combination isn't approved by regulators and some insurers
deny coverage. The practice fronts hundreds of thousands of dollars in
drug purchases a month.

Last year, BreastLink doctors began the unusual practice of asking
patients to sign a document promising to pay for the regimen if their
insurance doesn't.

BreastLink's practice coordinator, Lisa Donley, a therapist who helped
doctors develop the document, said some patients were shocked. One
woman with metastatic breast cancer wondered aloud if she would have
to mortgage her home to pay for two more cycles of Avastin, says Ms.
Donley.

Says James Waisman, an oncologist and BreastLink partner: "Patients
are at risk and we're at risk."

Write to Marilyn Chase at marilyn.chase@wsj.com1

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
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