Medicare drug pricing fix could threaten physician pay

Without a change in oncology payment rates, a drug savings measure also could harm patient access.

By Markian Hawryluk, AMNews staff. April 1, 2002.

Washington -- Sometimes two wrongs do make a right. For years, oncologists have made up for a shortfall in Medicare funding with an overpayment for the chemotherapy drugs they administer.

But this year, lawmakers are clamoring for the savings that could be realized by paying something closer to market prices for physician-administered prescription drugs. Oncologists are concerned they no longer will be able to afford to provide chemotherapy in an office setting.

"Patients are being treated because of this equilibrium we have with basically two unfair things going on: a dramatic [under]reimbursement on one side and overpayment on the other," said Larry Norton, MD, president of the American Society of Clinical Oncologists. "A sudden change in this, without carefully thinking out the consequences, could be disastrous."

Medicare pays for Part B prescription drugs only when they are administered incident to physician services. In 1999, the program spent $4 billion on outpatient prescription drugs, with 35 drugs accounting for 82% of that spending. Those 35 drugs included cancer treatments, inhalation therapy drugs and oral immunosuppressant medications.

Medicare reimburses physicians for those drugs at 95% of the manufacturer-reported average wholesale price. But recent evidence has shown this price is often not reflective of the prices physician practices actually pay for the drugs and that some companies have manipulated their prices to provide additional incentives for physicians to use their products. [...]